Get ready for a surge in prefabrication activity by contractors.
FMI, the consulting and investment banking firm, recently polled contractors about how much time they were spending, in craft labor hours, on prefabrication for construction projects. More than 250 contractors participated in the survey, and the average response to that question was 18%. More revealing, however, was the participants’ anticipation that craft hours dedicated to prefab would essentially double, to 34%, within the next five years.
The study—a sequel to FMI’s 2023 Labor Productivity Study—reiterates how the industry’s receptivity to prefab solutions corresponds with its ongoing labor shortages and compressed project schedules. (Contractors experienced approximately $30 billion to $40 billion in lost profits due to labor inefficiencies in 2022.) In its latest study, contractors told FMI that “improved quality” was prefab’s greatest perceived benefit. “Reducing the risk and variability” is how one contractor put it. Other benefits cited include reductions in construction schedules and improved worker safety.
(Nearly three fifths of the respondents to FMI’s study are MEP contractors, with another 15% being framing and drywall contractors.)
Contractors that consider prefabrication must determine how to do it at scale, profitably, and in a way that increases company earnings. Successful prefab practices, says FMI, require long-term strategic thinking and planning across an organization, along with the development of a comprehensive operational blueprint.
Which prefab model is right for pros?
It’s not like prefabrication is an alien concept for contractors. FMI’s study found that 86% of respondents currently offer single-trade prefab services. Three quarters of the concrete contractors surveyed said they are prefabricating on their jobsites; 57% of self-performing general contractors polled are prefabbing on-site, too.
What’s often lacking, however, is a clear vision of what they want their prefab capabilities to become. To make prefab work, says FMI, contractors need to shift their operating models, processes and systems. Contractors also need to decide which prefab models and combinations would work best for their companies; these include kitting services, multi-trade services, procurement, and modular services.
In making these determinations, contractors should be asking themselves:
•Why do we want to do more prefabrication?
•What is the total addressable portion of our work mix (today) that could be prefabricated?
•What investments would need to be made to scale our prefabrication capabilities to capture that opportunity?
•When fully optimized, what does the earnings stream from prefabrication look like?
•What does the return on investment look like for the enterprise?
•Do we have alternative investment options for other initiatives in the business? How do those options stack up against our prefabrication ambitions?
•Will prefab make the company better, more profitable, and resilient?
Prefabrication a different kind of business
Prefabrication is a manufacturing endeavor that’s different from building construction. Contractors diving into prefab in a bigger way need to think about whether prefab will be a unique business or separate entity, and how autonomously construction and prefabrication operate? Will prefab services be proprietary or available to other contractors? Will prefab be a profit or cost center? How will manufacturing cost overruns, if there are any, be accounted for?
FMI says that contractors need to establish clear project management lines that encompass how prefabricated products are tracked, stored, and billed for. Tracking labor productivity across prefabrication and field installation is key.
Owners and designers need to buy in more
One of the contractors whom FMI polled mentioned a recent casino and hotel project that required 25% less labor in the field, and cut nearly two months off of its installation time, by using prefabrication methods.
Scheduling is driving prefab demand, says FMI. But expanding that demand depends on acceptance by owners and AEC firms, and right now, that acceptance is middling: only 18% of the contractors polled by FMI said that owner-specific requests drove prefab, and only 10% said that prefab was specified by architects or engineers.
“For the industry to realize substantial gains in prefabrication and productivity, owners and designers need to be a bigger part of the demand equation,” says FMI.
FMI’s study found that the industry still struggles with broad adoption. The biggest challenges to adopting prefab are a project’s design and coordination, stakeholder awareness and education, the mindset and culture of a project’s active players, and the investment in facilities and equipment.
But given current and projected labor force limitations, “it’s clear that prefabrication will need to become part of the solution.” For that to happen, building teams need to demonstrate a bolder vision, strategic planning, commitment to investing, consistent communication, and a proactive engagement by external stakeholders.
Related Stories
| Mar 15, 2011
Passive Strategies for Building Healthy Schools, An AIA/CES Discovery Course
With the downturn in the economy and the crash in residential property values, school districts across the country that depend primarily on property tax revenue are struggling to make ends meet, while fulfilling the demand for classrooms and other facilities.
| Mar 11, 2011
University of Oregon scores with new $227 million basketball arena
The University of Oregon’s Matthew Knight Arena opened January 13 with a men’s basketball game against USC where the Ducks beat the Trojans, 68-62. The $227 million arena, which replaces the school’s 84-year-old McArthur Court, has a seating bowl pitched at 36 degrees to replicate the close-to-the-action feel of the smaller arena it replaced, although this new one accommodates 12,364 fans.
| Mar 11, 2011
Temporary modular building at Harvard targets sustainability
Anderson Anderson Architecture of San Francisco designed the Harvard Yard childcare facility, a modular building manufactured by Triumph Modular of Littleton, Mass., that was installed at Harvard University. The 5,700-sf facility will remain on the university’s Cambridge, Mass., campus for 18 months while the Harvard Yard Child Care Center and the Oxford Street Daycare Coop are being renovated.
| Mar 11, 2011
Renovation energizes retirement community in Massachusetts
The 12-year-old Edgewood Retirement Community in Andover, Mass., underwent a major 40,000-sf expansion and renovation that added 60 patient care beds in the long-term care unit, a new 17,000-sf, 40-bed cognitive impairment unit, and an 80-seat informal dining bistro.
| Mar 11, 2011
Research facility added to Texas Medical Center
Situated on the Texas Medical Center’s North Campus in Houston, the new Methodist Hospital Research Institute is a 12-story, 440,000-sf facility dedicated to translational research. Designed by New York City-based Kohn Pedersen Fox, with healthcare, science, and technology firm WHR Architects, Houston, the building has open, flexible labs, offices, and amenities for use by 90 principal investigators and 800 post-doc trainees and staff.
| Mar 11, 2011
Blockbuster remodel transforms Omaha video store into a bank
A former Hollywood Video store in Omaha, Neb., was renovated and repurposed as the SAC Federal Credit Union, Ames Branch. Architects at Leo A Daly transformed the outdated 5,000-sf retail space into a modern facility by wrapping the exterior in poplar siding and adding a new glass storefront that floods the interior with natural light.
| Mar 11, 2011
Historic McKim Mead White facility restored at Columbia University
Faculty House, a 1923 McKim Mead White building on Columbia University’s East Campus, could no longer support the school’s needs, so the historic 38,000-sf building was transformed into a modern faculty dining room, graduate student meeting center, and event space for visiting lecturers, large banquets, and alumni organizations.
| Mar 11, 2011
Mixed-income retirement community in Maryland based on holistic care
The Green House Residences at Stadium Place in Waverly, Md., is a five-story, 40,600-sf, mixed-income retirement community based on a holistic continuum of care concept developed by Dr. Bill Thomas. Each of the four residential floors houses a self-contained home for 12 residents that includes 12 bedrooms/baths organized around a common living/social area called the “hearth,” which includes a kitchen, living room with fireplace, and dining area.
| Mar 11, 2011
Construction of helicopter hangars in South Carolina gets off the ground
Construction is under way on a $26 million aviation support facility for South Carolina National Guard helicopters. Hendrick Construction, the project’s Charlotte, N.C.-based GC, is building the 111,000-sf Donaldson Hangar facility on the 30-acre South Carolina Technology & Aviation Center, Greenville.
| Mar 11, 2011
Texas A&M mixed-use community will focus on green living
HOK, Realty Appreciation, and Texas A&M University are working on the Urban Living Laboratory, a 1.2-million-sf mixed-use project owned by the university. The five-phase, live-work-play project will include offices, retail, multifamily apartments, and two hotels.
