Analysis of cost-increasing risk factors in modular construction in Korea using FMEA

The modular system is a very efficient construction method with various strengths and advantages that is expected to replace Reinforced Concrete (RC) or steel (S) structures. It is appreciated as a faster, more efficient, cheaper, and eco-friendly method capable of solving labor problems in the construction industry. However, the modular system has in fact failed to meet expectations in the Korean construction market, mainly due to higher construction costs as compared to RC structures. This study, therefore, sought to derive the construction cost-increasing factors for each phase of a modular project in Korea then analyzed what improvements should be made to secure economic feasibility. For the purpose of this study, the Failure Mode and Effects Analysis (FMEA) method was employed to find critical factors responsible for causing cost increases throughout the modular construction life-cycle from the perspective of the modular construction company. A total of 35 types are evaluated, which increased to 49 factors when overlapping is allowed over the phases. The result of the FMEA shows that there is a higher risk of a construction cost increase at the beginning of the design phase, highlighting the importance of initial planning and direction setting. It also demonstrates that workforce-related problems take up about half of the risk factors, indicating that the Korean modular construction industry needs well trained and experienced specialists. The results further imply that many of the serious risks of cost increases come from factors relating to market size and the maturity of modular construction, which the modular construction companies can’t control on their own. More publicity detailing the advantages and superiority of the system, its technical improvement and innovation in terms of quality and performance, could change customer interest in the system. These efforts should run parallel with the effort to lower costs.