Construction costs
In June of 2019, McKinsey & Company released a re-
port on modular construction, one of the key pieces of
off-site construction methodologies. Within this report
McKinsey compares the current growth of construction
costs, 2.5% growth in 2018 which is twice the rate of
other industries, and the savings that modular construc-
tion provides.
Advantages to modular construction, McKinsey
wrote, are that it can deliver projects 20% to 50%
faster than traditional methods; a potential for costs
savings of up to 20%... “and as ripe market around the
world ready for this kind of disruption.”
In the last two years, material and labor costs have
grown faster than contractors’ bid for work causing
contractors to have thinner profit margin, according to
this publihed report.
The two goliaths, owners and contractors, of the
construction industry are quickly coming to an impasse.
One that can be mitigated with the implementation of
off-site construction.
Global warming
The summer of 2019 has been considered record
setting temperatures across the United States. The Na-
tional Weather Service has even declared the June of
2019 the hottest June ever including 90-degree weather
in Anchorage, AL. These factors bring major risk not to
just costs of construction but also the safety of employ-
ees. See this published report. Contractors, like Choate
Construction, are during concrete pours at 2 a.m. to
avoid the risks involved with the heat at their Nashville
jobsite. Off-site construction
The current economy is forcing the construction in-
dustry to keep up and due to the recent recession, no
one is volunteering to take their foot off the gas. These
three factors combined are forcing the key decision
makers to become opportunistic.
Off-site construction can be compared to how IKEA
manufactures their own furniture. Create a series of
components and provide instructions on how to put
them together. Now apply that concept to a building.
Through construction technology known as BIM (Build-
ing Information Modeling) contractors are virtually build-
ing a construction ready model virtually, then dissecting
4 – OCTOBER 2019 — Florida Construction News
© CAN STOCK PHOTO / ND3000
Some studies have cross referenced this data with
the labor shortage in the construction industry, showing
that trade schools graduates earn more on average
than their new graduates with a four-year B.A. degree.
Contractors and owners will be forced to get more cre-
ative with projects and procurement methods with the
construction occupation market projected to grow 11
percent from 2016 to 2026, a gain of 747,600 new jobs,
according to data from the US Bureau of Labor Statis-
tics. it into a series of components that make up the overall
building. The term off-site refers to the process of being able
to manufacture the series of components inside a
warehouse where weather, construction quality and
processes are controlled and streamlined. Two of the
larger pushes within off-site construction are prefabrica-
tion and modular.
Prefabrication refers to the IKEA process. A full run
of piping within the building is virtually built and then
manufactured off-site. The components are labeled
sent to the site with instructions (Component A con-
nects to Component B) and installed.
Modular refers to producing full sections of a build-
ing. Repetitive items found within a building a repeated
built in an assembly line with all trades involved. AC
Marriott is a leader in this process producing the full
hotel room (all the down to installed bedframes and box
springs) inside a warehouse. After being shipped to
site and the units are stacked on top of another creating
the form of the building as well as the units inside.
Both of those examples reduce field labor and con-
struction costs while providing the ability to control
weather and risk.
Back to the tipping point. The industry cannot afford
to be slow to adopt. It can no longer have an unwilling-
ness to change or evolve.
If anything, McKinsey & Company has produced the
ice breaker for the construction industry. The discussion
has become real and reinforced behind the McKinsey &
Company name. Does anybody else see a tipping
point? Jacob D’Albora is director of BIM-FM Services
and associate vice-president at McVeigh & Mangum En-
gineering, Inc. in Charlotte, NC. He can be reached by
email at jdalbora@mcveighmangum.com or by phone
at (704) 547-9035. Story copyrighted by the writer, and
republished here with permission.