Prefab vs Modular: What's the Difference?

“Prefab” and “modular” are often used interchangeably, but they’re not the same thing. Understanding the differences helps you choose the right construction method for your project and communicate clearly with builders and developers.

Quick Definitions

Prefab (Prefabricated): Any building component manufactured off site before being assembled on site. This is a broad category that includes everything from roof trusses to complete buildings.

Modular: A specific type of prefab construction where complete volumetric modules (3D units with walls, floors, and ceilings) are manufactured in a factory and assembled on site.

The relationship: All modular construction is prefab, but not all prefab is modular.

Types of Off-Site Construction

1. Component Prefabrication

What it is: Individual building components manufactured off site.

Examples:

• Roof trusses
• Wall frames
• Floor cassettes
• Staircases
• Bathroom pods

How it works: Components arrive on site and are assembled traditionally. The building is constructed piece by piece, but with factory made parts rather than site cut materials.

Advantages:

• Widely available and understood
• Works with traditional builders
• Flexible to design changes
• Lower transport requirements

Limitations:

• Most work still happens on site
• Weather exposure during assembly
• Requires skilled site labour
• Limited time savings

2. Panelised Construction

What it is: Flat panels (walls, floors, roofs) manufactured in factories and assembled on site.

Examples:

• Structural Insulated Panels (SIPs)
• Cross-Laminated Timber (CLT) panels
• Prefab wall panels with insulation and cladding

How it works: Panels are craned into position and connected. The building shell goes up quickly, with fit out completed on site.

Advantages:

• Faster than traditional construction
• Good quality control in factory
• Flexible designs possible
• Easier transport than modules

Limitations:

• Interior fit out still on site
• Weather exposure after shell
• Requires crane and skilled installers
• Site coordination still complex

3. Modular Construction

What it is: Complete three dimensional modules manufactured in a factory, transported to site, and assembled into finished buildings.

Examples:

• Complete apartment units
• Townhouse sections
• Hotel rooms
• School classrooms

How it works: Modules arrive with internal fit out substantially complete-walls, floors, ceilings, electrical, plumbing, and often fixtures and finishes. They’re craned into position and connected. Site work involves foundations beforehand and connections/finishing afterward.

Advantages:

• Maximum factory efficiency (70-80% of work)
• Minimal site time and disruption
• Highest quality control
• Fastest overall timeline
• Weather independent manufacturing

Limitations:

• Transport size constraints
• Higher upfront design commitment
• Crane access required
• Specialist manufacturers needed

4. Hybrid Approaches

What it is: Combinations of the above methods optimised for specific projects.

Examples:

• Modular core with panelised facade
• Component frame with bathroom pods
• Modular upper floors on traditional ground floor

How it works: Different building elements use different prefab levels based on efficiency, design requirements, and site constraints.

Advantages:

• Optimises each building element
• Flexibility where needed
• Efficiency where possible
• Adapts to site constraints

Comparing the Methods

Time to Completion

Method	Factory Time	Site Time	Total
Traditional	-	12 to 18 months	12 to 18 months
Component	Minimal	10-15 months	10-15 months
Panelised	4-6 weeks	6-10 months	7-11 months
Modular	8-12 weeks	4-8 weeks	4-6 months

Excludes approval time. Modular assumes LMR/CDC pathway.

Quality Considerations

Traditional Construction:

• Variable quality depending on trades
• Weather exposure throughout
• Site supervision dependent
• Defect rates typically 5 to 10%

Prefab Components:

• Factory-made components consistent
• Assembly quality still variable
• Weather exposure during assembly
• Defect rates 3-7%

Panelised:

• Shell quality high
• Fit out quality variable
• Some weather exposure
• Defect rates 2-5%

Modular:

• Factory-controlled throughout
• Minimal weather exposure
• Built to transport stress standards
• Defect rates typically under 2%

Cost Comparison

Common misconception: Modular is more expensive because it’s “premium” construction.

Reality: Per-square metre construction costs are similar across methods. The difference is in:

• Timeline costs: Shorter timeline = lower holding and finance costs
• Site costs: Less site time = lower preliminaries and site facilities
• Variation costs: Fixed price modular vs variable traditional
• Quality costs: Lower defects = lower rectification costs

Total project economics typically favour modular for projects where timeline and certainty matter.

Design Flexibility

Method	Design Flexibility	Change Tolerance
Traditional	Maximum	High (but costly)
Component	High	Moderate
Panelised	Moderate	Low-Moderate
Modular	Structured	Low after manufacturing

What this means:

• Traditional construction allows changes throughout (but with cost and time impacts)
• Modular requires design commitment before manufacturing
• Pattern Book designs work naturally with modular (both value standardisation)

Which Method Suits Your Project?

Choose Modular When:

Timeline priority: Fast completion significantly affects returns or use.

Multiple similar units: Repetition (townhouses, apartments) maximises modular efficiency.

Budget certainty: Fixed price contracts and predictable timelines reduce financial risk.

Quality consistency: Important for rental portfolios, sales programs, or brand standards.

LMR Pattern Book: Pre approved designs align naturally with modular manufacturing.

Choose Panelised When:

Unique designs: Custom architecture that doesn’t fit standard modules.

Tight site access: Panels transport more easily than complete modules.

Mixed approach: Shell speed needed but flexibility for internal configuration.

Choose Component/Traditional When:

Single custom home: One-off designs with specific requirements.

Complex sites: Extreme access restrictions or unusual configurations.

Design evolution: Requirements likely to change during construction.

Simple additions: Small projects where mobilisation costs outweigh prefab efficiency.

Modular and Pattern Book: Natural Partners

The NSW Pattern Book and modular construction share a fundamental principle: standardisation enables efficiency.

Why They Work Together

Pattern Book provides:

• Pre approved designs meeting all requirements
• Clear specifications and dimensions
• Streamlined 10 day CDC approval
• Compliance certainty

Modular delivers:

• Efficient manufacturing of standardised designs
• Quality consistency across units
• Fast site installation
• Fixed price construction

Combined benefit: Design certainty + manufacturing efficiency + fast approval = 6-9 month project delivery versus 18-30 months traditionally.

How This Works in Practice

1. Site Assessment: Confirm LMR eligibility and site parameters
2. Design Selection: Match Pattern Book design to site
3. CDC Approval: 10 business days via private certifier
4. Manufacturing: Factory production (8-12 weeks)
5. Site Preparation: Parallel to manufacturing
6. Installation: Modules placed and connected
7. Completion: Site finishing and certification

Frequently Asked Questions

Are modular homes lower quality than traditional?

No. Factory-controlled manufacturing typically produces higher quality than site construction. Modular buildings must also withstand transport stress, driving engineering standards above minimum requirements.

Can you tell if a building is modular?

No. Finished modular buildings are indistinguishable from traditional construction. The difference is in how they were made, not how they look or perform.

Do banks finance modular construction differently?

Yes, because the payment profile differs (factory vs site progress). Specialist lenders and some mainstream banks now offer modular appropriate finance structures.

What happens to modular buildings in the long term?

They perform identically to traditional buildings. There’s no difference in durability, maintenance requirements, or lifespan.

Can modular buildings be customised?

Within parameters, yes. Facade treatments, finishes, colours, and some internal configurations can vary. Fundamental dimensions and layouts are typically fixed for manufacturing efficiency.

Start Your Modular Project

Understanding construction methods is the first step. The next is understanding what’s possible on your specific site.

Check your site’s development potential and discover if modular construction suits your project.