Chapter Corner

Winds of Change: Industrialization of Construction

Posted in: Features, November/December 2017

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The current symptoms of skilled labor shortage, faster-paced jobs, lower margins, and pressure from global competition are only signals of the times to come. It is not going to let up, and construction is never going to go back to what it was. So, the question is how to cope with it. We first introduced how to go about this with an article published in February 2017 in Insights, "Winds of Change and the Event Horizon" (www.ieci.org/newsroom-and-insights/winds-of-change-and-the-event-horizon). This article explains what happens when industries go through industrialization. Textiles, farming, automotive, and other skilled-trade-intensive industries have expanded significantly and kept up with increasing customer demands by following five steps which will be explained in this article.

Industrialization of Construction®

Industrialization is one of three shifts that will happen during the transformation and growth of an industry. The three shifts that are occurring simultaneously in construction are Industrialization, Disruption, and Market Shift. Industrialization can only happen through changes in the management of business operations. Factors that have driven industrialization in other industries are having the same impact on construction today. Much like changes in refinement of oil combined with improved compression ratios allowed internal combustion engines to replace steam engines; today, we see the introduction of prefabrication and enhanced computer modeling are currently impacting the construction industry. Overall, the changes that constitute industrialization include any or all of the following:

  • Management of Labor
  • Management of Work
  • Lean Operations
  • Modeling and Simulation
  • Feedback From the Source

Management of Labor

The starting point for the Industrialization of an industry is management of labor. This means understanding what the skilled trade labor does to go from a hole in the ground to an energized building. Electricians are trained and enjoy making electrical systems function, and very often have to improvise to make this happen on jobsite environments. But, as Frederick Taylor (the pioneer of this first step in industrialization) said, "The labor cannot possibly DO the work and find ways to MANAGE it at the same time" (Ref. Taylor, Frederick (1911) The Principles of Scientific Measurement). Therefore, management's job is to understand what the labor is doing, so they can help manage it more effectively. An example of this is shown in Figure 1. This was a photo taken during a job walk where the foreman was explaining that the bends in the feeder conduit were not in the BIM model or drawings, and happened because the cores in the slab were poured in a way that was going too cause these offsets. This "work" was a pain for the electricians, and cost the company money due to unplanned time spent. But it would not be possible to see this without the insights of the onsite labor.

Management of Work

Management of work goes hand in hand with management of the labor, but it is not the same thing. Managing the work begins with understanding the work required, and what it looks like in fine enough detail that each person involved will now see and expect the same thing. This means that the work space, the tools, the equipment, and all the needed material are properly prepared, cleaned, and delivered to the required place at the time needed. The most important piece about understanding “Management of work” is recognizing that the work is far more than the installation; it is everything that must occur for the proper installation to happen safely, efficiently, and timely.

Management of work begins with management of information about the work. Details relating to the work to be performed; how the work is to be completed; and who does what, when, and where are all critical aspects of well-managed projects and of well managed work. In a practical sense, management of work happens with visualization and planning using Work Breakdown Structure (WBS). For more information on WBS, please see October 2017 Insights Magazine, “Work Breakdown Structure from the Field” (www.ieci.org/newsroom-and-insights/work-breakdown-structure-from-the-field). The WBS originates with the project team who knows the work; it contains a structure to visualize the work and provides a basis for effective project scheduling and tracking (see Figure 2 for samples of this process in progress). The information doesn’t replace the skill, it enables the effective application of the skills. Figure 3 shows a concept for thinking about the work made visible through WBS and building a plan for where it will happen (e.g. it doesn’t always have to be ON the jobsite, for instance if prefabrication is used), when it will happen (e.g. it doesn’t have to be the sequence and timing that is on the GC’s schedule), and who will do it (e.g. everything doesn’t have to be done by a journeyman electrician).

Lean Operations

Lean is far more than just working faster and harder to squeeze more out of the resources. The most beneficial applications of Lean principles to construction are those that directly reduce variation and increase the predictability of the entire business system. To be Lean, a contractor must first be Agile. Lean requires knowing the work to the depth that it can be standardized and optimized. The principles of Agile Construction support getting to this depth, such as utilization of WBS, job productivity measurement (usage of ASTM Standard Practice for Job Productivity Measurement, E2691), and externalizing work with prefab and vendor support. Lean cannot happen without effective project planning and an efficient project delivery system. A lean contractor is a contractor that minimizes the waste in their operations by systemically aligning information and resources to complete projects as planned, and achieve the profit sought. Agile exists as a prerequisite to Lean, because first the information, the planning and the steps for execution must all be known and understood by all stakeholders and project team members before waste can be identified or eliminated. Lean results require standardized work; common practices; and often involve common assemblies, such as the utilization of prefabrication.

Modeling and Simulation

Modeling and simulation tools are enabled by information. Models of the building alone, as are today produced with BIM, are only the starting point of Modeling and Simulation in the Industrialization environment. As work moves faster and more and more assemblies are put together away from the jobsite, models of work, information, and processes will be required. Figure 4 shows a comparison of how feeder conduit racks were laid out and produced in prefab compared to how they were modeled with BIM. Early access to the detailed information of an Agile business system can allow for more planning and preparation. The introduction of high tech tools and methods for reducing risk and variation associated with the work is happening faster and faster. New software and hardware are both moving into the industry at a faster rate now that the younger generations are picking up the tools and demanding better ways of doing things. These are not subtle winds of change, future success is very dependent on a contractor’s ability to embrace and implement state-of-the-art tools and technology.

Feedback from the Source

So far each of the changes that constitute the Industrialization of Construction® has involved an element of more proficient information management. Where does the information come from? Much of the information has been out there all along. New estimating software, new CRM tools, new ERP investments are all fine, but the best information has been available continuously; it just needs to be captured and harnessed. The most readily available source of the most realistic information about what is going on with our jobs is right at the job. Information from the source of work and value transferred at the jobsite is the best available information we have for both short-term decision making and long-term learning. Moving the Project Manager to the jobsite has always been widespread practice on extremely large jobs, but developing and using means to capture and utilize information from the Foremen on every job is a sign of Industrialization of Construction®.

We have reviewed the key drivers behind Industrialization, and how they are taking shape in Construction. Knowing this information and using this information are also a major part of industrialization. Because you have read this article and agree, at least in principle with what has been presented, doesn't set your business up in a way to lead or even benefit from Industrialization of Construction. The underlying theme in this article is about having better information more readily available and using that information to take prompt and effective action. In our next article in this series we will explore the "Disruption" that occurs when the current customers are unserved or underserved, and the current successful incumbents are toppled unless they significantly change their business models to adapt. Disruption is the art of using information to create innovative solutions that better serve an otherwise neglected customer segment, creating a new and larger market for our goods and services. 

Dr. Perry Daneshgari is the president/CEO of MCA Inc. MCA Inc. is a research and implementation company that focuses on implementing process and product development; waste reduction; and productivity improvement of labor, project management, estimation, accounting, and customer care. He has also published six books, including Agile Construction® for The Electrical Contractor, and an ASTM Standard for Job Productivity Measurement.

Dr. Heather Moore is vice president of operations for MCA Inc. She holds a Ph.D. in Construction Management from  Michigan State University. Additionally, she holds an MBA from University of Michigan, Flint, and a B.S.E. in Industrial and Operations Engineering from the University of Michigan, Ann Arbor. She was a contributor for the ASTM Standard E2691 “Job Productivity Measurement” and also was coauthor of the newly published ASTM book, “Application of ASTM E2691 Standard Practice for Job Productivity Measurement in Agile Construction®.”

Phil Nimmo has held many positions within MCA and is currently the VP of Business Development. Phil has a B.S. Mechanical Engineering from Michigan Technological University as well as an MBA Technology Management
from University of Phoenix. With MCA since 1999 he has conducted research projects for several industries,
has lead numerous projects to help clients implement the research results effectively incorporating these into
their businesses, and participated in publication of both research and case study results. Additionally, he has Owned and Operated several small businesses, lead operations for a large multi-state / multi-location distributor focused on serving the needs of contractors. Phil has also lead operations and training departments for certificated air carriers, Managed digital controls and mechanical equipment installations, and is accomplished in Automotive advanced product engineering, receiving both US and European patents for vehicle traction control and antilock brake systems.