The practice, called panelized construction, involves building several components of steel or wood frames in a shop — typically roof trusses, floor trusses and walls sometimes finished with windows, exterior siding and electrical wires. Then the labeled frame sections, or panels, are assembled by contractors at the home site.

Panelization has long been used on the Mainland to save time and money, and a few small contractors in Hawai'i have imported frame sections from Mainland manufacturers for years. Recently, though, more local builders are using panelization to control costs and speed construction.

"It's catching on," said Sam Galante, a local construction industry veteran and chief executive officer of Steel Truss & Panel LLC, a three-year-old company that has increased frame panel work dramatically.

"What (builders are) finding is they save their time," he said. "Time is money. If it's raining, we're still building wall panels."

Several residential projects under construction are using panelization, including three Schuler Homes communities — Nanea Kai and Le'olani in Hawai'i Kai and SeaScape in Makakilo. Towne Development of Hawaii's Woodcreek Crossing in Mililani is another.

One fledgling company, Innovative Housing Solutions at Campbell Industrial Park, recently began offering steel-framed wall, roof and floor panels for sale separately or as part of a package that includes the usual fixtures to complete a home ready for assembly by contractors on site.

Even giant military contractor Actus Lend Lease LLC is looking at panelization as a way to help manage its upcoming multibillion-dollar renovation and construction of Army, Air Force, Marine Corps and Coast Guard housing on O'ahu.

"We are really looking to the greatest efficiencies that bring the greatest value to our projects," said Actus spokesman Ryan Mielke, who said Actus had not decided yet whether to use panelization.

Change 'difficult'

Michael Mudgett, sales and marketing director for Honolulu-based Homeworks Construction, believes a sizable panelized home market can be made in Hawai'i, but only if some of the larger developers participate directly.

"There's a lot of people who have looked into it, and most have not got off the ground," Mudgett said. "Change is difficult in Hawai'i."

Frank Payne, operations vice president for Schuler, said the company had tried shipping in frame panels from the Mainland in the mid-1990s for its Tropics at Waikele residences, and ended up switching back to regular framing halfway through the project because of trouble assembling the pieces.

Today, Schuler leaves panelization decisions to subcontractors, which Payne said has worked well. Panelization was an advantage during the concrete strike, because framers continued building frames for homes without foundations.

"Right now it's a good deal," Payne said, noting that contractors will be able to clear the house backlog faster as the concrete flows again because the framing is done.

On Maui, Prudential Iwado Realty President Tamio Iwado is involved in a 200-unit Kihei apartment building being developed by California-based Agora Construction using panelized components from California.

The project, Piilani Gardens, is scheduled for completion next month and had a construction cost of $82 a square foot, which Iwado said was $18 to $20 a square foot less than traditional construction, saving roughly $10,000 on a typical apartment. "We're very happy with the product," he said.

Iwado hopes to help develop another multi-family project with Agora, and said he expects to consider panelized frames from Mainland builders as well as from Hawai'i startup Innovative Housing Solutions.

Compared with Hawai'i contractors building panelized frames — such as framing contractors Coastal Construction and Sunrise Construction — Innovative Housing is trying to take the concept further by including windows, wiring and exterior siding in its pre-made panels and selling a package for complete homes.

Innovative Housing's panelized homes have not been substantially tested by the consumer or contracting markets. Only a few have been sold, mostly to an affiliated startup development company and to individuals associated with Innovative Housing.

Still, the factory could help satisfy some of the strong residential demand by cutting down on construction time and costs if its product catches on.

Assembling the parts

On one recent day at the company's nondescript hangar-like building, unassembled "house No. 2" was on the floor, arranged by parts — walls, doors, cabinets and roof trusses — stacked or bundled in groups. Appliances, carpeting and other fixtures and finishes were in a shipping container ready for delivery. Outside the factory, another house with a deck and garage was being erected as a model.

Mike Sessions, Innovative Housing president and chief executive officer, said the factory can produce parts from custom or in-house architectural plans for single or multi-story homes and light commercial buildings.

"We can build anybody's plans," he said. "If someone comes in here with the Kahala extravaganza, we can do it."

Panelized construction follows the same building code as site-built (also called stick-built) housing, by leaving one side of each wall open to allow wiring connections by an electrician, and inspection.

The savings, which Sessions said comes to $10 to $15 per square foot — or $15,000 to $22,500 on a 1,500-square-foot house — comes primarily from lower labor and insurance costs.

For example, the company's workers compensation insurance is half that of a typical builder because framing is done at tables instead of on ladders and platforms at a construction site, Sessions said.

Labor costs are lower because framing is quicker in a repetitive-task factory setting, Sessions said. Also, screwing together frame pieces requires mostly entry-level labor made easy by a computerized machine that cuts holes and notches where they belong in frame pieces.

"Guys assembling it don't need a tape measure," he said. "It's more like an erector set. The idea is to be kind of a McDonald's, where you use less-skilled workers."

Panelization has cut into work hours for unionized carpenters, but one union leader said it doesn't make sense to fight economics-driven advances in work methods and technology.

"I don't think we can prevent that from happening," said Ron Taketa, financial secretary and business representative for the Hawai'i Carpenters Union. "If a developer can build a house for less and pass on the savings to the customer ... that practice will probably only grow. I see more of this in the future, not less."

Companies faltered

Some industry observers said Innovative Housing, which was incorporated in July with close to $1 million in startup costs, faces a big challenge establishing itself in the market after the recent failures of two factory-built home companies to which Sessions had ties.

Sessions was a loan officer with two mortgage lenders, and was unable to arrange loans for dozens of home buyers doing business with failed companies Hawaiian Palisade Homes and Quality Homes of the Pacific, which tried to deliver low-cost homes built almost entirely in a factory.

Sessions, who also invested in and tried to acquire Quality Homes, said he learned from those failures. "We are not either of those companies," he said. "We are not doing the same thing or acting the same way."

Richard Jones, general manager of longtime panelized builder Farwest Homes in Washington state, said the business is tough to break into — more so in the western United States than the Midwest, where such construction is more common.

"It's a simple concept, but a lot of people have tried it and failed over the years," he said. Compared with a traditional builder, he said, a panelized construction company requires more sales people, plus a big factory investment to get started, and needs high volume to realize the cost savings and survive. "You can't just do a house here and there."

Farwest, which produces roughly 250 to 300 homes a year, mostly for California and Alaska, has had "mixed success" in Hawai'i, where it has shipped components since the 1960s, Jones said.

Still, the company is working with two dealers on Maui and Kaua'i and is interested in expanding to O'ahu and the Big Island.