Why builders must think like manufacturers in a world of modularization
by Gregg M. Schoppman
November 1, 2019

The construction industry continues to hear how it lags behind the rest of the civilized world when it comes to innovation, productivity and efficiency. Studies benchmark the massive gains that manufacturing has experienced, while construction languishes at the bottom. Before the pile-on continues, it is important to acknowledge there are never footnotes that provide contextual evidence to support manufacturing gains. 

Items like automation, technology, controlled environments, and even the daily production of some goods have greatly enhanced manufacturing’s claim to dominance. Furthermore, manufacturing has eliminated one of the greatest variables—humans.

But construction projects are still largely dominated by humans doing things that humans do (e.g., working, resting, communicating, interacting and, yes, making mistakes). As a result, construction has continued to evolve and attempt to replicate many of the successes that have aided manufacturing. Prefabrication, modularization, automation, autonomous equipment and robotics have all become the zeitgeists. 

So, what does this mean for the construction company of tomorrow? Do the challenges and problems dissolve once the machines have taken over? Do construction firms that look more like manufacturers have all of the upside with no downside? 

Modularization

The upside of modularization has been characterized repeatedly: improved productivity and enhanced safety. The controlled setting provides unbridled oversight that a jobsite never could. 

For instance, building a multistory commercial office building in Florida in the summer poses a host of risks that manufacturing never has to consider. Extreme heat, weather and safety hazards are all external factors that rear their ugly heads before internal processes, such as workforce development, even enter the conversation. 

While modularizing any or all of the elements of an office building sounds like a superior build, there are important ramifications firms should consider when embarking on this new strategic concept.

Spatial Constraints

Most contractors would argue that jobsites are becoming smaller and smaller. Building in an urban setting is the equivalent of playing a high-stakes game of pick-up sticks, hot potato and cup-stacking simultaneously, and then being forced to move that operation into a warehouse. It sounds simple enough, but where will you build that structure or system?

Look at the most sophisticated manufacturer, and you will come to the realization that it takes real estate—not simply to build, but also to store finished items and inventory, conduct quality control and mock-up components. A commercial general contractor or specialty trade contractor that has historically brokered all of its work or used “just-in-time” inventory practices has not had to deal with the encumbrances of space planning. The jobsites may have been small, but so too was the warehouse, which was used on a limited basis.

Variable Cost to Fixed Cost 

Most contractors operate on a fairly low overhead basis, proportionally speaking. In the event of a recession or economic downturn, the cost to cover overhead is much smaller when compared to a fixed-cost business like a manufacturer. All of that extra space, fixed equipment, inventory, etc., costs money. While there are productivity gains, those gains are achieved on backlog. With no backlog, there is a sizeable cost burden that must be absorbed. 

Transportation

An electrical contractor who prefabricates junction boxes or light fixtures, complete with whips, is one thing; while a contractor who builds entire modularized sections of classrooms or laboratories is another logistical hurdle altogether. Obviously, there are plenty of amazing examples of firms that have overcome this challenge. 

Overcoming it began in preconstruction planning and stemmed from having a detailed logistical sequencing plan. However, there are also costs to consider, which are incurred during shipping, staging and erecting, and are significantly different than the traditional trucking expenses. 

In the end, a cost-benefit analysis must be done to weigh the modularization cost impacts with the traditional build costs.

Training & Workforce Development

Yes, in a manufacturing model, you still have to invest in people—training and development is just different within this setting. The skills needed to be successful may look similar, but there are elements that need to be included in an associate’s development that a traditional builder might not consider. 

All of the previous elements discussed—logistics management, workflows, modularization—are great examples and are all variations on themes that should be covered. While automation and robotics may enhance construction, there is still a need for humans to use these tools effectively. In an industry plagued with the “dirty job” moniker, these new jobs bolster its reputation. 

Safety

One of the main tenets of prefabrication and modularization is the ability to drive safer work. This does not happen by chance—firms must still plan to be safe. However, there is also the risk of complacency. Manufacturers have just as many risks as contractors, but they are different risks. 

For instance, working on the leading edge of a manufactured component that is 12 feet tall is the same 12 feet that a craftsperson sees on a jobsite. Fall protection, lanyards, leading edge awareness, etc., are all things that still must be considered.

The industry continues to make massive shifts in building methods to keep up with the growing demands from clients and customers. Few could argue that these trends are not innovative and progressive. However, it is key for firms to understand all the factors that go into making drastic strategic pivots.