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Prefabrication: The Changing Face of Engineering and Construction

FMI provides fresh insight on how to start thinking about innovation and prefabrication to prepare your company for the future.

Article by FMI

Today, dozens of innovative companies are reshaping and transforming traditional E&C business models by learning and adapting new manufacturing and prefabrication techniques to work smarter, faster and safer. This “silent movement” is happening in pockets across the country, in different market sectors and across a range of project types and sizes. And while this may not be a sweeping transformational disruption across the entire E&C space, there is no doubt that transformation is happening.

Given that prefabrication has been around for decades, how is it influencing today’s U.S. engineering and construction environment and what—if anything—has changed since we last surveyed the industry in 2013? In Prefabrication: The Changing Face of Engineering and Construction, we provide fresh insights from FMI’s prefabrication industry study (conducted in collaboration with the BIM Forum) and offer several high-level recommendations on how to start thinking about innovation and prefabrication to prepare your company for the future.

A New Kind of Renaissance

The construction industry is back on track since the Great Recession, and total construction employment has rebounded to just over 6.5 million workers (still a far cry from its peak of 8 million workers in 2006). However, despite being almost 20% below its 2006 peak, the industry is struggling to find qualified labor. Compounding these statistics, baby boomers are reaching retirement age at a rate of 10,000 per day, while fewer, less experienced (millennial) workers are moving into the E&C industry.

Simultaneously, the evolution of design and construction functions has taken a leap forward during the past decade, with the transition from electronic drafting to high-resolution digital modeling (also known as Building Information Modeling or BIM). Ubiquitous digital connectivity, cloud computing, 3-D printing and big data are just a few of the evolving drivers that are responsible for the current melding of engineering, architecture, fabrication, construction and other related disciplines.

Today, these factors are setting the stage for revolutionary change and have helped prefabrication and modular construction make a comeback at a time when low cost, resource efficiency and tight schedules are priorities. We are witnessing the undoing of 100 years of expansive industry fragmentation where contractors and designers alike are taking on the role of master builders again.

Geoffrey Golden, president at Golden Construction, stated, “We always saw prefabrication as a three-step process: Create, Innovate and Revolutionize. Create so it functionally works. Innovate so it holistically works. Revolutionize to improve the industry. It took us three years of hard work through our “creating stage,” before we started truly affecting the whole project. We currently reside in our ‘innovate stage’ focused on making prefabrication affect the bottom line. We continue to see more and more success on our projects and look forward to transitioning into a ‘revolutionize stage,’ impacting the industry and ultimately fulfilling our purpose to ‘Build People, Revolutionize the Industry.’”

Today, dozens of innovative companies are reshaping and transforming traditional E&C business models by learning and adapting new manufacturing and prefabrication techniques to work smarter, faster and safer. This “silent movement” is happening in pockets across the country, in different market sectors and across a range of project types and sizes. And while this may not be a sweeping transformational disruption across the entire E&C space, there is no doubt that transformation is happening.

Another important aspect is the fact that prefabrication requires a completely different “control” philosophy. Guy Skillett, director of construction at Rhumbix, explained, “Construction companies are accustomed to planning, sequencing and executing their work using traditional scheduling methodologies. When you move to prefabrication, processes for production planning and control change substantially. Prefabrication relies on managing just-in-time delivery and inventory, and with traditional construction planning methods, you’re pushing your planning out into the future. The problem with that is it’s making huge assumptions about where the project, your materials and everything else will be in the future. Unless you’re paying very close attention to your schedule, updating it appropriately and monitoring at the right level of detail, these forward-looking forecasts may not necessarily be reliable.”

Project inefficiencies and improved technologies drive prefabrication. Study participants listed the following top-three factors in driving the demand for prefabrication: 1) The need for productivity improvement and lean construction, 2) improved technologies and 3) competitive advantage (in winning bids and increasing profits).

Innovating with Prefabrication: It’s More Than Just Technology

Prefabrication is not new, yet our findings show that the industry is still struggling to adapt this manufacturing technique at a broad level. With the rapid emergence of innovative technologies, such as augmented reality, 3-D scanning and printing, XD-BIM, drones, etc., it is easy to get caught up in all the technology buzz and forget about what it really takes to innovate and change.

From our work with clients and conversations with study participants on the topic of prefabrication, one thing has become very apparent: The biggest barrier to change and transformation as it relates to prefabrication is not technology, it’s culture. Getting people to embrace new ways of thinking and doing work differently is one of the most challenging (and most critical!) aspects of successful change.

Looking Ahead

In the wake of the Great Recession, companies of all sizes have started to redefine themselves by looking at new and innovative ways to deliver projects and explore new “spheres” of the built environment. While some have made more progress than others, the industry still has a long way to go to increase productivity and overcome project inefficiencies.

However, there is a distinct undertone of emergence here that presents growing concerns and opportunities for the successful company of the future. There are new questions and problems to be tackled and solved, including:

  • What will the construction/manufacturing/design firm of the future look like?
  • What role will prefabrication play, and what happens if our company doesn’t begin the learning curve now?
  • Where will we find the talented people to work in the emerging world of integrated technologies and project teams?
  • The new master builders will need to solve these problems, and today’s “design, engineering and construction industry” organizations will likely be positioned very differently 10 to 15 years from now.

The complete report, “Prefabrication: The Changing Face of Engineering and Construction,” is available for a free download.

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Prefabrication: The Changing Face of Engineering and ConstructionEthan Cowles is a principal at FMI. Ethan has worked with both general and self-performing contractors helping them to develop a strong understanding of the financial risks and rewards inherent to operational issues. Ethan assists these contractors to maximize productivity and minimize risk by implementing proactive management processes. He may be reached via email at ecowles@fminet.com / LinkedIn

Prefabrication: The Changing Face of Engineering and ConstructionSabine Hoover is FMI’s content director and chief editor for the FMI Quarterly. She is responsible for leading and setting strategic direction for research and content development across the organization. Sabine may be reached via email at shoover@fminet.com / LinkedIn

FMI

FMI is the leading management consulting, investment banking and people development firm dedicated exclusively to the engineering and construction industry. FMI professionals serve all sectors of the industry and combine more than 60-plus years of industry context and leading insights to achieve transformational outcomes for our clients. We have subject matter experts in the following practice areas and serve clients throughout the U.S., Canada and internationally.

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