Get ready for the new normal. High tech has met construction, and the marriage has investors salivating, venture capital firms swooning, and offsite construction taking center stage in the industry. 2018 saw $1.24 billion invested in prefabrication start-ups in just the first three quarters of the year.1 The trend shows no sign of slowing.
An executive in the prefab industry recently told CNBC, “Look, we’re doing what Silicon Valley does best, which is bringing technology into a very large market, and in a lot of ways it’s similar to Tesla. You know Elon has done a fabulous job by taking on a really big industry and doing it differently. And one of the things that they’re also doing at Tesla, which we’re also doing is taking the responsibility to do lots of things ourselves. We are fully integrated and bringing technology tools that are not common in the industry. We’ve taken on the entire chain much like they’re doing at Tesla. We’re the architects, we’re the engineers, we’re the general contractors, the subcontractors and the materials providers…we take on the whole project. We’re using very sophisticated electronics-style manufacturing techniques and applying that to construction.”3
While some prefab companies are serving as one-stop shops, firmly established tech giants like Amazon are also getting into the now lucrative offsite construction game. The company’s Alexa Fund made its first foray into prefabrication investing in the housing sector. And now, Amazon customers can even order a complete modular hospital room.4
Catalysts Driving Off-Site Adoption
So, what’s causing offsite construction to move from limited use into the mainstream? Pressure. Let’s start with labor. In 2018, 280,000 construction jobs were added to the workforce; this is over the 250,000 new jobs added in 2017.5 And 2019 isn’t bringing any relief. With offsite construction, fewer skilled laborers are needed.
Sheltering both the project components and the workers constructing them in a factory also eliminates weather-induced scheduling delays, helping ensure production deadlines are consistently met. It pulls laborers off scaffolding into a controlled environment, at a bench working with good lighting and ample room. No bad weather, no dangerous overhead work on a ladder, and no risk of falling from lofty heights.
But while carrying legacy processes into the factory will certainly provide efficiency, how much more can be achieved by incorporating products that already consolidate processes? Some building products manufacturers, such as Georgia-Pacific, are responding to the efficiency challenge that prefabrication has thrown down.
Everyone in the Process Chain Benefits
With the ability to accelerate the construction schedule, offsite construction projects can be delivered sooner, which lowers operating costs and allows the building owner to generate revenue more quickly than traditional construction methods. Trail blazers in the industry, are bringing lean manufacturing systems and software to the building industry, are showcasing their new business models and attracting serious investment – confirmation that the models work and are perceived to have a strong future.
The adoption of offsite construction is extending to general contractors as well.
By designing, manufacturing and constructing modular buildings and building components, prefab builders can centralize and stabilize labor, standardize the assembly process and eliminate weather-related delays. This process will increase efficiency, shorten schedules, ensure consistent high quality and reduce costs – ultimately making new buildings affordable, even in the current environment of rising costs for labor and materials.7
In the controlled factory environment, construction is completed with more precision, for example in joint construction and air flow management. It offers uniformity in process and consistency in crew skill levels versus onsite construction. This means architects’ designs can be accurately followed and their planned energy efficiency objectives achieved. The ability to recycle at the factory also reduces waste, helping architects meet sustainability goals. Ease of access and comfort means their “site visits” can happen more often. And when new products, components or assembly configurations are utilized, testing is easier outside of weather’s reach, so the frequency of their visits throughout construction can increase, helping ensure that performance matches expectations.