Industrialization of the Construction Industry

Posted in: Features, September/October 2013

The quality of life for every American relies on the products of the U.S. construction industry. The construction industry accounts for between 4 to 7 percent of the Gross Domestic Product (GDP) annually in the United States over the past 10 years and employs 5 to 9 million workers or 3 to 6 percent of the total U.S. workforce. But such a key industry is under constant pressure to improve productivity, reduce cost, and minimize waste in the operation. While the productivity in the manufacturing industry has improved by 400 percent over the last century, the construction industry’s productivity has, in the best case, stayed flat or turned negative.

One main reason for the improvement of the manufacturing and other industries’ productivity is the “industrialization” of those industries. The manufacturing industrialization lead by American Society of Mechanical Engineers (ASME) from the late 1800s advanced productivity and lowered the relative price of an automobile dramatically. The cost of an automobile has gone from 140 percent in 1910 of the average national per capita income in the United States down to 33 percent in 2012, but for the construction industry, the cost of an average dwelling has gone up from 333 percent to 619 percent of per capita income during the same period.

According to a study conducted by the National Research Council of the National Academies on behalf of the National Institute of Standards and Technology (NIST), the two main challenges and obstacles facing the construction industry were fragmentation of the industry and lack of interconnectivity and interoperability of projects:

  • Huge number of construction companies vs. small number of workers per company make it difficult to apply new technologies, best practices, or other innovations across a critical mass of owners, contractors, and subcontractors.
  • Four segmented sectors—residential, commercial, industrial, and heavy construction.
  • Diverse and fragmented set of stakeholders: owners, contractors, users, etc.
  • Segmented processes: planning and financing, design, engineering, procurement, construction, operations, and maintenance.
  • Variation in the standards, processes, and technologies required by states and different projects.
  • Lack of industrywide strategy and effective performance measures tasks and projects.

Furthermore the same study identified solutions for breakthrough improvement of productivity in five areas:

  1. Widespread deployment and use of interoperable technology applications.
  2. Improved jobsite efficiency through a more effective interface of people, processes, materials, equipment, and information.
  3. Greater use of prefabrication, preassembly, modularization, and offsite fabrication techniques and processes.
  4. Innovative, widespread use of demonstration installations.
  5. Improved performance measurement to drive efficiency and support innovation.

These findings are very much in line with what the manufacturing industry had realized after the advent of industrialization. The Industrial Revolution, started in the mid-1700s, brought the first time in the human history that production levels were higher than self-consumption of the working man, changing increased population from a liability in the traditional Malthusian economy to an asset in Adam Smith’s view, or capitalistic economy.

The new markets and customers required the production facilities to become more productive. Theories regarding managing labor and process began to thrive, reflected in Fredrick Taylor’s “Principles of Scientific Management” and Henry Ford for efficiency of the machine; Dr. Shewhart and Dr. Deming for statistical process control; and ending with Toyota’s Taichii Ohno for application of effectiveness of labor. Through these advancements, the manufacturing industry gained its four-to five-fold improvement in productivity.

Construction Industrialization on Its Way

Industrialization of any industry will rely on the management of labor and work, lean operations with modeling and simulation, and feedback from the source.

In today’s construction environment the value transferred to the customer for every dollar spent is only around 46 cents. More than 40 percent of the tradesmen’s time on a jobsite is spent on material handling; most of the work on a jobsite is performed by highly trained and highly paid skilled tradesmen. To achieve comparable results as have been seen in manufacturing the construction industry has to take the following five steps:

1. Segregation of Work (Work Breakdown Structure or Job Layout)

Fredrick Taylor promoted industrialization of manufacturing by first observing and studying work, then breaking down the work based on the difference between the skilled and unskilled tradesmen, then positioning that work could be designed using scientific methods once it is broken down into finite elements for study. This simply means that the project is broken down into manageable chunks. Once the work was visible and understood, it could have a layout in the most optimal manner and segregated amongst the resources available.

2. Externalizing Work® (Prefabrication)

Henry Ford’s contribution to industrialization was to use the approach developed by Fredrick Taylor and create the work packages separate from the point of assembly of the final vehicle. Externalizing Work® or as it’s known historically, offsite or onsite prefabrication in construction uses this process and techniques to improve reliability, safety, predictability, and productivity of the work performed and labor usage. In a recent example, the Chinese used this method to construct a qualified 15-story building in 6 days, where the traditional methods would have taken 9 to 12 months.

3. Application of Statistical Process Control (Job Productivity Tracking)

Application of statistical process control (SPC) was declared impossible in the construction industry, until the ASTM Standard E2691, developed based on the JPAC (Job Productivity Assurance and Control) proved everyone wrong. The main purpose of SPC is to predict the outcome of a project early on and measure the deviation from the expected output as an ongoing measurement of progress and correction. As part of the Agile Construction® methodology, JPAC® uses the knowledge based on Dr. Shewhart and Dr. Deming’s approach in using ongoing production data to predict the deviation from expected output and project the end of the job outcome deviation. Using SPC, JPAC® is able to issue early warning signals for any common or special causes of deviation. Using segregation and externalization of work, this tool will enable higher effectiveness of the labor usage both at the production and final construction assembly site.

4. Application of Lean Process Design to Improve Labor Effectiveness

Toyota’s approach to the lean manufacturing process design helped the manufacturing industry to focus on reducing waste and activities that did not transfer value to the final customer, reducing their cost of production. Application of lean processes in construction will require the usage of the three steps explained above. To reduce waste, the work has to first be segregated, externalized, and tracked, as explained in Steps 1, 2, and 3 above.

5. Application of 3D Modeling and Simulations and Feedback

To reduce the cost of design, development, prototyping, manufacturing, and product life cycle durability, the next step in the industrial revolution was to manage the required information in an electronic modeling format. Modeling and sim- ulation of all the product development and life cycle management work as an enhancement of the physical understanding and design of the final product and its usage. The accuracy of the modeling can only be improved by a real-life feedback process. The feedback mechanisms in manufacturing are typically sensors, servos, and synchros, where in construction due to its manual final assembly nature, the feedback comes from the final installer. Short Interval Scheduling (SIS®) as part of the Agile Construction® process plays the role of the feedback sensor, servo, or synchro. The Lean Construction Solution Experience developed by Dassault Systems serves perfectly as a feedback provider from a working environment.

To sum up, the above five steps allows the con- struction industry to use a lower composite rate to reduce cost by including more lower-skilled workers in prefabrication or material management services. This relies largely on correct segregation of work and certain modeling technology. This does not mean replacement of the skilled worker but just the opposite. Industrialization relies on expanding the use of the experience and skill of the trade, while reducing the nonskilled parts of their work such as moving material or working unproductively if the job was not laid out and visualized optimally.

To answer some of these challenges facing the industry, Dassault Systems, in collaboration with MCA Inc., have joined forces to apply the lessons learned from design, engineering, and manufacturing to architectural, engineering, and construction industries. The 3D Experience Platform will support this under-taking through applications of:

  • Product modeling (BIM-CATIA®, SOLIDWORKS®)
  • Process modeling and feedback (JPAC®, SIS®, EAE®, CPAC® DELMIA®, SIMULIA®, CATIA®)
  • Information and social network/interactions modeling (ENOVIA®)


Continuous need for better living and globalization forces construction into industrialization with higher quality and lower cost. Lessons learned from manufacturing and other industries on productivity improvement will help accelerate the industrialization of the construction industry, better supported by building modeling and simulation with 3D experience, which has not been seen before. The initial sparks of industrialization of the industry are already evident in examples such as construction of a totally modularized hospital in Dayton, OH, by Skanska. A more efficient way is lying ahead, and only the players who join the bandwagon will succeed because the cost of construction has to reduce.

Dr. Perry Daneshgari is President and CEO of MCA, Inc. Dr. Perry has published numerous articles for the industry and several books. The most recent books that Dr. Perry has published are: “Agile Construction for the Electrical Contractor” and Application of ASTM E2691, “Standard Practice for Productivity Measurement.”

Heather Moore is the Vice President of Operations at MCA, Inc. and a contributing author for “Agile Construction for the Electrical Contractor” and co-author for Application of ASTM E2691, “Standard Practice for Job Productivity Measurement.”

Daneshgari and Moore’s session, “Industrialization of Construction,” will take place Thursday, September 26 at 3:15 p.m. at the 56th Annual IEC National Convention & Electric Expo in Portland, Oregon.