When Harry met Sally

The movie 'When Harry met Sally' explores the question "can men and women be just friends?". The AEC equivalent is the relationship between offsite manufacturing and traditional construction.

In the movie Harry and Sally meet regularly over many years and then part again for extended periods of time. But each of them changes as time goes by until (spoiler alert) they eventually find true love and we are left to assume they live happily ever after. Offsite manufacturing and traditional construction are much the same. They have tried being together many times, Take a look at this video from 1954 ( https://www.youtube.com/watch?v=5_0U8pTlCpw ) and you'll see the industrial revolution meeting the demand for housing. But that love affair did not last. The 1960's brought much the same thinking back again ( https://www.youtube.com/watch?v=tkHlmVO2rQA ) but again it did not quite stick.

Fast forward to today and look at just some of the same ideas being promoted across the world :-

In UK https://www.youtube.com/watch?v=gdewiULgSEc

In India https://www.youtube.com/watch?v=P5zrnAeJFco

In Australia https://www.triaxtec.com/workersafety/2018/04/24/modular-construction/

In the USA https://www.usa.skanska.com/what-we-deliver/services/innovation/prefabrication-industrialization/

Just a few examples from hundreds all over the world. In the US today there are over 200 modular building companies in the market. This time offsite manufacturing and traditional construction are better off together than apart. Harry and Sally were right.

But why now ?

Well its a perfect storm of several factors:-

1. Building supply cannot meet projected demand
2. Building costs are outstripping GDP
3. Technology now allows digital fabrication at scale
4. Labor shortages and costs limit market growth
5. Owners have now culturally accepted vertically integrated suppliers
6. Offsite capacity is growing and driving down costs
7. Traditional construction margins mean risk and reward are not balanced
8. Performance based design codes create more freedom for component designers
9. Investment in construction disruption is at an all time high
10. Construction is the last major industry not yet disrupted

I have been in the construction industry since 1979 and have been involved in several projects that sought to change how large complex buildings were designed and delivered. Today is the first time in my experience that all the parts and pieces are in place for the industry to actually change. However change in construction is typically at a glacial pace and so the question most people have is not about whether change is coming but rather the speed this change will occur and what will it mean to me?

I describe the 2018 situation as brackish. This is the stage in which the fresh (faced) water of offsite construction mixes with the salty voluminous traditional market and each impacts the other. In 2018 we see a market in which offsite is a part of almost every project. It may be in the form of modular boilers, hospital head walls, pre-assembled partitions, curtain wall systems, bathroom pods or many other items but its there now. On almost every project there is an opportunity to mix stick systems with offsite manufacturing to some degree and in every case its done to save time, money or both. Brackish Construction is with us today and the dilution will continue for some time to come.

But do not be complacent because while wholesale change is not yet here the impact on the market is occurring now.

One of the major changes with moving to fully offsite is that you cannot design a project in a traditional manner and then obtain a competitive tender with an offsite manufacturer in the mix (vs traditional subcontractors). Buying a building made as components in a factory requires that decision to be made upfront at concept stage, or latest at 50% schematic design stage.

The reasons for this are that offsite solutions involve fully integrated components to be made in which the structure, electrics, plumbing and sensors are installed together. That is why bathroom pods work well as they are fully integrated solutions in which labor productivity in the factory exceeds that on site, and those savings are substantial enough to pay for the capital equipment, factory and transport and still at least match the price. You cannot bid out the bathroom pod electrics separately from the pod, it just does not work.

So the first things that have to change are the processes and products from the AE services professions as they need to align with the manufacturing processes.

This also means the deliverables will change. Architects and engineers deliverables have changed a lot over my career. They once produced detailed methods statements as to how they envisaged a design would be built when it was conceived but now their documents are guidance for the builder to produce shop drawings and are also used to obtain permits. This has to change as designers will need to understand manufacturing processes, construction logistics and deliver fully integrated machine code files in an offsite future. Shop drawings will disappear and the age of the designer-maker will emerge.

The process will also change. The age of the CM pre-construction advisor or the design-build contractor arrived to fill the gap vacated by the architect and engineer over the last 20 years. This put the constructor in the room at the inception of a project. The contractual triangle of design-customer-builder was broken and the vertically integrated company emerged. More and more customers say they'll use a vertically integrated model more in the future than in the past, this is the model that is required to support offsite manufacturing.

So the designers and the procurement method/pricing will change first. This brackish stage is rather like Taxi-Cabs and Uber co-existing but knowing that customer demand will decide the relative balance of each. Change is here, its all around you.

Today's AEC firms are faced with some decisions. Strategic plans typically run for 5 years at a time and are renewed every 2 years, they probably have had some validity looking out 3 years and that has been a reliable enough cycle over the past 50 years. Looking forward that approach will not hold as we have disruption in all segments. Change will happen fast. Think about how internal combustion engine makers are looking at electric vehicles, hotels looking at Airbnb, stores looking at Amazon and imagine how you should look at offsite manufacturing. Its that significant.

Harry and Sally are not married yet in this story but the wedding invitations are at the printers and the honeymoon is booked. Don't miss the ceremony or you'll regret it.

Steve Burrows CBE PE CEng FASCE FICE LEED-AP

[email protected]

415-302-3120