Cost-benefit analysis of modular building manufacturing automation: a new path for affordable housing

Introduction

Modular construction, as an effective means of addressing the demand for affordable housing in urban areas, is gaining attention in the global engineering industry. However, its promotion still faces challenges such as high initial investment and a shortage of skilled labor. Recently, a study published in *Frontiers in Built Environment* conducted a detailed cost-benefit analysis (CBA) of automation in modular construction manufacturing, revealing the significant potential of automation to improve production efficiency and reduce long-term costs. The study, completed by Enaam Ouda and Mahmoud Haggag from the United Arab Emirates University, provides important decision-making references for the global engineering construction industry.

Project Background

Modular construction, which involves prefabricating components in a factory environment and then transporting them to the site for assembly, can significantly shorten construction time, improve quality, and reduce material waste. Particularly in the affordable housing sector, modular construction, through economies of scale and process optimization, has the potential to lower construction costs. However, manual module manufacturing still faces efficiency bottlenecks. Automation—including the use of robotic arms for framing, welding, insulation, and panel assembly—is seen as a key technology to overcome these bottlenecks. Yet, its high initial investment and maintenance costs raise questions about economic feasibility.

Key Developments

The study adopts a two-stage quantitative approach. The first stage, based on simulation results from the authors' previous research, compares production times between manual and automated factory setups; the second stage collects and compares cost data for both setups, including labor wages, robot and equipment costs, and energy consumption.

• Core findings include:
• Production efficiency improvement: Automation reduces production time per unit by approximately 40%.
• Labor cost reduction: Labor cost per unit decreases by 69.7%.
• Energy cost savings: Energy consumption cost per unit drops by 11.6% after automation.
• Return on investment: Although the investment in robotic systems for automation is about 321% higher than that for manual setups, and annual maintenance costs increase proportionally, the long-term savings and efficiency gains lead to a payback period of approximately 3 years. Indicators such as net present value (NPV) and benefit-cost ratio (BCR) all demonstrate the economic feasibility of automation.

Industry Impact

The findings of this research offer important insights for the global engineering construction industry. With accelerating urbanization and rising labor costs, automation in modular construction manufacturing is poised to become a key technological pathway for affordable housing provision. Contractors such as Bechtel, Fluor, AECOM, and the China State Construction Engineering Corporation can optimize production systems through this approach to reduce costs and improve efficiency. Additionally, equipment manufacturers like Caterpillar, Komatsu, and ABB will also benefit from the growing demand for automation.

Automation not only reduces reliance on on-site skilled labor but also improves quality consistency through standardized production, reducing rework and material waste. This holds dual value for addressing global housing shortages and promoting sustainable construction.## Challenges and Risks

Despite the optimistic conclusions, the study also points out several limitations and challenges. The current analysis only focuses on the direct costs and benefits of the main manufacturing process, without considering idle time, indirect costs, and environmental and quality impacts. Moreover, the initial investment in automation systems is huge, and small and medium-sized enterprises may face financial pressure; maintenance and software updates require specialized technical personnel, further increasing operational complexity.

Future research should expand the scope of the model to cover complete factory operations, electromechanical integration, logistics, and on-site assembly, and apply probabilistic sensitivity analysis to capture uncertainty. At the same time, the impact of automation on employment structure also requires assessment at the industry and societal levels.

Future Outlook

This study provides a solid economic basis for the automation of modular building manufacturing. As technology matures and costs decrease, automated factories will become standard configuration for affordable housing construction. Global infrastructure investment trends show that industrialized construction and digital engineering are reshaping the construction industry. The successful experience of modular automation can be extended to other engineering fields, such as data center construction, industrial park development, etc., promoting the modernization transformation of the entire engineering industry.

Conclusion

The automation of modular building manufacturing excels in reducing production costs and shortening construction periods. Although the initial capital investment is high, the payback period of about 3 years makes it an economically viable option. This study provides a quantitative tool for decision-makers in the engineering industry, helping to accelerate the supply of sustainable affordable housing in the process of global urbanization. In the future, with the integration of green building standards and digital technologies, automation will play a more central role in the field of engineering construction.