What construction can learn from manufacturing

10 August 2017

Those who work in one industry are normally busy enough without enquiring into other industries’ methods. 

As construction methods and processes change, is it timely for the industry to pause to examine developments in the manufacturing industry?

Reducing construction costs

Increasing the use of offsite manufacture in construction – where components are made in factories and then assembled into buildings on site – could bring several important cost benefits.

Offsite manufacturing is not weather- dependent, uses more readily available factory-based labour, rather than the craft skills that are perennially in short supply, and allows for standardisation of products – and for economies of scale, which can be hard to achieve if every building is constructed from bespoke components.

The most notable example is Legal & General (L&G) Homes’ factory near Selby in the UK, which was developed to respond to anticipated demand generated by the government’s housebuilding drive.

Once running, it aims to produce up to 10 homes a day using cross-laminated timber components.

An L&G Homes spokesman says: “We are doing something new, essentially building precision-built homes, which ensures consistency and accuracy of build, is highly energy efficient, it can happen 24/7 in dry, controlled conditions and, importantly, will be economically viable and deliver much needed scale.”

Addressing the future skills shortage

Contractor Willmott Dixon has turned its attention towards an offsite manufacturing approach because of the “demographic time bomb affecting the industry”, says Product Director, Tim Carey.

The resulting skill shortages – if unaddressed – threaten to leave Willmott Dixon without the skilled resources it needs to deliver, and it therefore put in place a strategy to ‘design out this capacity gap’. 

Carey says: “Manufacturing operates at about 70 per cent to 75 per cent efficiency whereas I’d argue that construction manages around 35 per cent at best.

“Unlike in construction, most manufacturers do the same things time and again in an agreed way with continuous improvement.

“We need to follow their lead, and start to truly treat buildings as products assembled from standardised components. The best analogy I use is Lego, where you have standard blocks but they can be assembled in infinite permutations and the only limit to design is your imagination. 

“Our approach with initiatives such as our ‘Yellow Book’ is to define and standardise our components in conjunction with our supply chain partners and then use them time and time again.”

Willmott Dixon has emulated manufacturers’ practice of working with sole suppliers, rather than having multiple sources of essentially the same products.
Carey says: “We need supply chain partners who will give us best value components on a repeatable value, noting that very rarely is best value equatable with the cheapest offer.”

But he says both investors – L&G Homes aside – and customers need more confidence in the capacity of offsite suppliers to invest enough for offsite manufacturing to take hold.

“It’s still quite a fragmented industry. Although there are some major offsite suppliers, the bulk are of a much smaller scale, so overall capacity remains relatively low. 

“One solution would be to develop ‘open source’ offsite technical solutions that can be delivered by several suppliers, which would help to install confidence in the market and drive investment,” adds Carey.

Lower life-cycle costs?

In theory, a standardised building should result in lower life-cycle costs because it becomes easier to source spare components and perform maintenance.

But Carey says that argument is yet to cut much ice, as “there remains the age-old gap between those who commission a project – who are focused on capital costs – and those who later operate and maintain it”.

Experts in manufacturing, such as Patrick Lee, Senior Productivity and Performance Consultant at the UK body Engineering Employers Federation are getting requests to counsel a number of the UK’s construction firms. 

He says manufacturing has learnt much from Japan’s emphasis on productivity, efficiency and quality with a “focus on customer value and processes directed to that”.

This has led manufacturing to organise itself so that “instead of people being kept busy, materials and products are kept busy, to create quality through shorter processes with shorter lead times.

Offsite potential

Change will have to be driven from the top of construction firms to succeed, Lee thinks, as local teams, focused on their latest project, lack the authority to instigate such a departure. 

He thinks construction should make the change as offsite manufacturing offers “massive potential and I think it will happen due to financial imperatives, because whoever does this first will gain such a cost advantage that others will have to follow when they see the results”. 

This would also change the people construction recruits and the skills with which it must equip them.

There will also be demand in robotics engineering, digital design and production management, says Ben Lever, Future Skills Manager at the Construction Industry Training Board (CITB), and so potentially more high-skilled technical roles and factory ones, as well as multiskilled traditional trades.

Lever says: “Absolutely, we need to learn from manufacturing and we have been speaking to manufacturers – in particular those that have already worked with construction firms in joint ventures.

“There is a great deal to understand about the skills required for using data, robotics, lean principles and quality assurance.”

Adoption of offsite still has some barriers to overcome “but I think new entrants into the housing market are bringing the disruption that could spark significant growth and the need for new skill sets”, he says.

Accelerated construction programme

“Offsite is likely to be driven now because there is going to be more government support, as shown in the UK government’s housing White Paper, and big infrastructure projects have indicated a desire to use offsite as, something massive like Hinkley Point needs to think about regional skills supply.”

February’s UK government White Paper, Fixing Our Broken Housing Market, said there would be an accelerated construction programme. 

Under this, the government will help diversify housebuilding by partnering with small and medium-sized firms to build 15,000 homes by 2020 on public land using off-site manufacturing techniques, so “generating the confidence for the private sector to invest in new capacity”.

Lever notes that “investing in a radically different approach is difficult in an industry where profit margins can be low”.

But as Lee and L&G Homes both foresee, offsite has the potential to substantially lower costs and may need only a ‘tipping point’ to become prevalent.

Lee concludes: “I have talked to a number of construction companies about this. Some are looking to modularised manufacture so they can join together components created offsite, but it is a massive cultural change for those used to the way construction works.” 

For futher information, please contact Graham Medland, Account Handler on +44 20 7528 4574 or email graham_medland@jltgroup.com

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