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Restoring Canada’s Housing Affordability and Cutting Carbon Emissions: The Modular Construction Approach

To restore housing affordability, the Canada Mortgage and Housing Corporation (CMHC) projects that Canada will need an additional 3.5 million housing units beyond those currently under construction [1]. But how can this be achieved while saving time, reducing costs, ensuring inclusivity, and minimizing climate impact? The solution lies in building more while emitting less, considering construction contributes 11% of global emissions. The challenge is to achieve a housing boom without causing a climate bust, and modular construction presents a promising solution.

Understanding Modular Construction

For a long time, the construction industry has struggled with productivity compared to other sectors. Modular construction provides a potential breakthrough by relocating various building tasks from conventional construction sites to factory environments, where off-site, manufacturing-style production can be implemented.

Modular construction involves producing standardized components of a building in an off-site factory, which are then assembled on-site. Terms like “off-site construction,” “prefabrication,” and “modular construction” are often used interchangeably. This method ranges from connecting single elements using standard interfaces to assembling complete 3-D volumetric units with full fixtures.

The Construction Industry Institute (CII) [2] defines modular construction as substantial off-site construction and assembly of components and areas of the finished project. While not a new concept, technological advancements, economic demands, and changing mindsets have led to a surge in interest and investment in modular construction. This method can potentially boost industry productivity, address housing crises, and reshape traditional construction practices.

Benefits of Modular Construction

What are the benefits of modular construction? A traditional benefit would be looking at the project schedule, cost, and quality [3].

  • Project Schedule: Modular construction significantly reduces project timelines by allowing for concurrent site preparation and module fabrication. This method can cut project completion times by 40% compared to traditional methods, which is crucial for projects requiring quick turnarounds, such as post-disaster reconstruction [4].
  • Project Cost: The controlled environment of factory settings reduces material waste and labour costs, leading to overall cost savings. A 10%-25% reduction in construction costs is expected with modular construction due to efficient installation, reduced material transportation, and standardized design procedures [5].
  • Project Quality and Productivity: Factory-controlled environments ensure consistent quality across building components. The assembly-line approach enhances productivity, resulting in higher-quality buildings produced in shorter timeframes.

Additionally, modular construction offers significant environmental and social benefits [6].

  • Environmental Benefits: Modular construction is more sustainable than traditional methods, with efficient material use, reduced waste, and lower transportation emissions. This method addresses the environmental challenge of waste generation and reduces the carbon footprint of construction projects.
  • Labour Safety: With much of the construction work completed in a factory, modular construction reduces on-site labour requirements, leading to safer working environments with fewer accidents and injuries.
  • Diversity, Equity, and Inclusion (DEI): Modular construction offers more inclusive and gender-equal opportunities by allowing building components to be constructed in enclosed spaces, mitigating the harsh conditions often associated with traditional construction sites.

Carbon Reduction in Buildings

Residential, commercial, and institutional buildings contribute 17% of Canada’s greenhouse gas (GHG) emissions. Building materials and construction bring that number closer to 30%, making the building sector Canada’s third-highest carbon emitter [7]. Modular construction offers the opportunity to reduce both embodied and operational carbon.

The construction industry is increasingly aware of the importance of reducing embodied carbon—the carbon emissions associated with materials and construction processes throughout a building’s lifecycle. Modular construction can significantly cut embodied carbon. For example, two modular residential developments showed a 41% and 45% reduction in embodied carbon compared to traditional reinforced concrete buildings [8].

Reducing the carbon footprint of buildings starts with choosing materials that have a lower environmental impact. For instance, reinforced concrete, widely used in traditional construction, has an average embodied carbon of 370 kg per m³ in Canada, as reported in the 2023 CLF North American Material Baselines Report [9]. Producing and transporting such materials requires a significant amount of energy, contributing heavily to the building’s overall embodied carbon.

Modular construction offers a solution by often employing lighter materials, which not only reduces the carbon emissions associated with transportation but also allows for the shipment of larger quantities at once. Using sustainable materials like timber in modular construction further cuts down on embodied carbon.

This method also benefits from precision manufacturing, which decreases waste and the energy needed to process materials. Moreover, modular buildings have the advantage of being easily deconstructed, recycled, and repurposed. This flexibility not only lowers the embodied carbon but also allows for the creation of custom buildings from recycled components, extending the lifespan of the materials and reducing environmental impact.

Modular construction also addresses operational carbon. By incorporating design strategies and technologies that reduce carbon emissions during the building’s operational phase, this construction method helps mitigate the negative effects new buildings can have on the environment and local communities.

Social Factors and Industry Shifts

The Canadian Construction Association emphasizes the importance of diversity and inclusion in the industry, especially with the retiring baby boomer workforce [10]. Recruiting traditionally underrepresented groups, such as women, Indigenous Canadians, and new Canadians, is crucial.

In 2020, BuildForce Canada estimated that of the nearly 1.1 million tradespeople employed in the industry, women made up only five percent. And only about five percent of the country’s construction labour force was made up of Indigenous people [11].

Modular construction, with its safer and more controlled working environments, can attract and retain these groups, enhancing workforce diversity and inclusion.

Realizing the Benefits of Modular Construction

Realizing the benefits of modular construction will require a range of stakeholders to make strategic choices.

  • For developers, the first step is identifying segments of their portfolio that can serve as the “product core,” focusing on volume and repeatability. This approach involves collaborating with the supply chain to optimize designs for manufacturability, balancing quality, cost, and time savings.
  • Investors need to understand which markets are most likely to be disrupted and identify trends that will determine the winners and losers. This sector offers unique opportunities for smart investors seeking to capitalize on emerging trends.
  • Building materials suppliers will experience a shift in customer dynamics as prefabricated construction gains traction. Cement companies, for example, may be impacted if cross-laminated timber and steel-frame modules become more popular. Suppliers will need to adapt to a new landscape where their customers might be large manufacturers rather than traditional distributors or installers. They may also find opportunities in the prefabrication space due to their expertise in construction and manufacturing.
  • Public-sector entities can also benefit from modular construction, especially for large-scale projects with repeatable elements, such as schools and affordable housing. They can facilitate modular adoption by updating building codes and streamlining approval processes, which can expedite factory approvals and reduce on-site inspection requirements.

Canada’s Government Initiatives for Rapid Housing

The federal, provincial, and municipal governments are supporting modular construction to increase housing stock. The Ontario government provides comprehensive guidelines on building modular houses [12] while the BC government offers up to $500,000 to support mass timber projects [13]. The CMHC Rapid Housing $1 billion Initiative is another program that aims to address urgent housing needs through the rapid construction of affordable housing [14]. Additionally, the federal government has announced $6 billion in funding for housing-related infrastructure, with conditions to adopt changes to the National Building Code for more accessible, affordable, and climate-friendly housing options [15]. 

Modular construction offers a path to achieving affordability, sustainability, and inclusivity in housing. If your company is interested in incorporating modular construction into your strategy, contact us.


[1] CMHC, “Housing shortages in Canada: Updating how much housing we need by 2030.” Accessed: Jun. 28, 2024. [Online]. Available:

[2] CII, “CII – Modularization.” Accessed: Jun. 28, 2024. [Online]. Available:

[3] S. Karthik, K. Sharareh, and R. Behzad, “Modular Construction vs. Traditional Construction: Advantages and Limitations: A Comparative Study,” Proc. Creat. Constr. E-Conf. 2020, pp. 11–19, 2020, doi: 10.3311/CCC2020-012.

[4] W. Ferdous, Y. Bai, T. Duc Ngo, A. Manalo, and M. Priyan, “New advancements, challenges and opportunities of multi-storey modular buildings – A state-of-the-art review – ScienceDirect.” Accessed: Jun. 28, 2024. [Online]. Available:

[5] CII (Construction Industry Institute), “CII (Construction Industry Institute): Transforming… – Google Scholar.” Accessed: Jun. 28, 2024. [Online]. Available:

[6] BuildingGreen, “The Potential of Prefab: How Modular Construction Can Be Green | BuildingGreen.” Accessed: Jun. 28, 2024. [Online]. Available:

[7] CAGBC, “Building climate solutions,” Canada Green Building Council (CAGBC). Accessed: Jun. 28, 2024. [Online]. Available:

[8] R. Journal, “Two modular towers show huge reduction in embodied carbon | RIBAJ.” Accessed: Jun. 28, 2024. [Online]. Available:

[9] CLF, “2023 CLF North American Material Baselines Report – Carbon Leadership Forum.” Accessed: Jun. 28, 2024. [Online]. Available:

[10] Canadian Construction Association, “The value of diversity and inclusion in the Canadian construction industry.” 2019.

[11] BuildForce, “Canada’s construction industry rebounds post-pandemic, with more muted growth to come | BuildForce Canada.” Accessed: Jun. 28, 2024. [Online]. Available:

[12] Ontario Government, “Building a modular house |” Accessed: Jun. 28, 2024. [Online]. Available:

[13] BC Mass Timber, “Mass Timber Demonstration Program |.” Accessed: Jun. 28, 2024. [Online]. Available:

[14] CMHC, “Rapid Housing Initiative.” Accessed: Jun. 28, 2024. [Online]. Available:[15] P. M. of C. Canada, “Growing communities and building more homes, faster,” Prime Minister of Canada. Accessed: Jun. 28, 2024. [Online]. Available:

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