Today, each construction project is managed as a discrete effort and building models are still commonly delivered as drawings. General Contractors analyze the drawings, itemize the parts needed, order them from suppliers and ship them to a site where they are installed by craftspeople.
With off-site manufacturing and assembly, parts are first shipped to a prefab shop and pre-assembled so tradespeople are not running into each other. Some specialty contractors can work indoors. Processes have industrialized, the work is somewhat more efficient, but the traditional sequencing of processes remains the same.
In the near future, construction will be organized like a multi-tier manufacturing chain, which is exponentially more scalable. What does this transformation mean for the individual players within the construction value chain?
In The Next Normal in Construction, McKinsey & Company projects that GCs risk losing 20% to 25% of their value in a fully productized value chain in the coming years and specialty contractors risk 9% to 13% of their already modest slice. By resisting change, GCs will be disintermediated from the building delivery process. They will find themselves competing against module manufacturers and the firms that partner with them. In contrast, those who embrace productization and adapt as follows will retain the most
value and demonstrate the most resilience through the transformation of the industry.
Owners Reorganize the Value Chain
Owners are increasingly collaborating directly with module manufacturers to define their requirements and create custom components to achieve specific business outcomes. Owners of data centers frequently produce their own modules to shorten time to market. Likewise, large hotel chains work with bathroom pod manufacturers to deliver a differentiated brand experience.
Some developers have vertically integrated with module manufacturers to tightly align construction and integration knowledge directly into the product development process. For example, bathroom module manufacturer SurePods was acquired by WND Ventures, the corporate venture arm of DPR Construction. “SurePods prefabricated bathrooms are
sized, designed and accessorized to meet the owner’s precise requirements, then built under controlled factory conditions. Consolidating the talents of eight separate trades, the finished product comes ready to hook up and inspect.”2
GCs Deliver Value as Prime Integrators of Modularized Systems
GCs are already well aware of the drawbacks of a tradebased approach. They deal directly with coordination and sequencing optimization challenges and cross-trade interference, which are rising with sustainability regulations increasing the number of interfaces. Their dependence on trades puts a limit on development scalability; there is always a need for at least one tradesperson to touch each system.
Integration-ready, multi-trade modules remove the risks to a GC’s construction timeline and budget (the aforementioned financial sinkholes). However, these modules still must be staged and installed in the building in the most efficient manner.
As productization takes hold, a GC’s role morphs into one of chief assembler, head of module procurement, logistics and installation — in other words, the “prime integrator.” In this way, GCs overcome the threat of disintermediation and continue to deliver value to owners.
A prime integrator will manage and collaborate with virtual makers (specialty contractors that have virtualized their craft) to ensure multi-trade modules meet owners’ expectations. Integration excellence also requires proficiency in orchestrating site logistics and mastery of new approaches to procurement.
Digitalizing and Virtualizing Processes
The first step in preparation of this shift is determining how to virtualize each basic building block within a module. GCs can do this by disassembling basic building blocks and defining these blocks step by step. With this understanding, design collaborators need only configure the existing block to fit inside a building’s unique geometry each time a new project arises.
For example, if considering a room as one block or module, disassembly would begin with a systems approach to identifying structural components, doors and windows, mechanical, electrical and plumbing engineering (MEP) systems, finishing elements and all other components. The next step is to understand the dependencies and interfaces between these components. From there, it becomes possible to identify the various parameters for variability with which each one of those interfaces must comply.
By incorporating information from the architect on what is needed and why, the solution is also able to define how to construct this component: Where cuts or drilling may be needed, for example. From this system, GCs can produce a processing list and make a work order that can be sent directly to a localized factory close to the construction project.
This article is excerpted from THE PRODUCTIZATION EFFECT: How integration-ready modules will transform the roles of general contractors, specialty contractors and the entire construction value chain. This white paper maps the path to productization and defines how general contractors, specialty contractors and the entire construction value chain can leverage virtual twins on an end-to-end collaboration platform, transcend the limitations of classic industrialization and leapfrog to personalized construction.
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