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A Comparative Study of the Ecosystems for Prefabrication: Europe and the US

Project Team

Martin Fischer, Andrew Peterman, Wilfrido Martinez

Research Overview

Observed Problem:

After talking to CIFE members who prefabricate building components in Europe and the US, we noticed that Europeans see advances in the US they find difficult to implement, and vice versa.

Primary Research Objective:

Compare ecosystems for prefabrication in Europe and the US to understand their strengths, identify areas of improvement, and draw parallels between them so that these ecosystems can learn from each other.

Potential Value to CIFE Members and Practice:

  • Provide industry partners with a method to evaluate their current state of practice, and identify and adopt practices developed elsewhere that could bolster their operations.
  • Help prefabricated companies gain a competitive advantage by enhancing their operations based on the 13 key points informing them more heavily.

Research provides relevant insights for:

Owners, designers, builders, operators

Research and Theoretical Contributions

Study the systems and practices of two companies in Europe and two in the US. So far we have analyzed one European company in detail. We studied one of their products, and identified 13 key points that influence their operations. From these points, we identified four key areas that will allow us to draw direct comparisons with our other partners, including: level of vertical integration (with emphasis in the resilience of their supply chain,) standardization practices, project members’ involvement, and information management methods.

Industry and Acadmic Partners

Bouygues, Digital Building Components, GOLDBECK

RESEARCH UPDATE

A Comparative Study of the Ecosystems for Prefabrication in Europe and the US: Update


Abstract
Prefabricated construction is becoming ubiquitous as it challenges the status quo by offering all variety, competitive pricing, high quality, comprehensive service, and responsive delivery. However, we identified a lack of academic studies providing a rigorous analysis of the prefabricated construction practices in the US and Europe. By comparing prefabrication companies in both sides of the Atlantic we expected to point out the main ways in which European and American companies are similar and the ones in which they diverge. Unfortunately, the timing of the pandemic made it impossible for us to obtain data from all of our partner companies (two in Europe and two in the US.) Despite, we were able to complete one case study with an European partner. Based on our analysis we identified 13 points on which the strength of their operations relies heavily, which can be clustered into four areas: level of vertical integration (with emphasis in the resilience of their supply chain,) standardization practices, project members’ involvement, and information management methods. We believe running this case study has provided us with the knowledge to complete our research, and help prefabricated companies identify their strengths and work on their areas of improvement.


Introduction
Construction spending in the US was $1.30 trillion in 2018 [1], or 6.34 percent of the GDP. In the European Union (EU) it represented close to nine percent in 2017 [2]. Despite the central role it plays in the global economy [1, 2, 3], research shows the construction industry is slow to adopt new technologies [4, 5, 6, 7]. Research also shows that industries adapting systems developed by other industries have an edge over industries pioneering them [8, 9]. Prefabrication in construction was adapted from the automotive industry [3, 4, 7, 8] to address the widespread industry view that owners can pick any two of quality, affordability, or speediness for their projects [3]. Hence, in traditional construction is not unheard of owners being required to trade between constraints (Figure 1.) This balancing act creates disruptions between (and within) project processes. The consequence is the delivery of suboptimal projects. Prefabricated construction seeks to challenge the status quo by offering all variety, competitive pricing, high quality, comprehensive service, and responsive delivery [10].


 Trinity of Attributes for Traditional Construction Projects. The majority of these projects require a trade-off between constraints. [Adapted from 3.]

Figure 1: Trinity of Attributes for Traditional Construction Projects. The majority of these projects require a trade-off between constraints. [Adapted from 3.]


Motivation for a Comparative Study
We identified a lack of academic studies providing a rigorous analysis of the prefabricated construction practices in the US [7] and Europe. Furthermore, prefabricated construction companies have taken different approaches to prefabrication, with discrete motivations, and an evident discrepancy between European and American companies. Indeed, the fragmented nature of construction [4, 7, 11] does not encourage collaboration nor knowledge sharing between companies. This means prefabrication companies have mostly developed insular design, fabrication and assembly/construction systems. By comparing prefabrication companies in both sides of the Atlantic we expect to point out the main ways in which European and American companies are similar and the ones in which they diverge. We expect these points will help prefabricated companies identify their strengths and work on their areas of improvement, but most importantly, learn from each other.

We theorized that the in-place systems of these prefabricated companies could give raise to opaque decision-making procedures (e.g. unclear decision maker, timeliness, frequency, and basis,) and independent, company-specific design criteria (i.e. what makes a design good or bad?) We were curious about how the ambiguity in the type and number of design options considered introduced variability (e.g. product-focused or also process- and organization-focused.) Additionally, we wanted to understand if design iteration cycles lacked a defined format. We set out to understand if project participants’ understanding of “design” is mostly circumscribed to their own personal experiences, and the extent to which their knowledge and skills has been surveyed.

Additionally, we wanted to measure (if it had not been done already) the effort spent on projects and timelines. We thought the presence of abundant, non-connected tools (e.g. types, uses,) and disciplines involved (e.g. when, how) created inefficient work. To the extent of our knowledge no prefabrication company has structured platforms or databases to make information and expertise available over time. This creates a gray area where it is difficult to discern between amount of project-specific and project-independent information and knowledge in their projects. Notably, we did not know whether prefabrication companies were taking advantage of Virtual Design and Construction (VDC), and/or the scope to which they did. Existing research focuses on individual or small-scale aggregates of case studies or theoretical frameworks to think about prefabricated construction companies [12].


Research Method
We planned on studying the prefabricated systems of four companies through case studies: two in Europe and two in the US. Unfortunately, the timing of the pandemic made it impossible for us to obtain data from all four companies. We believe the case study we ran with a European company has provided us with the knowledge to conduct research through interviews and relevant information from the other companies to understand the key points that influence their operations. We expect we will be able to validate our findings once we are able to complete our case studies and are able to collect and compare data. All the companies selected for the case studies have a focus on prefabricated construction and already had a set of systems for design, fabrication and assembly/construction in place.


Summary of Case Study #1
Case Study #1 was conducted with a European company with operations in various European countries. We spent time in their central offices, and also visited their factories and construction sites. Together with this partner we decided to focus one of their products that we thought represented their operations comprehensively.  They have standardized processes for the design, fabrication, and assembly/construction of the chosen product. Based on our analysis we identified 13 points on with the strength of their operations relies heavily:

  1. High on-time project delivery success rate
    The company have mapped their whole cycle time, from the time a customer contacts them to the time the customer receives the product (they have discrete cycle times for each of their products.) This mapping includes time and space buffers (capacity buffers are rarely used,) and relies on every stakeholder (including the owner) fulfilling their duties and following the project processes. For this product, the timeline is measured in months.
  2. Low on-site workers to floor area ratio
    Most of the work occurs off-site. This means the company has greater control on variability than many companies that rely heavily on on-site work. Off-site work means a more stable and controllable environment, and reduces the chance of on-site accidents and weather disruptions.
  3. Defined sequence to delivery and place prefab elements
    They have a specific, non-changing sequence to both deliver the elements to the construction site and to place them. This sequence allows them to manage variability efficiently and keep up with the schedule. Space use is optimized too, and allows for a better management of the batches.
  4. High rate of design and construction procedures repeated across projects
    The company uses the same elements (e.g. columns) on this product notwithstanding the location, only changing the number of elements based on the project surface area. Only the exteriors are customized for each project.
  5. Customized exteriors
    The design team focuses mostly on the project’s exteriors, and the BIMs of the interiors are generated rapidly. At the same time, on-site workers already know the procedure and sequence of most of the project.
  6. Large market share
    Having a large market share means the company has had plenty of opportunities to refine their product, develop strong relationships with their clients, and focus on innovation. This share has also allowed them to bring their operations to other markets.
  7. Formalized workflow to make decisions
    Unexpected events are bound to happen in construction projects. For this product in particular, the company have developed a formalized workflow to guide decisions of the team members. Because most problems have happened before, having access to a system to guide the approach to the solution saves time and avoids the exacerbation of the mistake.
  8. Large share of in-house produced elements
    By producing most of their elements in-house, the company can modify them whenever they feel these elements are no longer meeting their needs. At the same time, they are able to manage the uncertainty related to shortages or overabundance of elements. Also, this guarantees each of the elements meets the quality the company expects.
  9. Long-term relationships
    The company has developed long-term relationships with both clients and strategic partners. Former clients are likely to contact them when they want to develop another project, and recommend it to partners. Strategic partners, on the other hand, bolster the company’s innovations, and means partners are likely to help out enhancing their operations by developing products that meet specific company needs.
  10. Foundation for a company-wide knowledge base
    While the company does not have a single source of information in place, an effort to establish it is underway. This means all stakeholders will have real-time access to information on their current project(s) and employees will be able to consult information on similar projects developed by the company. This enhances and speeds up the decision-making process.
  11. Specific tools used at each stage
    Stakeholders know what tools are to be used on each activity to comply with the project schedule. Digital tools are mostly integrated and developed by the same software company, and factories are highly automated. Tools for assembly both on- and off-site are also defined, and manual workers are trained on their use.
  12. Virtual Design & Construction
    The company does not have a VDC department per se. However, they have set the goal to have one by 2025 by transforming their BIM department. As for now, they are starting to adopt the VDC components that they believe will help them the most in the short term to set a foundation, integrating other components later on as they fulfil their target.
  13. Supply-chain ownership
    By effectively owning their own supply-chain, the company is able to have a better flow of materials and information, have better data visibility, apply lean concepts, identify areas of improvement and opportunity, and manage variability in an effective way.

From this case study, we identified four areas that will allow us to draw direct comparisons after finishing running the case studies with our partner companies. These are:

  • Level of Vertical Integration
    Benefits include increased sharing of information between stakeholders, and the product supply chain [4]. In the case of this company, a high level of vertical integration  works well because – besides having a stable and collaboratively supply chain, in which most elements are produced in-house – the demand is consistent (and expected to continue, given their large market share), and the product is well-defined.
  • Standardization Practices
    Decision practices are methodic based on a formalized workflow, reducing room for variability. The process to consider diverse design options is well-structured, and mostly has to do with the customization of the exterior of the product as most design and construction procedures are repeated across projects. The sequence to deliver and place prefab elements to the construction site leaves no room for improvisation, and time and space buffers are rarely used. Their high on-time delivery success rate can be attributed in part to the mapping of the cycle time, which allows the company and project managers to  know the delivery timeline for this product and adjust accordingly when there are setbacks or unforeseen events. Indicating the specific tools that are going to be used at each stage also reduces uncertainty and helps avoid misunderstandings. Finally, the timely involvement of the projects’ stakeholders at the different stages is remarkable, as indicated, for example, on the ratio of workers to floor area and the time window given to the owner(s) to take project-related decisions.
  • Project Members’ Involvement
    The product relies on the knowledge each project member has that allows him to  perform his activity and finish it on time based on the established processes. Additionally, their predisposition level to learn and implement new tools in the workplace (e.g. VDC) indicated a willingness to keep improving.
  • Information Management Methods
    The density of the knowledge is capital: if it is project specific, it means the project members will not be able to use it on their other projects. If it is project independent it means the information will be useful throughout their careers at the company. The company is taking the necessary steps to formalize their knowledge base and establish a single source of information. The effort expended will be reduced as these become ingrained in the company.

Conclusion
Prefabricated construction is becoming ubiquitous. As prefab companies develop their own systems in isolation, the opportunity to learn from each other is lost. We are addressing this problem by studying the systems and practices of companies in both Europe and the US. So far we have analyzed one European company in detail. We studied one of their products, and identified 13 key points that influence their operations. These points include their more remarkable strengths while also identifying areas of opportunity for improvement.

We learned they have standardized processes for the design, fabrication, and assembly/construction of their product. Their success rate of on-time project delivery  is high (the whole cycle time, from the time a customer contacts them to the time the customer receives the product is measured in months), and there is a low on-site workers to floor area ratio (compared to the ratio reported by the U.S. Bureau of Labor Statistics for industrial construction in 2018). They have a specific, non-changing sequence to both deliver the elements to the construction site and to place them. Additionally, the design and construction procedures are mostly repeated across projects, with the exception of the exteriors, which are customized for each project. We also found the company has a very large market share in their home country, and are present in other markets as well. For the studied product, there’s a formalized workflow to guide decisions in case of unexpected events. The company produces the majority of the used elements in-house, and they effectively own the supply-chain. An effort to establish a company-wide knowledge base is underway, as well as a serious effort to incorporate VDC into their operations within the next five years.

From these points, we identified four key areas that will allow us to draw direct comparisons with our other partners, including: level of vertical integration, standardization practices, project members’ involvement, and information management methods.

Next Steps
This is a preliminary study on the ecosystems for prefabrication in Europe and the US. At this stage, we have identified four key areas that will allow us to identify the practices that could bolster the systems of prefab companies. We expect to run the remaining three cases studies using our findings as a foundation. If it is not possible to conduction on-site research we will use a protocol that based on remote interviews and access to data on one product of our partners allow us to run a data-based, numerical comparison.


References
1. U.S. Census Bureau (2019.) “The Value of Construction Put in Place Survey.” (https://www.census.gov/construction/c30/c30index.html.) [Accessed 05/09/2019.]
2. European Union Commission for Economic and Financial Affairs (2018.) “European Economic Forecast.” (https://ec.europa.eu/info/sites/info/files/economy-finance/ip077_en.pdf.) [Accessed 05/09/2019.]
3. Griffith, R. & Scheiber, M. (2015.) “Industrialized Construction.” San Diego BIMFORUM.
4. Fischer, M., Ashcraft, H., Reed, D., & Khanzode, A. (2017.) “Integrating Project Delivery.” (1st Edition.) Hoboken, NJ: Wiley.
5. Zhang, J., Long, T., Lv, S., & Xiang, Y. (2016.) “BIM-enabled Modular and Industrialized Construction in China.” International Conference on Sustainable Design, Engineering and Construction: ScienceDirect.
6. Alarcon, L., Maturana, S., & Schonherr, I. (2009.) “Impact of Using an E-Marketplace in the Construction Supply Process: Lessons from a Case Study.” Journal of Management in Engineering. 25 (October,) pp. 214-220.
7. Pullen, T., Hall, D., & Lessing, J. (2019.) “A Preliminary Overview of Emerging Trends for Industrialized Construction in the United States.” White Paper.
8. Ballard, G. & Howell, G. (1995.) “Toward Construction JIT.” Third Workshop on Lean Construction, Albuquerque.
9. Bossink, B. & Vrijhoef, R. (2008.) “Innovation Management in the Construction Supply Chain.” Construction Supply Chain Handbook. (May,) pp.14.1-14.21.
10. Hopp, W. & Spearman, M. (2008.) “Factory Physics: Foundations of Manufacturing Management.” (3rd edition.) New York, NY: McGraw-Hill.
11. Fergusson, K. J. (1993.) “Impact of Integration on Industrial Facility Quality.” Dissertation.
12. Lessing, J., & Brege, S. (2015). “Industrialized Building Companies’ Business Models: Multiple Case Study of Swedish

Original Research Proposal

Proposal 2019-08

Funding Year: 
2020
Stakeholder Categories: 
Owners
Operators/Facility Managers
Designers
Builders