Why haven’t buildings become productised?

by Ofentse Sefolo
Why haven’t buildings become productised?

In their full report, “Modular construction: From projects to products”, McKinsey identifies seven factors influencing modular construction. As shown in Figure 4:

• Labour shortages.
• Ability to service demand.
• Regulation.
• Access to materials.
• Supply chain and logistics.
• Quality perception.
• Local site constraints.

Without these factors, modularised construction may not meet the economic goals of companies and jurisdictions and the needs of consumers.

The McKinsey report emphasises that all participants will need to change to create a significant impact. These include:

• Manufacturers – modularisation will need to scale and optimise.
• Developers and investors – will need to understand options for productisation and investment opportunities and choose industry partners.
• Materials suppliers – will need to shift products to more repeatable components, with an efficient “go-to-market” strategy.
• Public sector – opportunity to bundle projects and may need to look at changing building codes.
• Engineering and construction firms – will need to understand what commoditisation will mean for the industry and make decisions about where they will “play”.

Richard and Daniel Susskind argue in their book, The Future of the Professions, that the final stage of significant change and innovation is externalisation, when access to the technology is available to the general public without the gatekeeper being needed, as shown in Figure 5.

A simple example of this is the travel industry, where the use of a travel agent is now optional and not used by most of the public. To what extent could this happen in design and construction? Could the general public design and 3D print their own homes or offices, based on standardised components?

While commoditisation and standardisation can be valid in many situations, there is little scope for differentiation. We should not ignore opportunities for customisation and optimisation. Designers can start to create “customised” modular libraries to help decrease the time and cost of design and move towards a more “design-for-manufacture” approach, but this will not be suitable for every situation.

What needs to be true for change to occur?
There are some concerns that increased modularisation, robotics and automation, as well as a move to niche customisation and optimisation, will lead to job losses for traditionally-skilled construction labour and professionals undertaking work which can now be undertaken more efficiently by robots.

This will no doubt be the case, but the accompanying increases in productivity, combined with ongoing increasing demand, could mean that more projects could be designed and built, hence labour will still be required.

As Christensen espoused in his theory of disruptive innovation, change needs to occur at the bottom of the market, typically with a new entrant offering a significantly lower cost alternative to the masses.

He continued that the focus should be on “the job that needs to be done”, rather than the product or service itself. Applied to design and construction, this means that a house, office, school or hospital needs to fulfil the need of the customer to live, work, be educated or receive healthcare, as opposed to be objects of high design value.

So, what precedents need to exist for significant change to occur in the design and construction of buildings?

If we look at history, disruptive innovations have occurred when:
• There is a burning platform for change, e.g. the post-war construction of housing estates in the United Kingdom (UK) and Europe to cater for thousands of displaced citizens or the current global trends of population increases and urbanisation.
• Affordability has become an issue for the majority, so a significant customer base is ripe for a disruptive product or service – as in the case of automobile ownership in the early 20th century or ridesharing in the 21st century.
• New technologies are enabling change – for example 3D design, 3D printing and “on-site factories”.
• New materials are creating opportunities – such as the emergence of mass-engineered timber (MET) and precast concrete which are enabling the off-site, modularised construction of standardised components.
• Supply chains are aligned to enable ease of delivery of components to create cost-effective and fast manufacture, as achieved by Henry Ford with his optimised assembly lines.

Where these factors converge, innovation will occur. This may mean that the significant step-change required for more efficient and cost-effective design and construction to gain momentum, may occur in situations such as regions where housing is at a crisis point and inexpensive, and fast construction could make a significant difference. This is, for example, in emerging economies or countries devastated by natural or man-made disasters such as tsunamis, earthquakes, war, or as we have seen in China, where a hospital was constructed in ten days, due to the coronavirus outbreak.

It will be necessary to develop clear protocols for when commoditisation and standardisation are appropriate – this is, buildings that have low design value and can benefit from repeatability. This may represent the bulk of the “new world” of design and construction.

This will still enable customisation and optimisation to flourish – this is appropriate for buildings with high design values and that require customisation for differentiation. Design and construction firms will gravitate to one of the two extremes as well as some sitting across both, as shown in Figure 6.

Ultimately, someone or something needs to emerge, as did Uber and Airbnb in the transportation and travel industries, and Henry Ford before them, to disrupt design and construction in a way that will change the landscape forever.

Designers and developers will need to assess options and priorities in terms of appropriateness of approach, cost, time, location and differentiation, as demonstrated in Figure 7.

Once the options are understood, informed decisions can be made about how to move forward with a project. It will be necessary to consider all aspects of a project from design, through supply chain and construction to operation, to decide the best approach, and ensure the most appropriate team to design and deliver a project.

For example, Japan and Sweden have made significant inroads into modular construction due to many factors, including quality of build and resistance to seismic activity (Japan) and short daylight hours for on-site construction (Sweden). The United States of America (USA) and UK have utilised off-site construction after major wars, when the speed of construction was an imperative, but this has since waned.

As McKinsey suggests, it may be time to revisit this approach now due to advances in technology, which has made digital design and many automated processes ideal for fast, efficient design and construction.

Full thanks and acknowledgement are given to Peter Greaves, Buildings of the Future Leader, Aurecon for the information in this article.

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