Let’s Talk Modular Construction

Ken Puncerelli, CEO of LAI Design Group discusses modular construction with John McMullen, host of the podcast Inside Modular.

Inside Modular: Episode 54 – Modular Construction with Ken & John

John McMullen : (00:00)
Hello, and welcome to Inside Modular, the podcast of commercial modular construction, brought to you by the Modular Building Institute. Welcome everyone. My name is John McMullen. I’m the marketing director here at MBI. Today I’m talking with Ken Puncerelli, CEO, at LAI Design group. Ken is here to talk about modular construction from an architectural and development point of view and give a preview of his upcoming session at MBA’s 2023 World of Modular. Ken, thanks for being here.

Ken Puncerelli: (00:30)
Hey, John, thanks so much for setting this up. We really appreciate it. We’re flattered to be here.

John McMullen : (00:35)
It is absolutely my pleasure, so let’s dive in. Tell me about yourself.  What’s your background and how did you get started in architecture and development?

Ken Puncerelli: (00:44)
Well, that, that’s a really good question, the funny thing is, as a kid, I always loved real estate. It’s the weirdest thing. I used to ride my bike, through neighborhoods of Tenafly, New Jersey, which is near, the George Washington Bridge. It takes, takes you to New York City. And a friend of mine by the name of, Jean Bowen, lived in a really nice neighborhood, and I used to help him with his paper route. And, he and I had snowing routes and lawn mowing routes and did landscaping and all this stuff and so I really loved real estate. Then I found myself, through high school, junior high really, working construction jobs for Masons and carpenters back before they had child labor laws, which I’m not sure if those are really good to have. I think it should work. But anyway, I did that as a kid. And then when I got into college, I studied design. And then at a graduate level, I also studied, business and finance and I think finance is, one of the most important things to, for a design professional, to kind of bring the whole world of development together, just because you then become the complete left brain, right brain professional, and you can be the best advocate for your client.

John McMullen : (02:16)
Look, I have not heard that point of view before that, but that makes a lot of sense, so tell me about when you started incorporating modular construction into, into your portfolio. When did you get interested in, in that?

Ken Puncerelli: (02:28)
Well, that’s a good question. So what actually ended up happening is Modular found us. We didn’t find modular if the truth be told and that happened about either 2003 or 2004. And we had a modular manufacturer actually, by the name of Guerdon Enterprises and they’re very well known in the industry. And, they were fairly new, as well. They were, I wouldn’t say startup company, but they were a new company, at that time in the early twos. We did a workforce housing project for them in Gypsum, Colorado work together, again for probably close to a decade. And it wasn’t by choice, it was just kind of happenstance. We, all went in different directions, and then we got reacquainted in North Dakota about 2010, 2011 until everything kind of died down from a development standpoint in early 2015. So we found ourselves, reacquainted and reengaged with and others, in that region of the US. It was actually pretty cool.

John McMullen : (04:01)
So tell me about the, the, the project itself. Did you have any challenges? I know modular can be sort of a, a, a very different sort of, a skillset when it comes to, design and construction. What were, what were your big hurdles for those, first projects?

Ken Puncerelli: (04:16)
Yeah, so, you know, that is something that really comes down to understanding the parameters for design as well as shipping, logistics, client expectations about what modular is and what it isn’t. Now my philosophy is that you can hang, when I say hang, you can ornament or put ornamentation on any building using modular or virtually any building using a modular construction delivery method but really the biggest thing that we had to wrap our brains around is, okay, how big is a bedroom, for example? And then how does that translate into a master en suite? If you’re thinking about an apartment then how does that width translate into a hallway and then to a mirror image apartment on the other side? So once you started wrapping your brain around the minimum and maximum, as well as optimum widths of a modular box, as well as maximum length for shipping and putting that box on a low boy truck, then the world kind of becomes your oyster. Then you can kind of wrap, wrap your brain.

John McMullen : (05:50)
So now that your brain is wrapped around modular construction, tell me about how your process starts, now once you, once you understand the scope of a project, what’s your first step?

Ken Puncerelli: (06:02)
So because our firm is involved in…we have landscape architects that do land planning and zoning.  I myself am trained in both architecture and landscape architecture. And so, we start by programming of the site, how big is the site? Then just like you would with a site-built project, what’s the intended building use in square footage or number of apartments that the developer wants and hotels or, or anything else like that. So we start out the really the same way that we would with a site-built project and kind of go from there.

John McMullen : (06:48) So one question I like asking, architects and designers, because you have definitely a different point of view than, you know, manufacturers or anyone else. Are most modular products very similar from your point of view? Or, does each project need to have a unique module design that that requires sort of, starting from scratch?

Ken Puncerelli: (07:10)
Okay, so conceptually, yes, they’re similar, but each is unique because given the fact that each site is different, oftentimes each client because of either the site or the economic projections of a client’s project dictate something unique about it, it’s that, and site-built projects have that same common denominator, you know. So we begin really by sketching prototypical floor plans using a modular grid system, and using the pattern of sizes and shapes that can re, that can be produced in the factory using that system. And then, like I intimated before, we also need to keep in mind the maximum widths and links for shipping purposes. So we can’t just think about design, we have to think about engineering and logistics. And so really the optimum width of a modular box itself is about 14 feet wide. You can go down to 10 and you can go up to about 20.

Ken Puncerelli: (08:32)
And I’ve heard people talk about going to 21 or 22, but when you get up to about 16 feet wide you need additional assistance in the transportation of that project. So you need escorts, you know, the chaser cars mm-hmm. with the lights and everything to alert other drivers on the interstates that, you know, you’ve got a wide load semi, all in these boxes down the road. So, that’s, that’s another part of it. And then lastly, the, the one major difference with modular versus a site built is because the ground floor, if it’s not a site-built ground floor, like a podium, parking garage, or the first floor of a hotel that’s got all of the, lobby and all of that kind of stuff in it the first floor will have a crawl space underneath the foundation. So that’s, something you have to wrap your head around, when, when designing a module.

John McMullen : (09:46)
So in terms of modular structures themselves, is there a difference, in the design of a module that’s intended, say, for a single-family home versus a multi-family or a hotel project? Or are they all generally the same?

Ken Puncerelli: (10:00)
The short answer is yes. They are different. So a house falls under, a different set of, construction standards, whereas multi-family hotel and other commercial structures have a host of additional requirements. And these include sprinkler systems, fire rated assemblies, sound, sound attenuation between apartments or hotels, ADA, which is, which encapsulates, design in, in hotels in particular site impaired hearing impaired, as well as wheelchair accessibility. Whereas oftentimes in a multi-family setting, it’s, it’s often just, the wheelchair accessibility. But, and then in addition to that, there’s occupancy loads, for fire and fire separation, I think I mentioned sprinkler systems as well as other structural considerations such as shear walls. And a lot of these kinds of things are, shear walls are, are somewhat built into the modular design because each, each box has to be its own, sustainable, room, so to speak, and series of walls. And a lot of people ask me, well, Jesus is modular, shoddy construction. I said, no, it’s actually better built than my own personal residence, which I was the designer.

John McMullen : (11:43)
So what don’t people understand about designing for modular construction? Is there something that you find yourself repeating to clients about the process?

Ken Puncerelli: (11:51)
I do. Especially lately, because as I told you, we started in around ’03, ’04 and then we picked it up again, in the next decade and then it went away. It, we found in our shop that clients weren’t asking for a modular, after 2015, it kind of just evaporated in our office until about 2020 when the pandemic hit. And, and so because of that, I now think it’s here to stay. Whereas it was kind of ebb and flow. Cause most people in the construction industry are late adopters. So something new and different is scary than the way they’ve done it for 50 years. So, one thing with mod, when you say it’s modular, it’s manufactured in a factory, you still have to reiterate to a client that keep in mind it’s still construction. You’re not buying an IKEA bookshelf that’s perfectly pristine and without imperfections, this is still construction.

Ken Puncerelli: (13:14)
And there are things that need to be resolved in the field from time to time that weren’t contemplated either in design or they were missed in the factory, or a host of other things. But you should have a healthy appreciation that about 60% of the construction of your new building is done in the factory. The other 40% is on-site. And so, as a result of that, you know, the other biggest thing that I say is make sure you have an experienced contractor build your project. And I think that’s key because as design or construction professionals, we’re also, psychologists. So we have to be able to convey information, even bad news, and come up with solutions. And that’s the best.

John McMullen : (14:14)
So as I mentioned at the top, you are planning to speak at MBI’s upcoming World of Modular and your presentation is about the fundamentals of modular design. I noticed in your session description that you’re going to touch on regulatory permitting considerations as well.  Can you tell me more about what attendees can expect from that portion of your session?

Ken Puncerelli: (14:33)
Yeah, and it’ll be high level at the session, but it’s important for the audience. Some are experienced developers of modular and others are trying to learn about it and get into it. And so one of the things that is important for people to understand, just like when you go through a planning and zoning, submittal, and there’s multiple agencies within, an application, the same is true, for modular. It’s not just pulling a building permit with the local building official. The plans actually are submitted to the state engineer’s office for review. And additionally, there’s third party inspections that occur at the factory for compliance with codes, and I always think, and sometimes this happens and sometimes it doesn’t, it’s not my thinking part, but I always think it’s a really good idea, to meet with local building officials to do a workshop with them and explain how the project works and have your contractor there in attendance.

Ken Puncerelli: (15:47)
It’s not only educational for building official, but it’s also a good relationship builder for all. Because once you’re in the throes of construction, at least everybody’s been briefed on this. And I find that fear comes through ignorance. And if, and if people don’t have relationship begin and they, don’t have any information to begin with, then there’s all kinds of, distrust, fear, and as a result of that, you can have, some real conflicts in the field. So what happens is if you do ADA,  a little workshop type of a meeting, with the building officials to begin with, and I’m talking the local building officials that may not have experienced module before it, it almost functions like a pre-application or a pre-building permit type of meeting to get everybody on the same page about construction details, what’s different from what they’re used to seeing life safety, ADA, fire rated assemblies, how we’re addressing this or that, fire sprinkler systems, all kinds of things like that. So it’s really, it just is a great dialogue. You know, I think, as we all know, in life, if you’re failing to communicate, you’re failing.

John McMullen : (17:09)
Well, you weren’t getting about the, the psychology aspect of your profession. It sounds like you’ve been, well versed in all the ins and outs of good communication with your, with your stakeholders. So that’s, that’s fantastic advice.

Ken Puncerelli: (17:22)
Thank you. Well, my hair did used to be black and I had more of it

John McMullen : (17:25)
So without ruining too much of your presentation, I was wondering if you could walk me through the process of permitting a modular or a prefabricated project, maybe a multi-family residential project. Are there, are there common regulatory hurdles that projects face?

Ken Puncerelli: (17:42)
Sure. So as I stated, the state permit process, once you’re approved, approved, you walk through the local jurisdiction, so you submit to the state, then the local jurisdiction will review the plans. But what happens is they’ll typically defer to the, to the state engineer’s office for approval. Typically, a local building department doesn’t take over, but they, they will do periodic, site inspections, or, or inspections on site. And again, this kind of goes back to my previous commentary about having that workshop meeting.

Because sometimes you can have a local inspector that’s, and we just had this happen that’s new to the building inspection business and new to modular and perhaps wants to make a name for themselves. And so sometimes you can get conflicting direction, from the two agencies, and at the end of the day, you’ve got to satisfy everybody and get the project built. Cause delays are not good for projects. So

John McMullen : (18:58)
No, never are. And you’ll have to forgive my ignorance. I’m going to ask perhaps what, maybe an obvious question is, is the permitting process different for different types of buildings, you know, multi-family versus hotel versus, the parking garage, anything else? And, and in your experience, does it really matter if the project is modular or not?

Ken Puncerelli: (19:16)
Well, I think it does, it is different if it’s modular or not. And, and I think we’ve kind of cited some reasons, but, in addition to that, back to your question about multifamily versus hotel, the big items are exiting the building, smoke detection, fire dampers in your heating ventilation and, air conditioning sprinklers, fire rated assemblies and ADA. So, you know, multi-family building and hotel are very similar, one is an R two, type of building, which is the multi-family, and the hotel is an R one. There are similar things, but a bit more intense because one is a much more intensified commercial building. So ADA, for hearing impaired, visually impaired, those type of things are more prevalent in hotels.

John McMullen : (20:26)
 What’s one piece of advice you might offer to an owner developer who’s thinking about or has decided to use modular construction for the first time? What should, he or she know at the outset?

Ken Puncerelli: (20:38)
That’s a really good question. For me, I would not advocate a developer who has never developed before site-built to use modular. I would say after they’re seasoned from a site-built perspective, then I would say their experiences and expectations about construction will align better because honestly, like all construction projects, nothing is perfect. And sometimes you’re, you’re making modifications in the field to make it work, variety of reasons,

John McMullen : (21:17)
And don’t dive into the deep end of the pool essentially, is what I’m hearing.

Ken Puncerelli: (21:20)
That’s a, that’s probably the best, bit of advice I actually just had a client ask me about that, and he’s never done development before. And I said, you know, I would just do these town homes that you want to do for rent as site build first to get your feet wet in development because there’s enough, headaches with instruction and development, without, as you said, diving into the deep end of the pool.

John McMullen : (21:52)
Very good. So, and again, without ruining too much of your presentation because I don’t want to do that. Can you share what you’re most looking forward to sharing, with the attendees at World of Modular?

Ken Puncerelli: (22:04)
Sure, I want to share design parameters for a variety of case study projects to attempt to take the mystery, myth out of design, using, a modular system. And, and how I start out, my presentation, is showing, really what, modular perception is and what it really is. And then what I do is I go through a series of, case studies, beginning with designing the most simple structure a house, and we go from there into more complex buildings such as multifamily student housing and hotels to just kind of show how, you know, the volumetric parameters of a modular box work in laying out floor plans and how this is the same stuff that you’ve seen before with onsite two by s and Roofing Nails. But it’s a bit different.

John McMullen : (23:14)
 So you’ve, you’ve presented at other shows before, what made you decide that the world of Modular show was a place you wanted to be? What about the show attracted you?

Ken Puncerelli: (23:24)
Well, I think there’s a lot of, great networking, there’s a lot of, different perspectives from people that you, that you meet there, vendors that serve, the industry. So, you know, it’s a really an opportunity to learn.

John McMullen : (23:42)
 What’s next for you?

Ken Puncerelli: (23:44)
So we’re looking at a student housing project in North Carolina, that we did some, conceptual design for about two years ago and now it is actually, coming to fruition with financing. So we’re looking at that, starting up here probably sometime. And then, another student, housing project for a university down in Louisiana that’ll also be modular. We’re doing a couple of townhome projects in Colorado workforce housing where speed to market is the key, along with acknowledging a very short construction season. And then we’re also looking at some hotel projects as well in Alabama.

John McMullen : (24:31)
Very cool. And, lastly, a question I like asking people from all different areas of modular construction. What do you think the next three to five years will be like for the modular construction industry?

Ken Puncerelli: (24:44)
Well, as I, as I stated earlier, I think the construction industry is predominantly, populated by late adopters because you’ve done the same thing for 50 years and if you change, it’s scary, there could be liability associated with it and so forth. So here’s my take. I think the industry will better embrace this method of delivery, now that it’s been around, and become more prevalent for a while, due to labor shortages, tighter construction cycles, improvements in technology and the manufacturing process. And frankly, I think cause of that, it’ll likely, result in better cost structures, for developers.

John McMullen : (25:41)
Excellent answer. Thank you Ken. I really appreciate your time today. It’s been great to talk with you and I’m very much looking forward to seeing you at World of Modular later on in March.

Ken Puncerelli: (25:50)
Well, we are too. Thank you so much. Appreciate the opportunity to speak with you and your audience.

John McMullen : (25:56)
My name is John McMullen and this has been another episode of Inside Modular, the podcast of commercial modular construction. Until next time.

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