Journal of Cleaner Production 172 (2018) 649e660

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Journal of Cleaner Production

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Barriers to promoting prefabricated construction in China: A

costebenefit analysis
Jingke Hong a, *, Geoffrey Qiping Shen b, Zhengdao Li c, **, Boyu Zhang b, Wanqiu Zhang d
a
School of Construction Management and Real Estate, Chongqing University, Chongqing, 400045, China
b
Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China
c
College of Civil Engineering, Shenzhen University, Shenzhen, China
d
China Development Bank, China

a r t i c l e i n f o a b s t r a c t

Article history: Prefabricated construction has attracted worldwide concern because of its significant role in the creation
Received 16 November 2016 of sustainable urbanization. In Mainland China, the practice of applying prefabrication technology in the
Received in revised form construction industry still lags behind. In fact, the economic benefit is a key concern of various stake-
12 April 2017
holders involved in the construction process and is expected to influence the delivery of prefabricated
Accepted 16 October 2017
Available online 1 November 2017
buildings significantly. Therefore, this study established a costebenefit analysis framework to explore the
basic cost composition of prefabrication and examined the effect of adopting prefabrication on the total
cost of real building projects. Results show that the concrete and steel used in the typical prefabricated
Keywords:
Offsite construction
components were responsible for 26% to 60% of the total cost, followed by labor cost (17%e30%) and
Prefabrication transportation (10%). The average incremental cost is highly linearly correlated with the prefabrication
Costebenefit analysis rate, which ranged from 237 yuan/m2 to 437 yuan/m2, in eight building projects. To fully gain the
Case study economic benefits from the precast construction, the future focus should lie in providing financial
support for promoting the development of prefabrication technology, optimizing the structure integrity
of prefabricated buildings, and improving the maturity of the precast market.
© 2017 Elsevier Ltd. All rights reserved.

1. Introduction et al., 2015). Prefabricated construction can generally be catego-

rized into the following four levels based on the degree of prefab-
Prefabricated construction refers to the practice of producing rication implemented on the product: (1) component manu-
construction components in a manufacturing factory, transporting facturing and subassembly that are always done in a factory and not
complete components or semi-components to construction sites, considered for onsite production, (2) non-volumetric pre-assembly
and finally assembling the components to create buildings (Tam that refers to pre-assembled units not enclosing usable space, such
et al., 2007). Other terms and acronyms that are associated with as timber roof trusses, (3) volumetric pre-assembly that refers to
prefabricated construction include offsite construction (Pan et al., pre-assembled units enclosing usable space and usually being
2012), offsite prefabrication (Gibb, 1999), precast concrete build- manufactured inside factories but do not form a part of the building
ing (Kale and Arditi, 2006), modern methods of construction, and structure, such as the toilet and bathroom, and (4) entire buildings
industrialized building (Meiling et al., 2013). Precast products have that refer to pre-assembled volumetric units forming the actual
been recently widely used in the building sector because of its structure and fabric of the building, such as motel rooms (Gibb,
advantages in environmental protection, quality and safety control, 1999). Prefabricated construction provides an effective alternative
and construction scheme optimization (Chiang et al., 2006; Tam to the traditional site-based construction, which improves the
productivity, life cycle environmental performance, and predict-
ability of the construction industry and benefits all stakeholders in
* Corresponding author. School of Construction Management and Real Estate, the construction process (Pan et al., 2012). Compared with the
Chongqing University, Chongqing, 400045, China. traditional construction technologies, prefabricated construction
** Corresponding author.
provides controlled conditions for weather and quality, facilitates
E-mail addresses: [email protected] (J. Hong), [email protected]
(G.Q. Shen), [email protected] (Z. Li), [email protected] the compression of project schedules by changing the sequencing
(B. Zhang), [email protected] (W. Zhang). of workflow, and reduces material waste (Li et al., 2014a). Thus,

https://doi.org/10.1016/j.jclepro.2017.10.171
0959-6526/© 2017 Elsevier Ltd. All rights reserved.
650 J. Hong et al. / Journal of Cleaner Production 172 (2018) 649e660

prefabricated construction not only reduces construction waste, (1) The biggest challenge of hindering the uptake of the pre-
noise, dust, operation time, operation cost, labor demand, and fabrication in China is the cost. This may have arisen from the
resource depletion but also improves quality control, health, and fact that the perception of cost obstacles grounded in the
safety (Jaillon and Poon, 2009; Li et al., 2011; Lu et al., 2011; Pan prefabrication practice is still ambiguous (Mao et al., 2013a;
et al., 2007). These advantages significantly improved the perfor- Zhai et al., 2014; Zhang and Skitmore, 2012);
mance of the entire construction industry in developed and (2) The large population of China may generate the severe
developing countries, such as the US, the UK, Japan, Singapore, and shortage of housing while the precast construction provides
Mainland China. Given its inherent superiority, precast technology an attractive and innovative alternative to mitigate such
has been improved in China to meet the requirements of sustain- housing demand (Arif and Egbu, 2010);
ability and housing demand. In comparison with the rapid annual (3) The cost-related influence factors of the precast construction
increase rate of urbanization, the practice of applying prefabrica- in the context of China is different from the other countries,
tion technology in the construction industry lags behind. A number including the weakened economies of scale (Mao et al.,
of regulations and policies have been promulgated at the national 2013a), the lower labor cost (Arif and Egbu, 2010), and the
and industrial levels to promote the role and reinforce the impor- lack of skilled workers. Such particular situation in China
tance of offsite production in sustainable development. In the Na- may cause the cost benefits of the prefabrication as not
tional Plan on New Urbanization 2014e2020 (GOSC, 2014) and Plan realistically beneficial.
on Green Building (MOHURD, 2013), industrialization is one of the (4) The quantitative analysis and empirical evidence on specific
most critical issues in the creation of energy-efficient urbanization process data are still scarce as prefabrication is in the early
in China. stage in China., which in turn results in the lack of knowledge
Given the precast construction is still in its infancy in China, cost about the cost assessment method (Chen, 2009; Zhang and
therefore plays a major role influencing the decision-making pro- Skitmore, 2012).
cess when selecting innovative construction methods (Tam et al.,
2015; Zhai et al., 2014). Many previous studies placed their em- Therefore, this study develops an analytical framework to
phases on a transparent cost analysis for supporting the feasibility facilitate the costebenefit analysis of prefabricated buildings and to
and understanding the prefabrication industry-wide (Kamar et al., justify the widespread adoption of precast technology in the con-
2009; Steinhardt and Manley, 2016). Pan et al. (2008) and Mao et al. struction industry. This study initially examined the cost perfor-
(2013a) also highlighted the success of a transparent and system- mance of specific prefabricated components by investigating its
atic costing benchmark in mitigating economic barriers faced by manufacturing process and other production-related activities and
stakeholders and promoting the offsite construction worldwide. In then revealed how the adoption of prefabrication affects the cost
summary, the cost issue is the major factor highlighted from both profile of real prefabricated buildings by comparing the cost dif-
literature and pilot studies impeding the construction industry to ference between precast and conventional construction. The
move forward with the precast construction (Blismas et al., 2006; investigation covers six common prefabricated components used in
Kamar et al., 2009). the context of China, including precast facade, precast form, semi-
Moreover, in comparison with other regions, there is a necessity precast slab, precast staircase, precast balcony, and precast air
to evaluate the cost barrier to the adoption of the precast con- condition panel.
struction given its foreseeable urgent need in the high-speed ur- The specific objectives of this study are outlined as follows:
banization in China. Fig. 1 summarized such increased need of the
prefabrication by investigating the number of relevant regulations (1) To decompose the basic cost composition of six common
and standards promulgated in China at the provincial level. prefabricated components;
Apart from this, there are a number of special reasons high- (2) To investigate the economic performance of prefabricated
lighting the necessity of investigating cost benefits and obstacles of buildings in the context of China;
the precast construction in the context of China:

Fig. 1. Number of regulations and standards promulgated in China at the provincial level.
 J. Hong et al. / Journal of Cleaner Production 172 (2018) 649e660 651

(3) To identify the cost difference between precast and con- investment (new machinery, fabricate molds, and factories), and
ventional construction; logistic process were emphasized most. Although extra cost on
(4) To explore the driving factors behind the increase in the cost labor (checking, counting, and sorting raw materials) and compo-
intensity of prefabricated buildings. nents storage space were rarely mentioned, these items indeed
generated the direct impact on the economic performance of pre-
Given the significant role and urgent need of precast construc- fabrication. The primary factors leading to cost savings included the
tion in the high-speed urbanization in China, the findings of this decreased labor requirement on the construction site, enhanced
study can generate a transparent and systematic method to assess quality of prefabricated components, and Lower maintenance and
the cost impact from adopting prefabrication, which enables to repair expenses. Labor rate was also highlighted by De La Torre et al.
advance the construction industry to move forward with the pre- (1994) in the cost savings while, on the contrary, it was identified as
cast construction. The specific contributions include the following the major driver for the cost increase by Khalfan and Maqsood
aspects. First, a cost-benefit analytical framework is developed to (2014) and Molavi and Barral (2016). Apart from the investigation
improve the level of industrialization for the betterment of the of the offsite manufacturing process, the research community also
construction industry as a whole, with due economic consider- argued that it would be more beneficial to identify the cost benefits
ations. Second, this study examines the cost driving factors in the and barriers in the prefabrication practice from a life-cycle
context of China, which is beneficial to understand the unique in perspective (Gasparri et al., 2015; Jaillon and Poon, 2008;
China's construction practice. Third, the empirical results obtained Schoenborn, 2012). However, the relevant studies focusing on the
in this study provide a robust evidence of the cost benefits and cost saving potential during the maintenance and deconstruction
barriers for the precast construction in China. process of prefabricated buildings were still rare given limited
The remainder of this paper is organized as follows. Section 2 empirical data can be found in the realistic cases.
conducts an overview of the cost barriers in the precast construc- To address such ambiguous perceptions in the cost analysis of
tion. Section 3 presents the basic profile of case buildings. In Section precast construction, a number of researchers developed the cor-
4, a cost-benefit analysis framework is developed to explore the responding cost analytical framework to further examine the cost
cost difference between precast and conventional construction difference between offsite and conventional construction. Jeong
method. Section 5 shows the results of cost-benefit analysis in et al. (2017) argued that the major financial advantages of offsite
prefabrication. Section 6 presents the discussion, while the con- construction lie in the material, construction, and overhead cost.
clusions drawn from the study and several research limitations are Tam et al. (2015) investigated the cost savings of prefabrication
provided in Section 7. from the aspects including material usage, scaffolding erection,
labor force on formwork fixing, concreting, window frame fixing,
2. Overview of the cost barriers in the precast construction and window installation. Mao et al. (2016) established a cost
analytical framework by dividing all the costs into preliminary,
Precast construction is different from the conventional method capital, facility management, and disposal cost. However, as a result
in the aspects of building complexity, manufacturing procedures, of the complexity and long-term duration of construction projects
logistics system, material use, and labor input, which has directly and the confidentiality issues stated by clients and contractors,
increased difficulties in cost accounting (Chiang et al., 2006; Shen, information on building budget is difficult to obtain for further
2008; Steinhardt and Manley, 2016). In fact, previous studies analysis. Such difficulty may be even exaggerated in offsite con-
indicated that the economic performance of the precast construc- struction because of its innovativeness in the construction field.
tion remains a controversial issue (De La Torre et al., 1994; Gibb, In summary, despite the contribution of previous research to the
1999; Steinhardt and Manley, 2016). On the one hand, prefabrica- body of knowledge on the research domain of prefabrication,
tion was regarded as one of more cost effective construction limited effort has been exerted to develop a costebenefit analysis
method than the traditional one with cost reduction in labor, ma- framework for prefabricated buildings in the context of China (Zhai
terial, and construction waste (Li et al., 2014b; Tam et al., 2015). Pan et al., 2014; Zhang and Skitmore, 2012; Zhang et al., 2014). Such
and Sidwell (2011) empirically proved the cost-effectiveness of adoption is a key concern of various stakeholders involved in the
innovative offsite options. Gasparri et al. (2015) held the similar construction process and is expected to influence the delivery of
viewpoint by examining the cost of the offsite prefabricated facade. prefabricated buildings significantly, which is presently considered
Rogan et al. (2000) also demonstrated that the capital costs could the main obstacle that hinders the adoption of prefabrication in
reduce up to 10% by adopting modular construction. Boyd et al. China.
(2012) found the offsite construction offered the cost benefit of
up to 30% savings. Also, such costebenefits encourage the adoption 3. Case study and data consolidation
of green technologies that facilitate the use of materials that can be
easily reused and recycled in further possible demolition, thereby The selection criteria for the target case buildings in this study
establishing a positive public image for contractors (Wang et al., include:
2014). By contrast, Zhai et al. (2014) identified the higher capital
cost was a big obstacle to promote the precast construction over the (1) The selected buildings should be built with a similar building
long term. Mao et al. (2016) indicated that the incremental cost of type, structural system, and other profiles that may cause the
applying prefabrication technique ranged from 27% to 109% in changes in the project budget.
comparison with the conventional construction. Nadim and (2) The target buildings should cover a broad range of prefab-
Goulding (2010) collected the perceptions of offsite construction rication rate and adopt several types of prefabricated build-
from industry practitioners by conducting interviews. The results ing components. Such settings can facilitate an in-depth
indicated that a widely held perspective on the higher capital costs investigation of cost effect from the precast construction.
for offsite construction methods is present in the respondents. By (3) This study assumes that the effect of cost variations induced
comprehensively reviewing the previous research, this study by the onsite construction management skill is negligibly
summarized the major factors influencing the financial perfor- small on the total cost.
mance of the precast construction (See Table 1). In general, the
additional costs of highly skilled workers, design changes, initial Based on criteria above, a field survey is conducted through the
652 J. Hong et al. / Journal of Cleaner Production 172 (2018) 649e660

Table 1
Factors influencing the economic performance of the precast construction.

Influence factor Reference

Higher cost Highly skilled workers [1], [2], [3], [4], [5], [6], [7]
Complex techniques [1], [8], [2], [9]
Complex design [1], [10], [2], [11], [3], [12], [9], [13]
Additional procurement costs [10], [5]
High initial cost (cost on new machinery, fabricate molds, and factories) [8], [14], [14], [12], [15], [16], [17], [6], [13], [7]
Extra labor cost on checking, counting, and sorting raw materials [18]
Occupying extra space for accommodation of precast components [14]
Additional transportation costs [14], [9], [19], [15], [20], [6]
Additional use of tower cranes (vertical transportation) [14], [6]
Lower cost Increased productivity [21], [14], [12]
Decreased labor [21], [10], [22], [14]
Avoidance of construction site hindrances [10]
Cheaper labor rates [10]
Decreased management cost [10]
Faster project delivery [10], [22]
Minimal wastage [8], [14], [6]
Less site materials [8], [7]
Reduction of formwork [22]
Controlled quality [22], [8], [14], [12], [6]
Lower maintenance and repair expenses [7], [15], [23], [24]

Note: [1] Molavi and Barral (2016); [2] Thanoon et al. (2003); [3] Jaillon and Poon (2009); [4] Khalfan and Maqsood (2014); [5] Zhang and Skitmore (2012); [6] Chiang et al.
(2006); [7] Zhai et al. (2014); [8] Kamar et al. (2009); [9] Shen (2008); [10] De La Torre et al. (1994); [11] Gasparri et al. (2015); [12] Zhang et al. (2014); [13] Luo et al. (2015);
[14] Tam et al. (2015); [15] Jaillon and Poon (2008); [16] Pan et al. (2007); [17] Pan et al. (2008); [18] Zhong et al. (2015); [19] Lu and Yuan (2013); [20] Mao et al. (2013a); [21]
Gibb (1999); [22] Schoenborn (2012); [23] Polat (2008); [24] Jaillon and Poon (2010).

combined methods of site investigation, questionnaire, and face-to- Two categories of data, namely, process-based inventory data
face interviews with designers, project managers and prefabrica- for offsite manufacturing and basic design parameters of investi-
tion suppliers associated with the target projects. The question- gated building projects, were required in this study. The process-
naire comprises three parts as summarized in Table 2. The first part based inventory data for six common prefabricated components
is designed to understand the basic profile of the target pre- are summarized in Table 4, with a full breakdown including ma-
fabricated building. The second part represents the prefabrication terial use, labor input, machine use, miscellaneous works, trans-
information including the volume of prefabrication, prefabrication portation, and profit and tax. More importantly, the superiorities
rate, and volume of each type of prefabricated component used in and limitations of adopting prefabricated construction were dis-
the target project, which aims to explore the features of the sample cussed during the interviews. A number of immeasurable expen-
prefabricated buildings and establish the quantitative basis for cost ditures were also estimated based on their professional experience.
estimation. The third part investigates the cost information for The quantitative data collected from the field survey through case
different lifecycle stage of buildings, namely, design, offsite studies can serve as firsthand data and an effective method to
manufacturing, transportation, and on-site construction, which understand the cost performance of prefabricated buildings. In this
aims to facilitate the comparison with the conventional buildings. study, the focus of concern is on prefabricated residential buildings
In summary, although the collection of budget data is relatively as the current development of precast construction remains back-
difficult because of the confidential nature of the construction in- wards in China, where the application of prefabricated technologies
dustry, basic cost information of eight prefabricated buildings was in public buildings is scarce.
eventually collected. Finally, a number of techniques were adopted to normalize the
Based on the field survey, the basic profiles of the sample raw data and ensure the comparability of sample buildings. First,
buildings labelled from R1 to R8 are shown in Table 3. All of the the preliminary cost on land development and acquisition was
buildings were residential buildings with the same frame shear assumed to be similar for the same building regardless of the
structure. This consistency in building type and structure enables construction method adopted. The capital cost of building decora-
comparability to a certain extent. By contrast, a number of building tion and demolition was excluded in the cost discussion to establish
parameters, such as the gross floor area and volume of prefabri- a common base for further analysis. Second, the unit price of ma-
cation, vary among sample buildings. These profiles may directly terials and machine for an identical building was assumed to be the
determine the economic performance of a certain building, which same between conventional and precast scenarios. Third, the costs
enables the investigators to examine the cost-effectiveness of off- were all converted into the 2015 constant prices via price indices to
site construction. In this study, the precast rate is defined to keep the price consistent. Fourth, multiple measurement units,
describe the percentage of prefabrications in the total volume of such as cost intensity of prefabrication (yuan/m3) and cost intensity
concretes used in the target building, which has been regarded as on a per-square-meter basis (yuan/m2), were employed to build a
an efficient variable to reflect the prefabrication level of a building. general base for the cost-effective comparison.

Table 2
Description of the questionnaire.

Part Content Detail

Part I Basic information Location, building type, gross floor area, total cost
Part II Prefabrication information Volume of prefabrication, prefabrication rate, volume of each prefabricated component
Part III Cost information Cost on design, offsite manufacturing, transportation, and onsite construction
 J. Hong et al. / Journal of Cleaner Production 172 (2018) 649e660 653

Table 3
Building profiles of the eight sample buildings.

Unit Sichuan Shanghai Shenzhen

P1 P2 P3 P4 P5 P6 P7 P8

Building basic information Building type R R R R R R R R

Structure FSS FSS FSS FSS FSS FSS FSS FSS
2
Gross floor area m 7770 6890 38,352 9467 7039 28,522 13,600 8000
Total cost Million yuan 15.8 16.6 61.7 19.1 14.8 43.9 40.3 38.1
Prefabrication technology Volume of prefabrication m3 933 1250 2891 1089 804 1740 2312 2080
Precast rate % 41 59 20 40 44 15 40 60
Precast facade m3 850 769 0 0 415 1296 1195 1127
Precast form m3 0 0 0 811 0 0 229 0
Semi-precast slab m3 0 401 2240 0 265 0 563 574
Precast balcony m3 28 55 498 167 74 301 138 82
Precast staircase m3 32 26 153.4 89 36 142 187 297
Precast air condition panel m3 24 0 0 22 7 0 0 0

Note: FSS represents the frame shear structure.

Table 4
Decomposition of the basic cost for six prefabrications.

Unit Precast facade Precast form Semi-precast slab Precast balcony Precast staircase Precast air condition panel

Thickness mm 180 85 70
Concrete m3 0.9 0.98 0.84 0.84 0.84 0.84
Steel kg 131 119 152 285 133 161
Embedded part kg 142 121 0 31 11 25
Template use yuan 128 247 300 95 224 95
Labor cost yuan 544 770 783 439 439 439
Construction machine use yuan 24 52 57 22 22 22
Maintenance yuan 49 97 114 50 50 50
Finish protection yuan 30 64 71 20 20 20
Transportation yuan 207 437 214 180 202 180
Profit and tax yuan 639 776 628 643 463 486

4. Development of costebenefit analysis framework mostly based on the interview or questionnaire instead of sys-
tematic quantitative analysis. This study aims to fill these research
In previous research, most of the cost-related studies focused on gaps using the firsthand qualitative and quantitative data collected
the overall cost investigation rather than considering the pre- through field survey. Jaillon and Poon (2009) indicated that the
fabricated part separately. A costebenefit analysis framework, major type of prefabricated components used in the Hong Kong
particularly for prefabricated buildings, was conceptualized and construction industry includes precast facades, semi-precast slabs,
developed to provide a holistic understanding of the cost- precast staircases, precast beams and structural walls, precast
effectiveness of prefabrications to address such weakness. The to- bathrooms, precast kitchens, precast balconies, and precast internal
tal cost of prefabricated buildings has been further decomposed partitions. Precast façades, partition walls (drywall) parapet, stair-
into four categories, namely, design, prefabrication part, cast-in- cases, and semi-precast slabs are the most commonly adopted
situ part, and onsite construction, to distinguish the difference precast elements. Some pilot projects have even adopted compli-
between precast and conventional construction. cated volumetric precast units, such as precast volumetric kitchen
and bathroom and structural walls to extend the precast compo-
4.1. Cost for design (C1p ) nent coverage to 65% (Tam, 2007). Mao et al. (2013b) investigated
the greenhouse gas (GHG) emissions from three common pre-
According to the field survey, interviewees also emphasized that fabricated components, namely, facades, staircase, and slabs. Given
prefabrication is a relatively new and innovative technology the current development of prefabrication technology and the data
applied in the construction process; thus, it needs to be elaborately availability in China, this study focuses on six typical types of
designed and scheduled in advance. This process is indispensable prefabricated components, which are regarded as the major pre-
and can be taken as a premise for prefabrication application, fabrications used in the building construction in China.
particularly in China where the necessary practical experience and This study divided the basic cost of prefabricated components
professional guidance are lacking. Therefore, in addition to the into the following six items for further economic investigation: cost
p p p
expenses in manufacturing, transportation, and on-site construc- of the main materials (C21 ), labor input (C22 ), machine use (C23 ),
p p
tion process, extra cost needs to be paid for the additional service miscellaneous work (C24 ), transportation (C25 ), and profit and tax
p
provided by the professional consultant (e.g., architect, quantity (C26 ). In this study, miscellaneous work, which is necessary for a
surveyor, and engineer) and designer. The major additional services temporary component store, involves daily maintenance and pro-
provided in the pre-construction stage, as mentioned by the in- tection after manufacturing in the offsite factory. Transportation for
terviewees, are summarized in Table 5. precast construction includes two steps, namely, moving raw ma-
terials to the fabrication plant and transporting prefabricated
4.2. Cost for prefabricated part (cost for cast-in-situ counterpart) components to the construction site. This systematic logistics
p
(C2 ) process has considerable challenges, not only requiring an appro-
priate plan for the on-time delivery of materials and components
In previous research, cost estimation in related studies was but also needing additional protection of loading and fixation when
654 J. Hong et al. / Journal of Cleaner Production 172 (2018) 649e660

Table 5
Additional services in the pre-construction stage of precast construction.

Additional service Features

p The number of drawings is 3e5 times that of the conventional construction method
Drawing work (C11 )
p The labor force is 2e4 times
Labor input (C12 )
p The period for the design stage is 1.5e2 times
Design cycle (C13 )
p Additional professional fees of architect, quantity surveyor, and engineer
Offsite production guidance (C14 )
p Professional 3D software is needed for collision check
Conflict examination (C15 )
p Additional bidding fee for prefabrication suppliers
Bidding (C16 )

transporting prefabricated components. Moreover, paying extra the joint part to connect prefabrications and cast-in-situ concrete.
cost to clients or contractors in improving the quality of onsite road Additional reinforced steel should also be provided in the interface
and extending the paved road area for prefabrication trans- when pouring purchased concrete to prevent cracking. Conse-
portation are necessary. According to Lu and Yuan (2013), the quently, the steel intensity of the cast-in-situ part between precast
average cost for prefabrication transportation takes up 18% to 20% and conventional buildings is different. According to Li (2012), the
of the total cost. With regard to the cost of wastage in the amount of steel used in prefabricated buildings is 10% to 60% more
manufacturing process, prefabricated construction has been than that in conventional buildings.
considered a key strategy to promote construction waste reduction
(Baldwin et al., 2009). Tam et al. (2007) also indicated that one p
4.4. Cost for onsite construction (C4 )
effective method to reduce building wastage generation is to apply
prefabrication in the building. In contrast to the traditional con- According to the interviews with contractors, prefabricated
struction method where executing concrete casting and assembly components are manufactured in the factory separately and
works in the confined area is the process, the manufacturing of considered for onsite assembly in the general situation. On the one
prefabrication which benefits from industrialized mass production hand, some costebenefits can be obtained from the use of pre-
can handle and store building component precisely, resulting in fabrication instead of purchasing cast-in-situ concrete. For
approximately zero wastage in the manufacturing process. Ac- instance, the onsite installation of windows and doors in the con-
cording to the survey conducted by Lu and Yuan (2013), the ventional construction method is replaced by preinstallation in the
wastage level in the prefabrication transportation process is also offsite factory. Also, from the perspective of onsite management,
approximately zero because of few damages in this process. the standardization and uniformed design of prefabrication enable
Therefore, the percentage of waste materials in the upstream pro- clients to improve construction efficiency and maximize material
cess of precast construction is significantly small. In fact, Lu and utilization by reducing engineering changes, maintenance ex-
Yuan (2013) indicated that the wastage rate of the major mate- penses, and wastage generation during the building construction
rials consumed in the manufacturing process is lower than 2% by process. By contrast, the considerable extra cost has been spent on
weight. By contrast, the percentage of wastage materials in the additional works associated with onsite installation and subas-
conventional construction method is comparatively high. Table 6 sembly works, such as horizontal transportation and vertical lifting,
summarizes the wastage rate of common building materials used during the building construction process. Additional miscellaneous
in previous research. Concrete and steel bar, as the two major works, such as unloading, protection, and storage prefabrication,
materials used in the manufacture of prefabrication, were wasted are also required for precast construction. These manipulations
from approximately 7% to 8% in the conventional construction need assistance from advanced construction technologies and
process. However, according to Tam et al. (2007) and Jaillon and additional equipment, which may increase cost.
Poon (2009), using prefabricated components minimizes more In summary, from the aforementioned cost categories and dif-
than 50% of construction waste. In addition, the unit price should be ferences with the conventional construction method, the cost-
a comprehensive price, which contains the tax and retailer profit. ebenefit analysis framework can be developed, as shown in Fig. 2.
Therefore, according to interviewees, we assume that the profit and
tax were equal to 25% of the cost of materials, labor, and machine. 5. Analysis of the results

p
4.3. Cost for cast-in-situ part (C3 ) 5.1. Cost decomposition of common prefabricated building
components
In the prefabricated building system, additional materials are
necessary to combine prefabrication and cast-in-situ part to ensure A cost breakdown of the target prefabricated components is
the quality and integrity of the entire building, particularly in shown in Fig. 3. During the fabrication process, material use is
comparing with the conventional construction method. For identified as the major contributor to the total cost. The quantity of
instance, steel-made connectors and fixings are commonly used in steel is to a large extent dependent on the basic function and

Table 6
Wastage rate of typical building material.

Conventional construction Prefabrication

Blengini (2009) Poon et al. (2001) Tam et al. (2007)

Concrete 7% 3e5% 4e7% 0.5e3.5%

Steel bar 7% 1e8% 3e8% 0.2e4%
Timber 7% 5e15% 4e23% 0.6e12%
Block/brick 10% 4e8% 5e8% 0.6e4%
 J. Hong et al. / Journal of Cleaner Production 172 (2018) 649e660 655

Method Prefabricated building Traditional building

Cost of design (Cp1)

Drawing work (Cp11)
Labor input (Cp12)
Process-based Cost of design
Design cycle (Cp13)
estimation (Ct1)
Offsite production guidance (Cp14) Cost
Clash detection (Cp15) difference
Bidding (Cp16) (Cp1-Ct1)

Cost of prefabricated part (Cp2)

Materials (Cp21)
Cost of cast-
Labor input (Cp22)
Process-based in-situ
Machine use (Cp23)
estimation Cost counterpart
Miscellaneous works (Cp24)
difference (Ct2)
Transportation (Cp25)
(Cp2-Ct2)
Profit and tax (Cp26)

Cost of cast-
Experience-
p Cost in-situ
based Cost of cast-in-situ concrete part (C 3)
difference concrete part
estimation
(Cp3-Ct3) (Ct3)

Cost of onsite construction (Cp4)

Experience- Machine use (Cp41)
based Installation (Cp42) Cost Cost of onsite
estimation Unloading (Cp43) difference construction
Process-based Lifting (Cp44) (Cp4-Ct4) (Ct4)
estimation Protection (Cp45)
Storage (Cp46)

Fig. 2. Costebenefit analysis framework.

structure requirement of a particular type of prefabrication, but still miscellaneous works, such as finish protection, offsite mainte-
contributes most to the total cost because of its large quantity and nance, storage, and transportation. In contrast to the conventional
comparatively high unit price in building the material market. material transportation process, the logistics of prefabrications
Generally, concrete and steel are responsible for 30% to 55% of the requires a careful loadeunload control process and additional
total cost. In addition to the cost of material use (e.g., steel and protection and fixation to avoid possible damage during trans-
concrete), labor input also plays an important role in the economic portation. In this study, the cost of transportation ranges from 6% to
performance of prefabrications, accounting for 14% to 24% of the 11%. Lu and Yuan (2013) indicated that the overall expenses of
total cost. More importantly, compared with the traditional con- prefabricated components transported from Guangdong to Hong
struction method, additional expenses are needed for Kong took up 18% to 20% of the total cost after interviewing people

5
(Thousand Yuan)

Major materials Labor input Machine use

Miscellaneous work Transportation Profit and tax
4

0
Precast Precast Semi - Precast Precast Precast air
facade form precast slab Balcony staircase condition
panel
Fig. 3. A cost breakdown of the target prefabricated components.
656 J. Hong et al. / Journal of Cleaner Production 172 (2018) 649e660

from prefabrication companies. This percentage occurred under the

cross-border transportation, which may be slightly higher than the
normal situation. Therefore, the proportion obtained from this
study is reliable and valid. In summary, typical structural bearing
components (e.g., precast form and facade) and cantilevered
structure (e.g., precast balcony) are more steel-intensive, which
leads to a relatively higher unit price. By contrast, the cost of precast
staircases and air conditioning panel is comparatively low.

5.2. Cost examination of prefabricated buildings

A number of studies indicated that the unit cost of prefabricated

buildings was estimated as 2% to 17% higher than the conventional
buildings (Lu and Yuan, 2013; Jaillon and Poon, 2008). Therefore,
investigating the drivers behind the incremental cost from adopt-
ing prefabrication technology during the building construction
process is necessary. Fig. 4 presents a breakdown of the total cost
intensity of eight prefabricated buildings by reordering the sample
buildings according to their precast rate. The cost intensity was
generally positively correlated with the precast rate. In other Fig. 5. Regression analysis of total cost intensity and precast rate.

words, the extent of prefabrication adopted directly determines the

cost-effectiveness of buildings. Mao et al. (2016) made a similar
conclusion that a higher percentage by precast volume resulted in a
higher cost. Meanwhile, the cost of the prefabricated building en-
velope (e.g., precast facade and form) is the major driver of the cost
incremental when compared with other types of prefabricated
components.
A series of regression analyses were conducted to further
explore the relationship between precast rate and cost intensity of
prefabricated buildings. The results showed that the total cost in-
tensity (Fig. 5) and incremental cost intensity (Fig. 6) were signif-
icantly positively correlated with the precast rate of the eight target
buildings. Therefore, the improvement of prefabrication utilization
forgoes the current economic benefit in China. Such heavy cost
burden from adopting the prefabrication technology has impeded
the promotion of precast construction in China.
A comparative analysis was conducted under the precast and
conventional scenarios based on the cost items listed in the
analytical framework to explore the main drivers behind the cost
increase of prefabricated buildings. Fig. 7 shows the cost intensity
of prefabricated buildings and conventional counterparts. Buildings
constructed under prefabrication technology were 26.3% to 72.1% Fig. 6. Regression analysis of incremental cost intensity and precast rate.

higher than those built with the traditional model, ranging from
372 yuan/m2 in Project 6 to 1028 yuan/m2 in Project 8. Mao et al.

1250 Precast facade Precast form

Semi-precast slab Precast balcony
(Yuan/m2)

Precast staircase Precast air condition panel

1000 Cast-in-situ part

750

500

250

0
P6 P3 P4 P7 P1 P5 P2 P8
Fig. 4. A breakdown of the total cost intensity of eight prefabricated buildings.
 J. Hong et al. / Journal of Cleaner Production 172 (2018) 649e660 657

(2013a) made a similar conclusion that the adoption of precast were built under the same building type, structure system, and
construction caused 20% higher than the total cost of using con- precast rate and distributed in Sichuan, Shanghai, and Shenzhen,
ventional construction method. Fig. 8 examined the effect of four respectively. Therefore, a detailed comparative analysis of these
cost categories under the costebenefit analysis framework on the three buildings could help to examine the possible effect of
total incremental cost for eight case buildings. Notably, the geographical location on the total cost. The results showed that the
manufacturing of prefabrications is dominant in the total incre- incremental cost intensity was highest in Project 7, followed by
mental cost, ranging from 32.3% to 63.3% in all sample buildings. Projects 4 and 1. This finding relates primarily to the fact that the
Such dominance is primarily induced by the cost occurred in the unit price of materials and labor force is relatively higher in
additional materials and works, such as the use of embedded parts, developed regions (e.g., Shenzhen and Shanghai) than that in
additional miscellaneous work, and challenging logistics process. developing regions (Sichuan). More specifically, Shenzhen is
Given the higher traffic volume than the conventional model and located in the Pearl River Delta Region, which is identified as the
the additional efforts focused on fixation and onsite road prepa- major supplier for the prefabrication sector in the surrounding
ration, the transportation cost increased by approximately 10%. The regions, such as Hong Kong. Consequently, the proper facilities,
second driver behind the cost increase is onsite construction, services, and factories necessary for the entire supply chain of
including machinery cost (vertical transportation), installation, prefabricated housing production are well established. Such
jointing, and onsite storage. Mao et al. (2016) also emphasized the maturity in the construction market of Shenzhen can to a large
importance of additional lifting in precast construction by extent reduce unnecessary preliminary cost during the design,
demonstrating a higher frequency of the use of tower cranes. manufacturing, and transportation stages, which result in a rela-
Moreover, given the difficulties in the scheduling of the design- tively lower unit price than prefabricated projects in Shanghai.
emanufacturingeassembly process, reserving onsite waiting space
for prefabricated components in construction practice is quite
6. Discussions and policy implications
normal. Such temporary storage should be conducted with
considerable care and also needs additional efforts and cost (Tam
According to the findings, three critical factors influencing the
et al., 2015). By contrast, the additional cost occurred in the
cost-effectiveness of prefabricated buildings in the context of China
design and cast-in-situ counterpart was negligibly small. Although
can be summarized. The factors are as follows: precast rate, types of
the complex design was identified as a major factor causing
prefabricated components adopted, and market maturity of the
increased cost (Gasparri et al., 2015; Luo et al., 2015; Molavi and
local construction market.
Barral, 2016), this part was insignificant because of a relatively
Given the economic impact of precast rate is rarely investigated
lower labor cost in the context of China. The consultant services and
in previous studies, this study provides solid evidence for the tight
drawing work in the design stage resulted in a 4.7% to 12.9% in-
linkage between the cost overrun and precast rate of building
crease, whereas the material changes in the cast-in-situ counter-
projects. The promotion of precast construction may sacrifice the
part only increased 1.6% to 4.3% of the total cost.
economic benefits of the construction projects, which is bound to
In summary, the total cost intensity of prefabricated buildings is
increase the reluctance of clients in implementing prefabrication
significantly positively correlated with the precast rate. The
technology because they are profit-oriented and cost-sensitive in
manufacturing of prefabrications contributed most to the total in-
the construction market. A number of cost-saving strategies should
cremental cost, followed by the onsite assembly, whereas the
be adopted to resolve this dilemma. Maximizing the utilization of
additional cost incurred in the design and cast-in-situ counterpart
offsite fabrication to improve cost efficiency through mass pro-
has only a slight effect.
duction is recommended. Only continuous bulk orders can make
the full use of cost benefit from economics of scale. This technique
5.3. Examination of the effect of geographical location can not only minimize production time and disturbance in the
offsite factory but also enhance the rationalization of the proced-
The influence of the change of geographical location on the cost ures along a production line.
intensity of prefabricated buildings can be further examined by Second, the significant role of the prefabrication manufacturing
keeping other variables static. Table 1 shows that Projects 1, 4, and 7 process in the cost accounting was highlighted in the present study,

3.0 Cost intensity of prefabricated buildings

(Thousand Yuan)

Cost intensity of conventional counterparts

2.4 2.5
2.5
2.0 2.0 2.1
2.0
2.0 1.8
1.6 1.7
1.6 1.5 1.5
1.3 1.4
1.5 1.2 1.2
1.0

0.5

0.0
P1 P2 P3 P4 P5 P6 P7 P8
Fig. 7. Cost intensity of buildings constructed under prefabricated and conventional scenarios.
658 J. Hong et al. / Journal of Cleaner Production 172 (2018) 649e660

P1
70%
60%
P8 50% P2
40%
30%
20% Difference for C1
10%
Difference for C2
P7 0% P3
Difference for C3
Difference for C4

P6 P4

P5
Fig. 8. Proportion of four cost categories in the total incremental cost.

which is also rarely identified in previous research. This may have the costebenefit in the operational phase is still promising. Factory
arisen from the fact that handicraft operation is widespread in the production provides a controlled condition to maximize quality by
offsite factory in the context of China. This requires a tool-based or concentrating on a single element without distraction from a
automatic production system in the fabrication plant to minimize collection of parts and fixations, thereby improving durability to
such high capital cost during the manufacturing process. avoid recurrent maintenance and renovation. With tool-based
Third, the findings of this study show that despite the prefer- assistance and automatic control during the manufacturing pro-
ence of government policy and promising future of prefabrication cess, the precision of components can be further improved to
in the construction industry, the concept of industrialization is only minimize potential conflicts in the onsite installation and reduce
applied to a small part of building components. According to the the frequency of replacement in the building operational phase.
interviews, precast slab, precast staircase, and precast balcony are Recognizing the costebenefit of the precast industry is of
prioritized to precast facade and form with regard to the current importance in providing a better understanding of the economic
practice in China. This practice is mainly because the unit price of property of prefabrication and promote the industrialization of
the prefabricated building envelope is higher that its counterparts building construction in China. Therefore, implementing the cor-
in the traditional construction method. In other words, other cost- responding policies to address the economic barriers identified in
effective alternatives, such as block or brick-made external walls, this study is crucial. First, the empirical results reveal the implica-
are prioritized to concrete-made external walls for the nonbearing tions of the current cost performance of prefabricated buildings in
structure. However, for the places that may be more likely China. Given the ranges of incremental cost by adopting different
vulnerable to damages from typhoon and extreme weather, such as types of prefabrications, the local government can provide financial
Hong Kong, a prefabricated building envelope with a higher inte- support with different levels of subsidies not only for stakeholders
grality and quality should be selected to ensure safety. Moreover, in but also for suppliers to encourage the application of prefabrication
addition to a higher cost, the precast building envelope is also technology. Such incentive can make a rapid return on the cash
energy-intensive according to the study of Hong et al. (2016). flow for clients, which is essential for the operation of their com-
Therefore, developing multi-performance materials, which are not panies. Second, policies should be biased toward improving the
only environment-friendly but also cost-effective for prefabricated maturity of the precast market because offsite production is still in
components, is challenging but necessary. an initial stage in China. The local government should promulgate
Fourth, the extent of industrialization of the construction mar- technical guidance, build the corresponding facilities, attract
ket in a particular region also indirectly influences the cost in- experienced stakeholders, encourage professional suppliers, and
tensity of prefabricated buildings. The lack of necessary train specialized workers in the property market, which could
prefabrication facilities, experienced stakeholders, and prefabrica- effectively facilitate the implementation of prefabrication tech-
tion suppliers can increase the preliminary cost in the upstream nologies at the pre-construction stage, reducing additional cost
process of building construction. In fact, according to the in- spent on prophase investigation. Third, given a relatively higher
terviews, such hidden cost is particularly significant, which is proportion of component manufacturing in the total cost changes
estimated to be 120 yuan/m2 to 150 yuan/m2. Interviewees for prefabricated buildings, replacing manual operations with
emphasized that a mature construction market with highly evolved computer-based or tool-based control systems to enhance the level
industrialization enables the effective reduction and management of automation, ensure the precision, and improve the productivity
of the cost incurred in the preliminary stage. Therefore, the of the manufacturing process is imperative.
immaturity of the prefabrication market is another barrier in the
current practice given the backwards development of precast 7. Conclusions
construction in China.
Moreover, although the unit cost was estimated relatively In summary, a costebenefit analysis framework has been
higher in the embodied phase of prefabricated buildings, earning established to examine the cost performance during the
 J. Hong et al. / Journal of Cleaner Production 172 (2018) 649e660 659

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