Inside Modular: The Podcast of Commercial Modular Construction
Inside Modular is the official podcast of the Modular Building Institute, the Voice of Commercial Modular Construction. This series will highlight industry news and trends, include conversations with industry thought-leaders, and discuss the advantages of modular building construction.
Inside Modular: The Podcast of Commercial Modular Construction
Simplifying Modular Preconstruction for Building Developers w/ RaaP Builders
Imagine having precise pricing for your construction project before ever hiring an architect. That's exactly the paradigm shift that RaaP Builders wants to create in the modular construction industry.
RJ Mahadev, co-founder and CEO of RaaP Builders, reveals how his company is transforming modular preconstruction through a "rooms as a product" approach that brings clarity, certainty, and efficiency to building developers. The company's innovative online platform lets developers input basic information—location, number of floors, and units—and immediately receive comprehensive designs with detailed pricing comparisons between traditional and modular construction methods.
For developers building prototypical structures like affordable housing, workforce housing, or budget hotels, RaaP's system offers a potential path to greater certainty, faster timelines, and significant cost savings.
Listen to all episodes of MBI's Inside Modular podcast at https://www.modular.org/inside-modular-the-podcast-of-commercial-modular-construction/
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 joined by RJ Mahadev, co-founder and CEO at Rapp Builders. Rj is here to talk about his company's distinct rooms as a product approach and the potential it offers for more efficient modular design and fabrication. Rj welcome.
Speaker 2:Thanks very much, john, great to be here, and also thanks for saying the name of the company right. It is RAP, like rap music, and not R-A-A-P. Well, I guess we are helping developers navigate the modular swamp, so maybe we need to be more pronunciation fluid. But, yeah, rap, and thanks for having me here and looking forward to this conversation.
Speaker 1:Well, I appreciate it. I do what I can. I'm glad I got it right. Tell me about yourself, rj, what's your background in the industry and what led you to founding RAP Builders.
Speaker 2:So my background is in tech for construction and for manufacturing, and I spent many years at Cisco developing blueprints for how we manufacture more effectively and how we construct better. And you know, as part of that journey we started seeing that there's so much of this that's applicable to the modular industry. You know, john, I know you're with NBI. I don't know if you've ever thought about when that first modular company happened. You probably know the answer. But you know, in my imagination it's always like imagining, you know, humans back in the Stone Age driving a rock uphill and suddenly going you know what. Let's just free-plop this thing and call it a temple, right? It was all like kind of very organic the way it came together.
Speaker 2:My inspiration a little more mundane, right. So, but as part of working on these blueprints for manufacturing and construction, it was pretty easy to realize that innovation isn't really about better wall panel systems and all the things we love to talk about in this industry. It's really more about simplifying the message to drive more customer traction. You know, I think in many ways we have a housing problem, not because we don't know how to build cost-effective housing. It's because we failed to communicate effectively with developers. So that really was the inspiration for RAP was how do we help bring modular construction to the 21st century through more effective management of the process and communication with developers.
Speaker 1:So what can you tell me about how RAP works? Who's the target user and why should they be using it?
Speaker 2:A lot of what we are doing is organizing how the construction ecosystem works to connect the pieces between developers and fabricators, and architects and GCs. You know, I think each of these individual entities do a very, very good job at what they do, but because this industry is so fragmented and disconnected, a lot of times the project itself doesn't go well because things fall through the cracks. So RAP is really about how do we come up with systems and processes so we can design better, have upfront pricing and manage the modular process better and really helping developers navigate that.
Speaker 1:Well, you took us back to sort of the beginnings of prefabrication the guys rolling stones up the hill. I do know a little bit about the history of modular construction, but I'm interested about how RAP has evolved since it began. What's changed since you initially had this idea to where you are now?
Speaker 2:I think the big things that have changed is we've spent a lot of time getting into the details of where things are broken in the process and, if we think about this industrialized construction process, what are the things we need to do to fix it and how do we communicate it better.
Speaker 2:And a big game changer for us was all of the work we did with some large hotel chains and their developers to help them build hotels budget hotels more effectively.
Speaker 2:And budget hotels in many ways are a poster child for modular construction because they're so repeatable. And the great thing that we saw with budget hotels is they always start with a design prototype and having that design prototype really clarifies the pricing. It clarifies what the architect and the GC needs to focus on and how the developer can get that built faster and cheaper. And so a lot of our processes is built on the same idea of we have design prototypes for housing and we have them priced out. So we can provide these free design and pricing tools to developers to help them understand what it would cost to build their project in a particular location, whether modular makes sense in that location and then, if they want to move forward, a very effective way to get started with a smart start package which says let's start with a conceptual design and pricing that you can get almost in real time, because we have all of these things pre-developed and pre-researched.
Speaker 1:What differentiates you and WRAP from other similar products and services in the industry?
Speaker 2:So WRAP, you know, is a rocket science, right. We are just one part of a bigger shift. Everything we're doing in RAP the modular design kits, the real-time pricing data, the permit-ready drawings it's based on stuff that's always tripped up modular projects, right. So what we're really trying to do is prevent developers from stepping in that same rake over and over again. You know, aligning the GC scope with the fabricator scope, so the budget is real and not a fantasy, making sure that the design reflects DSA and HUD codes so you can really hit those timelines. We are just actually trying to fix the small things. That makes modular succeed, and this isn't really about our way versus your way or somebody else's way. This is really about helping the modular industry shift from sticks and bricks to bits and clicks, right. So the lesson we learn every day, john, is we're not trying to reinvent a new method of construction, we are just trying to stop this industry from reinventing itself badly every time. We're trying to organize the ecosystem so all of us can succeed with modular construction.
Speaker 1:How does the RAP software it is software, I believe how does RAP facilitate design optimization for modular builders, particularly with room layouts and finishes and other options that manufacturers have to consider?
Speaker 2:Great question, john. Again, construction is, I think, one of the last massive industries that's still defined by fragmentation, competition, siloed workflows, and it's a very mom-and-pop business at a global scale, and so every GC has their way, every architect has their way, and what that results in every project becoming a bespoke unicorn. So what we're saying is let's start with coming up with design prototypes that are optimized for fabrication. So in one of our projects for a home two, we took out about $2 million in the cost of fabrication. Through more effective design by making sure that the units, we are reducing the number of unit types and the number of module types and we are driving greater factory throughput and we are reducing the ramp time it takes for factories to scale.
Speaker 2:This and this is one of the big shifts is to think about design from a modular construction mindset rather than a traditional construction mindset, and then, when we do that, we can then start to identify all of the different assemblies that have gone into this design and we can price that out nationally using both national databases as well as individual project benchmarking with GCs across the country. So now, when a developer approaches us and says they want to build a particular design, we can tell them pretty much with 95% plus accuracy what it'll cost to build that project at their location. How we ensure we select the right fabricators because we now have quality metrics, because we understand the design so well and then, after we select the right fabricator, we ensure that this project gets completed on time and on budget. So again, it's about organizing the process and connecting the fragmented pieces so the project flows through the process more effectively and projects aren't dependent on bets that developers make that they have the right indicator and the right architect who might hit a roadblock because they're not communicating effectively.
Speaker 1:In what ways does RAP's software and construction approach affect quality control and sustainability in modular construction?
Speaker 2:Because we have these productized designs that we've spent a lot of time refining and developing we can identify the individual assemblies that go in to make up the building driven by this design.
Speaker 2:So we've identified about 200 or so assemblies, all the way from concrete down to the MEPs, and with those assemblies we can tie quality metrics to those assemblies. So when it comes to flooring, we know exactly the kind of flooring that needs to be built, the STC rating, what it's going to take to make sure that flooring feels firm underfoot and how we can ensure that we validate the building systems used by the fabricator to ensure that that building is going to be of the quality that the developer wants. And then we can also identify in the design things that might shift during transportation and to ensure that when those modules are delivered on site we can minimize the work required to do any patches and to ensure that nobody has to enter the actual units. So these are some of the ways we are ensuring that we have effective quality. What was the second part of your question, jeff?
Speaker 1:I was asking about sustainability. Is there an aspect of your approach RAP's approach that improves or affects the sustainability of a modular project?
Speaker 2:sustainability of a modular project. Many of the developers that we work with they haven't really emphasized sustainability as a key goal. A lot of the larger developers, especially the affordable housing ones, as well as some of the larger companies they do care about sustainability, and some of the things that we've been working on is tying our assemblies to net zero metrics, so we can also talk about what an assembly with a lower net zero score might be, both in terms of which manufacturers might be the best to use, how we transport those more effectively, and then also how we construct on-site more effectively and to create net zero scores around that. That's something we've been working on on the site. But again, since we are a startup, we really want to focus on what our customers are asking for today and unfortunately, not many of our customers have really demanded sustainability. So I think that's more sort of a long-term focus for us, like it is for many of us in the industry.
Speaker 1:Well, it's good to hear that it's something that you've got on your radar. You mentioned that you're a startup. Haven't been around a tremendously long time, but it seems like you've made lots of progress. You have a well-developed product. What's your plan for scaling Rapp Builders and how do you envision expanding into new markets and new sectors?
Speaker 2:You know, when we started our journey, we positioned ourselves as a pure tech company and I'm based in the Bay Area and so I'm surrounded by folks in Silicon Valley and we really sort of tried to think of this and derive this as a tech company. But that's not the way the construction industry works, right, the construction industry is a very physical industry. It moves at human speed, not at the speed of thought, right, and so we've had to sort of reevaluate our scaling plans and we are a lot more focused on bootstrapping this based on successful project completed and sort of success with developers, on sort of shifting the industry in this new direction. And the inertia has really been more kind of past behaviors and how slow people are to change, and so we're really taking this a sector.
Speaker 2:At the time we started with hotels and we spent a lot of time with hotel developers educating them on how to build more effectively using modular. We've just come into housing, and here again it's very sort of prototypical housing, so it's affordable housing with a capital A as well as workforce housing that can use more sort of repeatable units, and we're very focused on designs that are optimized for fabrication. So we're not doing single family and townhomes. We are not doing high rises. We focus on where the industry is, which is type 5 construction three to four floors faster when they come into the factory and to drive more factory throughput so we can lower their costs and we can bring more projects to them.
Speaker 1:How do developers and GCs and the target users of your product, what's the interface? What data do they need to input? How do they actually interact and interface with RAP in order to get the results they're looking for?
Speaker 2:I think the best way to experience our technology is to go to our website it's rapbuilders, r-a-a-pbuilders and once you go there there's access to free tools that you can sign up for to play with our design and pricing tools. And when you get to our design and pricing tools, you'll see that we've really designed them for simplicity for developers. So they get to pick their project time, whether they're building hotels or housing. They get to tell us the location they're building in, so which is the nearest big city they're building in and the number of floors that they're building and the number of units they want to build. And with just that information the location where they're building, the number of floors and the number of units we have a generative design engine that will provide them the designs for that building. So it'll show them the massing, it'll show them the designs and it'll show them the typical unit floor and it'll provide pricing. Not only does it just provide pricing, it says this is how this price would compare to building traditional on-site and this is how this price would compare to building with a traditional modular fabricator on some design that's not as optimized as ours is. And then it gives them the ability to click on a pricing button, and in the pricing button they can get a detailed breakdown of the pricing by master format division.
Speaker 2:So for concrete, for masonry, et cetera, what is the overall price?
Speaker 2:And not only that, but also how does that scope split up between the GC and the fabricator?
Speaker 2:So, as you know, most modular projects the GC still has around 50% of the cost and work involved, but then this varies by division. So in the case of, for instance, wooden plastics, 87% or plus should come from the fabricator and less than 13% of that cost should be with the GC. And when the developer knows that, they can then look at the bids they're getting from GCs and go. You know why is wooden plastics 50% of the fabricator cost as opposed to 5% of the fabricator cost? And so this gives them a more effective way to manage not only the overall cost of the project but also the bids that they're getting in from GCs and fabricators. And again, what we have on our site are demos based on the demo design and demo projects. And if developers are serious about moving forward, we then spend time with them to customize this pricing to their specific project location and site conditions and then, based on that, we can provide much more that we can use to negotiate better pricing from GCs and fabricators.
Speaker 1:That sounds very comprehensive and very cool, if I may say so.
Speaker 2:It's very much like that, john. It's really something we've spent a lot of time on, but again, I think for those of us listening to this, it's really about shifting that message to developers and telling them hey, we want to flip the script for you, we want to help you start with price and we want to show you why modular is a better way than site build and really make it easy for you to select modular early in your project so you don't go down this path of working with architects to develop a design that's really tough to fabricate.
Speaker 1:Are there any upcoming technological developments or enhancements or patches or new releases to your software that you can share?
Speaker 2:Two so to give you an idea of our product offering. We offer a free modular feasibility study so based on that, we can look at their location and tell them, from a price and a design perspective, is modular a good fit or are they better off site building this project? And we want to do that for the developer very early in their life cycle of a project, right when they're looking at sites and considering underwriting. And once we've done this pre-feasibility and we show that modular can price in and is attractive compared to other means of construction, we then do what's called a smart start, where we provide a complete conceptual design for that project and we provide detailed pricing for that project. And this is obviously a lot more detailed and granular and accurate than the pricing you typically get from a GC or a fabricator. And with that we want to sort of start shifting developers into thinking about how they can consume our FabAssure product, which shows them that they select the right fabricator and they're managing them most effectively and they are also getting an easy design from us.
Speaker 2:Now the product offering for all of these. Some of these are in development and in many of these, for instance with our Smart Start we've integrated large language models and AI, so we have chatbots where you can ask questions to get into some incisive answers around what makes up the pricing and how they can value, engineer their pricing to even lower it. At the end of the day, both my background in tech as well as the team that we have are really data science and AI focused, but we realized that we can't get to that AI and data science magic until we've organized the process and the workflows to where we're thinking about this more effectively and thinking about pricing and design, before we get too deep in with architects, gcs and fabricators.
Speaker 1:So what's next for RAP builders as a whole? What's your next goal? So what's next for RAP builders as a whole? What's?
Speaker 2:your next goal? Our next goal is to really get our messaging out there to the development community. Especially if it's a hotel developer or a housing developer that's building prototypical buildings, we really have an effective way to help them build with greater certainty, greater speed and to drive cost savings. And so that would be my ask to anybody sort of listening to this and nodding along with a car stereo. It's a really small ask, you know. Forward this episode to three developers in your network. Tell them that we're really talking about making more relevant to them and as an industry, we're really getting much better at understanding their pain points and addressing them with the right set of tools and processes.
Speaker 1:Well, speaking of messaging and getting the word out, I know you've been on the road this year. You were at World of Modular in Vegas in April. In a couple of months, I think, you'll be in Denver for the Offsite Construction Summit, hosting a panel there. Is that right?
Speaker 2:That's right. We've had a really successful presentation of both the world of modular as well as the Berkeley Offsite Summit, and we continue to evolve that message, and so what we have on tap for Denver is we have a panel with a developer, a GC, an architect, a fabricator. I'll be moderating it and it's to really understand where the modular industry has come short in terms of addressing developer pain points and how we change the narrative to developers. So anybody in the audience is in the modular industry and is interested in how we can all shift the narrative for modular. We'd love to have you at our session and talk to you some more.
Speaker 1:Well I know I'm looking forward to it. Thank you, rj. This has been a great conversation. I learned a whole lot. I appreciate your time. Thanks for being here.
Speaker 2:Thanks very much, john. Thanks for helping us shift the narrative collectively. I think you know you, me, mbi, us as an industry as a whole. We've got the tools, we've got the talent. We've just got to tell the story better, and hopefully this is a start to doing that.
Speaker 1:Well, I hope so. I can't wait to see you in Denver that's September 18th, if I'm looking at my calendar correctly, at the Offsite Construction Summit in Denver. So, RJ, until then, I'll see you soon.
Speaker 2:Thanks, John.
Speaker 1:My name is John McMullen. This has been another episode of Inside Modular, the podcast of commercial modular construction. Until next time.