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Many in the construction industry are aware of the trends and macroeconomic factors rapidly furthering the adoption of offsite and modular construction, over the coming years. Few however, have fully considered the effect this will have on large incumbents and the disruption of the current construction landscape. In a recent report by McKinsey & Co., titled The Next Normal In Construction, the authors outline a dramatic value chain disruption underway:
A value chain delivering approximately $11 trillion of global value added and $1.5 trillion of global profit pools looks set for overhaul. In a scenario based on analysis and expert interviews by asset class, strongly affected segments could have a staggering 40 to 45 percent of incumbent value added at risk, even when the economic fallout from COVID-19 abates—value that could shift to new activities such as off- site manufacturing, to customer surplus, or to new sources of profit.
In this Expert Insight we sit down with Matt Wheelis, VP of Industry Strategy for Construction at Nemetschek Group, the parent company for Bluebeam, and Zigmund (Zig) Rubel, CEO at Forsight Digital to discuss how the offsite disruption will affect established architecture, engineering and construction (AEC) companies.
Q: Matt: Given the many AEC brands under the Nemetschek Group umbrella, how has the company's view changed over the last year on Offsite Construction? Are certain parts of the AEC industry transitioning faster than others?
I’ll admit that I’ve only been Nemetschek for about 6 months now, and I’ve been amazed to learn about the breadth of the solutions from our brands, ranging from design solutions from Graphisoft and Vectorworks, to Bluebeam for managing construction documents and workflow, to Spacewell’s solutions for managing the finished asset. The portfolio is unique in its ability to serve all three aspects of the lifecycle - design, build and operate.
But one area that I’ve seen a great deal of interest in since arriving is in our solutions that drive offsite construction, like SDS2 for steel Allplan’s integrated design and construction solutions that cut across many trades in both the building and civil construction segments. We see offsite construction as a key element of the industry’s drive to find efficiency and productivity gains, and believe there is significant opportunity to be found in solutions that help detailers and constructors work together to achieve an effective workflow.
The areas that are moving the fastest seem to be those that are suitable for repetitive work, whether healthcare, high rise residential, or even data centers. These types of projects get significant gains around the re-use of design elements and fabrication details, and through driving toward factory-like cyclical work both offsite and in the construction field for final installation.
Q: Matt: What do you see as the headwinds and tailwinds for Offsite Construction? How do you expect established AEC technology providers to position themselves in the near future to capture the Offsite market opportunity?
The tailwinds certainly exceed the headwinds for Offsite Construction, with an expectation of net gains for the practice. Over the past several years, we’ve heard a great deal about the challenges in finding enough skilled labor in developed economies, and this pushed many firms to consider how they might improve their labor utilization by moving to a factory setting. The COVID-19 crisis has also led, ironically, to shortages in key material components, pushing the costs of construction and the impact of waste even higher. So, I expect to see an increased emphasis on using new methods of construction to improve the efficiency of both input factors.
Headwinds are present, as well, mostly in the form of inertia. By this I mean that the value chains that most AEC firms participate in are all built around the concept of on-site construction and a reliance on local trade practice for the final details. Moving offsite requires a paradigm shift in the level of planning and integration required all the way from design through final assembly.
At Nemetschek, we’re firm believers in the power of open standards like IFC and PDF to help construction teams interoperate around key deliverables. I expect this to become more formalized as key handoffs must be carefully mapped around the reliability of data between detailing and factory operations, and between the factory and the field. These efforts have been ongoing in the oil & gas construction industry for years, and concepts like interface management and configuration management will need to become common lexicon in the fast-moving world of building construction. AEC technology providers can position themselves by thinking about their customers’ key interfaces in addition to the customer’ workflows themselves.
Q: Zig: Tell us a little bit about the differences in design for offsite/modular construction vs. your traditional onsite project? Do you feel these differences require a new skill set or new design software catering to offsite?
I would suggest that there are two ways to think of offsite/modular. The first way is to think that nothing has changed and I will design my project as I’ve always designed. Once I complete the design, I will think about how the design can be made from available offsite or modular components. This is often done today when an Architect completes schematic design and needs to think about which products should be used in the project. The difference between what is done today and what will need to be done in a future state is that the designer will need to understand what products are available at the Offsite/Modular shop. This typically will require some re-design based on what the fabricator can do and the design intent.
The other way is to understand the requirements of the offsite/modular fabricator and use these constraints to influence the design process. This requires more work upfront, but is less work overall. As an Architect, I can design knowing what the constraints are to minimize or eliminate the changes needed to occur.
I do not think offsite/modular design requires a new skill. I think the architect has all the skills they need to work within an offsite/modular environment. What the architect or designer will need is the new knowledge of constraints as it relates to the system(s) they are using on their project.
Q: Zig: What advice do you have for design firms on how they should prepare for future offsite projects. What should they invest in now to reap the benefits?
First, I would say to always think in a curious mindset. Offsite/modular methodologies offer capabilities and qualities not available to designers currently. In order to fully understand the potential the architect needs to ask questions.
Second, understand what you might be willing to compromise on from a design perspective, to gain benefit from an offsite/modular perspective. Offsite/modular is a systems approach that requires repeating thematic decisions. Knowing where design-intent can be flexible to meet systems thinking is the dialogue the architect needs to have with an offsite/modular fabricator.
Last, and connected with the second point, the real benefits of offsite/modular solutions is re-using knowledge on multiple projects. For example, if an architect prefers a particular offsite/modular solution that is a library part, they can then re-purpose this on multiple projects. There would be no need to get wrapped up into worrying about design intent because the architect would show fabrication requirements in their design. Ultimately, I believe this approach will free the architect from some of the mundane tasks that are normally required in detailing projects and afford them more creativity in their solution.