Warren Buffet’s New Bet: Modular Construction

For the past decade, architects, engineers, and businesspeople have argued over the need for tech advancement in the construction industry.

Present-day, the slow, messy, and costly process of building has transformed into a streamlined factory. It is an iconic phenomenon that many designers and architects like Buckminster Fuller, Frank Lloyd Wright, and Bone Structure have strived for.

One of the newest companies by Warren Buffet Berkshire Hathaway Group has ventured into scaling and creating modular architecture. With a big budget from a famous parent company, the initiative has a chance to succeed at creating newer, cheaper, and better buildings.

There are various challenges to making this type of construction process work, starting from the high overhead of materials to the labor cost and numerous challenges on the approval of innovative construction methods. Here we discuss the specifications of the modular construction:

What is the Modular Construction?

Modular construction is a popular process that has been used for the past century or so. It refers to building off-site in a factory and then shipping the products to the site.

Modular buildings can be relocatable and temporary; for example, construction site sales offices, schools, and medical clinics. At the same time, they may be permanent buildings like apartments, hotels, office buildings, and houses.

The Oracle of Omaha doesn’t have much hopes pinned to modular construction. Meanwhile, MiTek, a construction company of Warren Buffet in Missouri, is launching a new modular building venture. The startup will partner with Danny Forster & Architecture to build rooms for apartment buildings and hotels in factories before shipping them off to a construction site.

MiTek plans to invest more than tens of millions of dollars into the initiatives and hopes to kick start working on its first project.

What is MiTek?

MiTek captivated the reputable American business magnate, philanthropist, and investor Warren Buffet 20 years ago. With its headquarters in Chesterfield, Missouri, MiTek is the world’s well-renowned provider of design engineering software, steel connector products, and ancillary services for the global building components market.

MiTek believes that its model can help prevent the delays and cost overruns associated with modular construction. It is because MiTek will ship its manufactured building parts along with instructions for projects instead of building entire rooms off-site.

General contractors then construct the rooms with the help of instructions provided by MiTek.

Understanding the Project

MiTek will still rely on some centralization despite its collapsible modules produced in a 250,000 square foot facility in Lebanon, Pennsylvania. These modules will then be shipped out to warehouses near different job sites.

General contractors will transform these steel spaces into carefully designed custom pop-up plants that meet the infrastructural needs of the existing warehouses. Plus, you can place them near building sites with the help of rented equipment from MiTek to outfit different modules.

It means that most of the building process of the modular projects helps locally with the help of local labor. However, labor unions are not entirely welcoming of these kinds of factory-based projects. As a result, the total amount of labor hired to do construction work is likely to decrease.

An in-depth report on modular construction from McKinsey reveals that shifting to off-site construction can help labor costs by amount 25%. However, chances are, some of this labor will shift to the factory.

To Sum it Up

Even with the time and luxury that Berkshire Hathaway boasts, many features about the construction industry would have to change for this to succeed. From the work practices to local permitting rules to building inspections, various features would have to transform.

MiTek is yet to release the names; however, it claims to be high-level talks with two major national builders. Together they plan to implement revolutionary approaches on upcoming projects.

If that does happen, companies can enjoy a module-based approach, and construction can become faster, easier to access, and cheaper.