OMC0064 - Evidence on Off-site manufacture for construction

University of Cambridge – Written evidence (OMC0064)

Submitted by: Professor Campbell Middleton* and Dr Eirini Konstantinou**

The authors are the Director* and a Research Associate** at the Laing O’Rourke Centre for Construction Engineering and Technology in the Department of Engineering at the University of Cambridge. The mission of the centre is to transform the construction sector, in partnership with industry and government, by delivering disruptive change through education, innovation, research and policy leadership.

Definition:

Off-site manufacture is the production of non-volumetric components, such as pre-cast concrete walls, beams, flooring or volumetric (modules), such as bathrooms, kitchen pods etc. in a factory and their transport and erection into their final position onsite.

Perceived advantages of offsite manufacture for construction

1.1 Off-site manufacture offers the opportunity to employ an efficient production line and well-organized working environment. This leads to a) predictability of the daily output [1], b) improved quality of the end product through standardised processes [2], c) up to 70% reduction of material waste compared to conventional construction [3], d) improved working conditions as employees are protected from harsh weather [4], and e) sustainability (e.g. precast concrete manufacturing in the UK has reduced carbon emissions by 26%, mains water consumption by 31%, and waste to landfill by 95% over the period 2008 to 2016)[5].

1.2 The main drawbacks of off-site manufacture for construction are associated with: a) the transportation challenges of off-site manufactured “products”; mainly due to the size and weight of the prefabricated “products” and the potential shortage of space for trucks to manoeuvre onsite [6], b) difficulty achieving economies of scale due to the customized nature of construction projects in terms of size, shape etc.[7], and c) difficulty in making changes to designs at any stage of the construction project due to restrictions of factories’ production lines [8].

1.3 The main factors influencing clients to choose off-site manufacture [9] include the potential to achieve significant reductions in programme time and improved quality of the end product [10] (e.g. Travelodge chose modular construction for a new hotel in London that resulted in faster completion time leading to an increase in revenue of £179,000 [11]). Contractors are influenced by the opportunity for increased cash flow and turnover through self-production of the off-site “products”[12]. Architects and design engineers are likely to be influenced by the opportunity to improve the quality and performance of their designs by the use of standardized and detailed off-site “products”. This should reduce the number of design errors which are a major cause of rework in construction and can add up to around 5% of the total construction costs [13].

2.1 $C:\Users\User\Eirini_PostDoc_LOR_Centre\House of Lords\Literature\cost comparison_fig 1.jpg$ One of the objectives of offsite manufacture is to reduce total construction cost (capex) (in particular due to improved certainty of delivery and reduced programme times) however there is surprisingly limited data and evidence to verify this. A comparison of the total cost of eight case studies undertaken in the UK, Spain, Canada and USA and covering a wide range of project types such as housing, education, health care, retail, and industrial facilities, concluded that modular construction achieves on average a 16% cost reduction compared to conventional construction (Figure 1)[14]. Seven out of these eight case studies were also compared in terms of programme time and it was found that this is reduced on average by 39%, with a maximum reduction of 60% down to a minimum of 25%, when compared to conventional construction (Figure 2)[15]. The main reason for this programme time reduction is that off-site manufacture allows several tasks to progress in-parallel (e.g. whilst the foundation is being constructed in-situ, the superstructure can be prepared off-site).

$C:\Users\User\Eirini_PostDoc_LOR_Centre\House of Lords\Literature\time programme_figure 3.jpg$

2.2 Off-site manufacture can increase productivity as labour costs may be reduced due to improved efficiencies in a factory setting as many of the detrimental factors reducing productivity on conventional sites are removed. A survey carried out in the USA, evaluated the impact on labour productivity of 83 factors and concluded that the main causes of low productivity are related to mismanagement (e.g. availability, quality, and lack of construction equipment, materials, tools and consumables)[16]. A survey in Hong Kong found that overcrowded sites and rework can reduce labour productivity by 5.1 to 13.6 man-hours per week per person [17]. At present there are no cost effective or automated methods for monitoring productivity and the development of such methods, for example using computer vision techniques, offers a significant opportunity for the industry [18]. Reducing labour costs is crucial for the improvement of construction. Note that labour productivity in construction globally has grown by just one percent per year over the past two decades [19].

2.3 Health and safety of construction workers is improved with off-site manufacture. A report on sustainability published by Buildoffsite [20] shows that the UK manufacturing sector has 29% less $C:\Users\User\Eirini_PostDoc_LOR_Centre\House of Lords\Literature\injuries_fig 2.jpg$ major injuries and 52% less fatalities when compared to the UK construction sector. This conclusion is based on data provided by the Health and Safety Executive (HSE)[21] (see Figure 3).

2.4 The potential for reduction of programme time and labour cost also applies to housing. In particular, the better quality of product implies that less maintenance will be required. A study by McKinsey reports that housing projects can be built by up to 30% less if off-site manufacture is chosen [22].

Potential barriers to wider use of offsite manufacture

Some drawbacks of off-site manufacture for construction suggested by the top 100 UK housebuilders are as follows [23]:

a) 68% percent of the respondents identified the large capital cost required to build a facility for offsite manufacture as the primary barrier to adoption (e.g. the investment required for a factory in the US to build 12,500 houses per year is $30 million (≈ £21.6M)[24],

b) 43% argued that it is difficult to achieve economies of scale with off-site manufacture because there is a lack of design standardization and lack of available product range,

c) 29% identified the difficulty involved in changing designs as a barrier, and

d) 29% of the respondents converged to the conclusion that the complex interfacing between building systems i.e. in-situ production/prefabrication, is also an important barrier.

At present, there is a skills shortage in the UK construction sector. With higher productivity in the factory environment it is expected that less workers will be required, however they will need to be trained in new techniques that differ depending on the levels of factories’ mechanisation and the type of off-site “manufactured” products [25]. A survey has indicated that manufacturers tend to prefer employees with mainly general/semi-skilled abilities instead of traditional craft skills [26].

The potential constraint on architectural ambition can be overcome with innovative building materials and systems. The latest advances in façade technology allow differentiation of building aesthetics. For example, Laing O’ Rourke’s off-site facility provides an unlimited variety of façade panels [27].

Research to support the development of more flexible production lines to expand the range of current products offered to the industry could help factories achieve the economies of scale and throughput needed to cover the original capital investment.

Government actions

The construction sector deal [28] focuses on three key areas: a) procuring for value, b) industry led innovation, and c) skills for the future. Within these areas, work streams on digital engineering, manufacturing and performance provide a very comprehensive and robust programme. The sector deal provides a unique opportunity for implementing disruptive and transformative improvements in the construction sector that should deliver significant improvements in productivity and performance. The responders believe there is considerable scope to include provision for independent, objective research within the sector deal to obtain the evidence base and data required to support policy decisions by government and industry. At present there is a dearth of such evidence available in the construction industry as whole.

For the benefits of off-site manufacture to be realised, design for manufacture and assembly needs to be adopted from the very start of the public procurement process and not retrospectively introduced to modify a design based on conventional construction methods. The maximum value is likely to be achieved if the key stakeholders in the supply chain are also involved at the earliest stage of the process. The public procurement approach called “balanced scoreboard”[29] that has recently been adopted in the UK to promote criteria such as sustainability alongside profit could be extended to promote off-site manufacture as well. This might be achieved by specifying the use of off-site manufacture at the tender stage. (e.g. design complexity, location, size) of each project type (e.g. housing, health-care, and education).

RECOMMENDATIONS

Implement an independent academic study to demonstrate the value of off-site manufacture across different sectors in the industry. CIRIA is currently planning a small pilot study to this effect however a more extensive and detailed investigation should be supported.

Implement research, in collaboration with the supply chain, to design and implement standard but flexible interfaces and joints between building components and services.

Establish new procurement strategies to incentivise off-site manufacture by including whole life performance and sustainability criteria in the evaluation process.

Provision of a longer term pipeline of projects suitable for off-site manufacture, supported by framework agreements to provide certainty of long term demand, will incentivise the large capital investment needed to build the factories required to deliver the off-site components.

Support development of digital design configurators and tools to facilitate off-site construction.

Support both academic and vocational training schemes for stakeholders (e.g. architects, design engineers, procurement teams, clients, contractors, supply chain partners and operatives) on the off-site building systems and processes. For example, the Construction Engineering Masters Programme (CEM)[30] at the University of Cambridge educates emerging leaders in the construction industry on the innovations needed to transform the construction sector and more specifically, the implementation of the latest digital engineering and off-site manufacturing technologies.

26 April 2018