The Payback on Panels

A way to build better and faster — what's not to like? Builders are finding there's a lot to like when building with advanced panel systems.

Panelized wall systems are prefabricated building panels that form a structural "envelope" for the home, eliminating the need for conventional wood framing. Panelized systems can be assembled on-site faster by less skilled laborers.

Despite these and other significant benefits, panelized wall systems capture only about 8% of the market, according to the Wood Promotion Council. Builders wary of panel systems point to the cost, noting that they have to pay at least as much, and usually slightly more, than they do for stick building their walls. They also express concerns about teaching crews new methods and meeting building codes with a less common product (see the "Considering Codes" sidebar).

Change is never easy, but there are real benefits to builders willing to make the leap, says Kirk Grundahl, executive director of the Wood Truss Council of America, an international trade association representing structural wood component manufacturers.

"A lot of the hesitancy about panelized walls is traditional mind set," says Grundahl. "Builders who use them can build homes better and faster."

Curtis Stendel of Panelworks Plus in St. Francis, Minn., wholeheartedly agrees. Stendel, who teaches other builders about advanced panelized construction, says that he and other panel builders find that they not only have less need for skilled labor, but they also shorten their installation time, reduce waste and have less risk of theft on-site than their stick-building counterparts.

Advanced panel systems take many different forms. The usefulness of each one depends on the builder and the client.

The most common systems are structural insulated panels (SIPs), which are closed walls made from expanded polystyrene foam core adhered inside and outside to oriented strand board (OSB) or plywood skins. The foam alone has little strength, but when bonded to OSB or plywood, it acts as a bridge to augment the panel's structural capacity.

A variety of materials can be incorporated into other open- and closed-wall panel systems, including wood studs or light gauge steel with foam insulation, structural concrete, concrete with foam core insulation, aluminum, steel and fiberglass skins.

Advanced panels usually come in modules of 4 feet by 8 feet or greater with a thickness of 4 to 6 inches, depending on the type of panel and the insulation required in that region.

Advanced panels are assembled to form exterior walls or roofs with minimal additional framing. Installation techniques vary by type and manufacturer. Typically, connections along the top and bottom of the panel and at panel abutment edges are required.

No standard exists for panels; each system has its own particular connection needs. For example, the connections for a concrete system are vastly different than those for a steel panel, while different types of SIPs have different connection methods.

Of course, the builders who use panels didn't switch simply out of curiosity. They were seeking — and are finding — bottom line benefits.

Through the ease and speed of assembly, wall and roof systems can be built in days rather than weeks. The faster construction time also greatly reduces the chance of theft and of bad weather creating construction delays. Because most of the cutting is done in a remote factory, the builder has to deal with much less waste on-site.

Only basic carpentry skills are required for laborers, which means assemblers don't need the skill of conventional framing crews. For some builders, reducing the need for skilled labor is extremely beneficial.

"Different regions in the country have very different labor resources," says Scott Stevens, general manager of Modu Tech, a Baltimore, Md.-based manufacturer of trusses and open wall panels. Some regions allow "piece-in labor," in which the builder pays workers a fixed amount on a project's square footage or the number of walls built.

To ease construction costs even more, manufacturers offer prefabricated home packages that compare with the cost of conventionally framed structures. This is helpful for standard builders, but is less advantageous for custom builders since the cost of producing and engineering panel layouts may drive up the cost of custom designs.

Stevens points out that prefabricated panels also offer greater durability than stick-built walls. Panels can be produced in an automated factory environment using computer-controlled equipment that transfers panel-cutting instructions directly from digital computer aided design (CAD) drawings. The resulting components are precisely engineered and easy to inspect for quality control.

Beyond the greater durability, advanced panels have other attractive selling points. With better overall air tightness and thermal performance of the walls and insulation — common traits of advanced panelized systems — customers will be warmer in winter, cooler in summer and they'll enjoy energy savings to boot. SIPs, in particular, can improve energy efficiency by replacing lumber or other structural thermal bridges with insulation material. In addition, the thicker walls will also add some soundproofing as well.

Before switching to advanced panel construction, Stevens suggests builders consider the availability of skilled labor, time for design and the time to learn a new technology.

The time a builder is able to commit to design issues figures prominently because the factory relies on receiving accurate measurements and data from the builder in a timely fashion. How far in advance the builder needs to do this depends greatly on the type of panel and the manufacturer.

"If measurements are inaccurate or incomplete — as is often the case — then the designers have to make assumptions and there is a chance for problems on site," Stevens says. Taking the time to get those measurements right the first time will save some headaches down the road.

Several big builders — including Pulte Homes, NVR Homes and Toll Brothers — are willing to commit that time because of the time they save in the end. Big builders can easily use panelization because they have specific and repeatable designs.

"You want it to be repeatable because of the time investment necessary to properly develop the factory's software to cut the panels," Stevens says.

Small builders may also benefit from using panels if their building designs are fairly reproducible. Because of the difficulties managing wood use and costs, panels provide a way for builders of any size to develop more predictable fixed costs for the project.

"Builders can get a better handle on fixed costs, and managing the quantity of material is always a big issue with wood," Stevens says. "When using panels, it's much easier to estimate those numbers."

While it may be easier to estimate fixed costs with advanced panels, do they cost less?

With improved quality and speedier on-site construction time often comes greater material cost, because now the builder pays for partially fabricated walls.

While cost varies greatly with the different types of advanced panels and the size of the structure, most panels are somewhat more expensive per square foot than a stick-built home of comparable size.

Open-wall wood panels are the most cost competitive; they tend to cost slightly more than stick-built construction. Stevens estimates the materials for a wood panel system cost 50 cents more per square foot than a stick-built house. The cost is even higher with many of the closed-wall systems on the market.

During the transition period, inexperienced crews or poorly coordinated panel dimensions can make the process more costly. However, panel builders say these issues are easily overcome with experience.

"For a typical builder, the proficiency comes after maybe three to five projects," Stendel says. "But for some projects, you get it right the first time and they are off and running. It's not really difficult."

Weighed against the additional cost is the prospect of greater savings — from reduced time for construction, reduced chance of theft and weather delays, less waste and less need for skilled labor. The equation will differ for every builder, but advanced panels may be most cost-effective in those areas where labor is difficult to obtain.

While it may not be difficult, there is a learning curve, as with any change in building methods. That was certainly the case for Scott Bergford, founder and president of Scott Homes in Olympia, Wash. Eleven years ago, Bergford was using the conventional stick building method when a customer asked him to use SIPs.

"We had never even heard about them," says Bergford. He was intrigued by what he learned. To experiment, he built his business partner's home with SIPs. "We had to redo things and we made mistakes, but we worked them out," says Bergford. This decision led to a long-term commitment to panel building.

For Bergford, the biggest difference was learning how to manage utilities while installing wall panels, particularly SIPs that have foam attached to the panels.

Bergford learned he needed more chases in the kitchen walls. The panel provider, Premier Building Systems, was happy to oblige. Bergford and his crews also started using a flexible drill bit to make their own chases to snake wiring through the walls.

"Every once in a while we get a new subcontractor and he doesn't follow the directions and he will have sliced the panel in half," Bergford says. "So now we have learned how to fix a SIP panel once the plumber has destroyed it."

"At this point, I really don't know what we could run up against that we wouldn't know how to fix."

Learn more about advanced panels at www.PATHnet.org. Visit "Quick Clicks," then "Technology Inventory," to learn more about the technology; visit "Newsroom," then "2004 News," to read about PATH's research on developing performance standard criteria for panel connections.