Driven by an unprecedented demand tied to electrification, digitization, and onshoring of technical manufacturing, the opportunities in the construction market are enormous.
However, construction worker availability is declining (while the unemployment rate rises), and supply chains are disrupted. This creates challenges to successful project delivery.
Statistics illustrate the reality of demand levels for new construction:
The challenges of the construction industry are well-known and don’t need to be thoroughly recapped:
- siloed design and construction processes,
- worker shortages,
- supply chain disruptions,
- lack of productivity improvements on par with other industries, and
- poor/mistimed data and knowledge transfer between stakeholders
The COVID pandemic wreaked havoc on the availability of materials. An aging labor force contributes to a shortage of skilled workers who are already in high demand. This has resulted in a sub-optimal delivery ecosystem. McKinsey suggests that more than 75% of projects fail to meet schedule and budget objectives. Their data shows that the average schedule was exceeded by 20% and the average budget by 80%.
The construction industry is evolving to the new reality we build in. These disruptions cause the industry to react by shifting more work off-site and forcing organizations to build in new ways.
There are multiple emerging efforts to improve the space with a focus on technology. Some focus on broader ecosystem solutions. One of these initiatives is often termed “Industrialized Construction” (or, depending on where you are in the world, “Modern Methods of Construction" or "MMC”). More and more of the market is moving towards this model, which blends manufacturing industry approaches to construction site challenges. Current estimates suggest that more than half of the construction market will rely on Industrialized Construction delivery in the next ten years.
What is Industrialized Construction?
Simply put, Industrialized Construction (“IC”) is the convergence of manufacturing and construction. Specifically, Industrialized Construction joins manufacturing’s expertise in mass production and construction’s ability to design and build a highly customized complex product.
Industrialized Construction heavily relies on:
- Volumetric construction, modularization, or prefabrication
- more advanced production planning approaches
- automation of low-skill, highly repetitive manual tasks
Some expand the definition to include “big data”, the use of the “internet of things”, AI, and robotics. The vast majority, if not all, of IC benefits, can be achieved through the simple application of manufacturing and production principles to construction.
Industrialized Construction has many parallels to the evolution of manufacturing, as driven by the “Toyota Method” in manufacturing in the 1980s. However, it does require management decisions to be tied to a long-term philosophy. Even at the potential expense of short-term financial goals. I recommend the Toyota Principle #1 for further reading.
Why are companies investing so much in building this way? The answer is simple: increased demand and decreased availability of skilled labor and materials.
What are some trends that are driving this change in construction methods?
There will always be job openings in construction; it’s not an industry that will ever just "go away." That being said, there are four major trends that are creating a shortage of skilled labor through high demand:
- Decarbonization
- Electrification
- Digitization
- Reshoring of Critical Manufacturing
Each of these spaces is experiencing a mini-industrial revolution at the moment. Have you noticed how many startup wind, solar, and nuclear companies there are right now? If you’ve bought a car recently, did you see how many electric vehicle choices you had?
Why companies are pursuing this change?
Industrialized Construction rethinks traditional construction models and focuses on bringing a "mass-produced” approach to capital asset delivery. Why?
- Money
- Time
- Predictability
- Risk Reduction
Industrialized construction allows owners to move portions of work from the construction site to the assembly line. This means more predictable delivery and faster production and delivering times. In addition, one of the main benefits of shifting operations away from the construction site and into a controlled environment is risk reduction. Operations can’t be delayed due to adverse weather conditions, and workers are exposed to fewer hazardous scenarios.
Autodesk estimates that to address the additional demand in the construction industry, the majority of projects will be delivered using an IC delivery model by 2035. Stakeholders in the space must begin preparing today for this transformation.
Want to learn more?
Learn more about the drivers that are reshaping the construction industry in Part 1 of our Industrialized Construction series of Whitepapers.
-> Download Whitepaper
