A collection of insights on reshaping the construction industry.Explore the issue
The challenge of low productivity in the construction industry has been well documented. To catalyze significant productivity improvements, the industry should seize the opportunity to move toward a manufacturing-style production approach. For example, some in the industry are already taking lessons from the automotive industry and streamlining the on-site assembly process. Others have moved to an off-site manufacturing model producing full modular units.
Engineering and Construction (E&C) roundtable participants had the opportunity to hear from just a few of these leaders: Mace’s Jump Factory, which can build a fitted-out floor in 55 hours on a constrained site in London; Ambar in Brazil, which has already built more than 75,000 homes through its “design, supply, assemble, live” process; and Uber, which has been a pioneer in its customer-centric view and ability to evolve and scale quickly.
While not all players in construction are well positioned for off-site manufacturing, certain segments of the industry will see significant improvement. Roundtable participants explored how this manufacturing-style approach could dramatically improve project planning and delivery in three sectors: airport, rail, and real estate. While each asset class has its unique considerations, participants identified four common areas of focus. All stakeholders—owners, contractors, suppliers, and regulators—will need to agree to new ways of working together.
- Increased customer centricity. Project owners need to consider assets with the end users’ experience in mind. This customer-centric focus must be clearly articulated to everyone within the value chain to establish clear project requirements. For example, the use of modular construction in real estate should deliver sufficient customization for the end customer while still retaining the productivity benefits of standardization. Likewise, airport operators need to consider the experience customers look for as it relates to retail and dining, which are primary revenue drivers.
- Standardization and interoperability of modules among and across asset classes. Within modular construction, one of the biggest challenges for suppliers is ensuring consistent demand so the manufacturing facility maintains sufficiently high utilization levels. Project owners are concerned that modular suppliers may have to close operations during a project because they don’t have a strong enough revenue stream. A critical step to overcoming these issues is to create greater interoperability between owners and suppliers. An industry-wide agreement on the interoperability of modules would allow greater flexibility for suppliers to provide modules across a series of asset classes, while owners would have greater robustness in their supply base. This sort of standardization could also help improve user experiences. For example, a standard security layout or boarding system may result in a better experience for passengers.
Design and architecture will certainly create the desired variety in the look, feel, and experience of each asset, but participants agreed that tremendous strides can be made in the industry by convening working groups to establish standards for the core “building blocks” that allow for interoperability.
- Continued need to improve productivity and efficient delivery. Currently, the case for modular construction is often marginal. Cost benefits today can vary from a 20-percent cost reduction to a more common comparable cost—or even a cost premium compared with on-site construction. For adoption of modular construction to really take off, modular companies will need to incorporate best practices that enable them to fully realize cost benefits.
First, companies should industrialize design to allow mass customization to balance standardization and flexibility. Standardization will maximize the use of automated equipment, but flexibility will ensure a range of products and therefore demand on the factory.
Second, they need to invest in digitization, data strategies, and automation. They should also consider how to incorporate other technologies (such as 3D printing) that can also deliver productivity benefits. Third, investing in and upskilling the supply chain will be critical to increasing use of just-in-time delivery and building information modeling (BIM) for coordination between services.
- Scaled procurement, moving from project- to portfolio-level purchasing. The full cost and productivity benefits of modular construction can only be achieved if there is a consistent project pipeline. Projects identified and procured as a portfolio create demand confidence for suppliers. Project owners, particularly in the public sector, should consider opportunities to move toward a portfolio approach to procurement and project management to reap the cost and time benefits. A successful example of this is the Pennsylvania “500 bridges in 500 days project,” in which the use of standardized design and modular construction allowed the ambitious and extensive project to be delivered on time and on budget.