Call it what you want, modular building or offsite construction isn’t going anywhere — except to more jobsites.
The construction industry’s productivity woes are nothing new to the companies trying to solve the problem. While the agriculture and manufacturing sectors have seen productivity gains upwards of 1,000% since the 1940s, construction has lagged behind at 6% growth as of 2016, according to Steffen Fuchs, a partner at research firm McKinsey & Company, speaking at the recent World of Modular conference in Hollywood, Florida.
Part of the problem, Fuchs said, is that the industry hasn’t invested enough in research and development — the kind of R&D that could give valuable insight into how to complete projects more quickly and more efficiently and that could boost the prefabricated construction market.
“Ninety-eight percent of projects run over cost and over schedule. But we found that every single increase in productivity increases margin,” Fuchs said. “If we address cost issues and schedule issues we actually see productivity goes up, which means margins go up, which probably means we all make more money — more money means people can invest in more things.”
And, for Fuchs, that investment might best be put toward technology, like prefabrication.
“[Prefabrication] is one segment where the industry has a massive opportunity to improve,” he said.
According to McKinsey data, prefabrication has the ability to boost construction’s productivity up to 10 times. And the companies that are maximizing that opportunity, Fuchs said, are those — like Katerra — that have integrated the supply chain. Whether other companies will borrow from Katerra’s or others’ model remains to be seen, but suppliers are already growing their stake in the offsite game for the first time.
Better system, better product
Though offsite construction has seen success in a number of iterations across the globe, the method has been slow to gain popularity in the U.S.
Still, more developers are turning their focus to offsite in the face of pressures from limited resources and a need to drive greater productivity under increasingly tighter constraints. And the conference’s organizer, the Modular Building Institute (MBI), aims to foster that trend by focusing its efforts on growing the commercial modular building sector’s market share from 2.5% of all new starts to 5% by 2020.
To do so, the industry is going to have to look inward at perfecting the way offsite project teams’ stakeholders collaborate.
According to a survey by Ryan Smith and Ivan Rupnik, professors at the University of Utah and Northeastern University, respectively, AEC professionals and owners agree that schedule reduction is a primary advantage of offsite construction.
Despite that commonality, the mindset of favoring traditional construction methods and a lack of knowledge about how to carry out offsite projects effectively are holding back the delivery method.
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