Disruption in motion
Zoom out/zoom in: An alternative approach to strategy in a world that defies prediction
A few years ago there was a site in the Melbourne CBD that no one had been able to make a go of. It’s a prime location but the basement is filled with a substation that feeds power to a large proportion of the CBD. The air rights had changed hands a number of times but no one could find a way to build anything that fit in the restrictions on vibration, weight etc.
A local architect, Nonda Katsalidis, eventually acquired the air rights as he had an idea that he wanted to try out. His thought was to treat mid- high-rise building as a design-for-manufacture problem, rather than a building problem. Create a complete digital model of the building, down to each washer, cut the model into container-sized modules, de-layer the module models and feed them to NC machines on a production line, assemble the modules, ship to site, and lift into place. Think building with Duplo rather than Ikea. Nonda founded Unitised Building <https://www.unitisedbuilding.com> to capitalise on the idea. The building should be lighter and would avoid the on-site work that created the vibration etc. The digital tooling and production line is al off the shelf, and the decline in car manufacturing locally provided easy access to the expertise needed. Construction is accurate to within 5mm (they can do 2mm) so the modules just clip into place. The approach worked and the result was Little Hero <https://www.unitisedbuilding.com/myportfolio/ub1-little-hero-melbourne/> which, by all accounts, is a nice building to live in. The eight story building was erected in size weeks rather than ~7 months, something like 40% cheaper, and you can’t pick the building from a more conventional one (unless you know what to look for). (Unlike the Brooklyn project, which gets all the publicity, and which was a complete disaster <https://www.builderonline.com/building/a-modular-tower-grows-in-brooklyn_o>. Amusing as the people behind that project saw what UB was doing.)
Since then the building process has been improved and more firms have got involved. There’s even an industry organisation – prefabAUS <https://prefabaus.org.au> – that we’re involved with. Over all the process is ~80-60% faster, 10% lower material costs and 40-60% lower total cost, 90% less on-site waste, a lot safer (no live edges and, so far, no deaths) and you can build pretty much anything. The latest buildings are high-rise, over 50 stories. A little under 1/2 of all high rise construction in MEL is now modular off-site, and the firms using the new process are doing the vast majority of their work this way. As it’s a natively digital process it’s also changing the relationship between builder, engineer and architect. The systems uses parametric models, so the building is sketched out in an afternoon. The architect then skins it, and the engineer certifies the model. The bill of materials and all costings come directly from the model. The model drives the production line and also generate instructions for the trades. Not only is construction, design is faster and more interactive. We wrote about this in Your next future for Deloitte Insights <https://www2.deloitte.com/insights/us/en/focus/disruptive-strategy-patterns-case-studies/capitalising-on-disruptive-change.html> as it’s a great example of how it’s system change, rather than technology, that causes disruption.
Movement behind the new building process has been developing slowly as there has been a number of barriers to overcome. None of them are technological though. For example, the risk management processes the banks use, based on Quantity Surveying, don’t work for this model. The builders were forced to find alternative funding for the first few projects while they worked with the banks to develop an alternative risk management process. (The solution was, in the short term, to inspect off-site production on much shorter schedules, while the longer term solution is to get big slabs of the process certified as building products.) Builders have been slowly chipping away at these barriers. Manufacturers are also starting to get involved, which makes perfect sense as it blurs the line between manufacturing and building.
We’re now at the point where this new building process is about to tip over into major disruption.
Last year UB was working on a site with awkward access that would block access to a lane. To get around the problem the offered to only construct at night: put an entire floor in outside business / peak hours (which they can do as the process is so fast), and then have the trades go through in the day. Everyone thought that it would be too noisy, but a test showed that people living near the construction zone didn’t hear it. The building went ahead and everyone is happy. As a result of this project Melbourne City is considering to make it mandatory that all new construction can only be done at night, to avoid urban disruption. This means that any new building must be built with a modular off-site process, as a conventional processes is too slow and noisy. The result is that the majority of builders, those without such a process, are scrambling to get their head around the approach, or be prepared to be excluded from the market. Disruption! (I should point out that PW and I have been pointing out to them for some time that this moment has been coming.)
It’s a classic example of start by solving a problem that existing techniques don’t work for, and then slowly engulf the market and push out the old approach.
This article was written by Peter Evans-Greenwood, Deloitte Center for the Edge, Melbourne Australia