As a Scot myself, I don’t have the sense of bravado that an American might when it comes to the United States construction sector or the vitality of the American economy overall. But even those of us in the UK have seen most globally important management or productivity trends, with notable exceptions like the Toyota Production Method, coming in our direction from across the Atlantic.
Nobody needs a new management or productivity trend like the construction industry. Construction productivity is abysmal all over the world, but in the UK, contractors and governmental bodies are collaborating to improve. Good progress is already being made adopting building information modeling (BIM). While the UK, according to some measures, has lagged behind Europe on offsite or modular construction, IFS is currently working with a number of customers not only in the UK but in the US, engaged in offsite and modular construction. These companies are investing in their ability to dominate their local markets and sometimes the global market.
The thought that our own construction sector in the UK may be orders of magnitude further ahead in adjusting to this trend than our friends in the United States seems strange.
Yet as I read the McKinsey Global Institute Report from 2017, they very clearly point out the discrepancy between productivity American industries have seen and the distinct lack of progress by the construction sector. The report points out that the United States construction industry could add about 2 percent to the nation’s GDP—about $1.6 trillion—if it was as productive as its peers in other American industries.
According to the McKinsey report, economic value lost by the United States construction industry is largest in the world at $58 billion versus $46 billion for all of Europe. Simply put, this is happening because contractors lack the systems to tackle the problems of the business. EY does a good job explaining how uniquely demanding the construction sector is:
“Construction is highly fragmented: contracts have mismatches in risk allocations and rewards; often, inexperienced owners and buyers find it hard to navigate an opaque marketplace. The result is poor project management and execution, insufficient skills, inadequate design processes, and underinvestment in skills development, R&D, and innovation.”
In the UK, on the other hand, as noted above, investments are now being made to address many of these deficits, and have been for some time now. We are talking about a combined public and private investment in as much as 420 million pounds for new construction technology.
As early as 2011, we had a Government Construction Strategy with a target of BIM Level 2 for government construction projects. This has given us an almost 10 year head start. BIM creates a more collaborative environment for the various contractors, subcontractors and others working on the project which itself helps lower cost. The project owner benefits because all of their project data is structured to aid in managing the rest of the asset lifecycle.
According to a survey conducted by Building Magazine, 73 percent of UK contractors have already used BIM on their projects. Adoption in the United States has been spottier, in part because of the lack of standards or leadership on methodologies or standards. On both sides of the pond, the challenge will be to go beyond simply using a BIM-compliant design tool and getting contractors and subs to collaborate on that data set, delivering what BIM really stands for—better information management.
Modular and Offsite Construction
BIM has one thing in common with modular and offsite construction. Why is this?
Because in both BIM and modular, you strive for a more complete design earlier in the process.
In traditional construction, there are multiple change orders over the project lifecycle to the point where the end result looks very little like the initial design. Manufacturing blended construction by necessity starts with a finished design against which you may consume materials, labor, machine or work station time. With BIM, a more iterative approach has too many knock-on effects because that change impacts components or project elements delivered by other vendors.
Modular can also improve margin—which gets directly to the original point about construction productivity.
Modular lets you complete projects faster, cheaper, with higher quality at a lower risk. It addresses a lot of what is wrong with the industry. It encourages the use of standardized processes, materials and assemblies something that is a big issue in the industry.
But I don’t have a horse in the race. We are here to help you move towards offsite and modular, BIM-enabled future with fantastic productivity and double-digit margins regardless of where you are headquartered or how many countries you operate in.
But if we take a broad view of BIM—as being about more than buildings and more than the information model—it is really all about better information management. And that is required before you move towards offsite construction, maintenance and facilities management contracts or other higher-margin business models that will make you more successful in the market. Find out more by downloading our executive summary, Grow Your Construction Business With Better Information Management (BIM).
Do you have questions or comments?
We’d love to hear them so please leave us a message below.