Construction companies aren’t typically valuable, and our multiple in the stocks is low. The society around us doesn’t value companies in the construction industry as high as companies of the same size in other industries. From this, our problem is collecting intangible capital and turning it into positive expectation value. We don’t add, or produce, enough utility value nor face positive expectations for a change for better. This we must change.
Intangible capital and accumulating it requires organizational learning. We easily mistake individual learning directly for organizational learning. In reality, it doesn’t go like that. Instead, the individuals take all they have learned with them, unless we build mechanisms within the company to transform the knowledge that individuals gain into organizational knowledge that can be passed on also to others.
A construction project is extremely difficult to outline or model as a process. What is the operational model that would collect intangible capital, value, for later use every single day when the company participates in different projects with various parties? As a main contractor, pieces or instruments in this operational model in construction projects are takt production, digitalization, standardization and pre-production. They create knowledge through learning that can materialized into company assets. Even better, it can be done so that developing each of them helps speed up the development of the other pieces.
The core of our operation is takt production which essentially changes building in itself. Especially in residential production, the last phase that study books call the final phase and the site calls dispute settling, are at best completely eliminated since the settling starts from day 1 of the indoor phase. Small batch size and interaction between various contractors also reduces the total amount of errors when compared to traditional, large area division at the site. Errors are found before multiplying them into the entire building. It’s important to handle these errors transparently, as it creates us information about the building process, and is therefore essential for making both the process and the product more valuable.
Takt production alone, however, is not enough to transform the productivity problem of the construction industry into something different from what it is today. At the site, takt collides immediately with the resource shortage in site management. Increase in the management work is a logical consequence of the reduced batch size, since shortening the lead time also adds to the number of people working at the site and reduces the size of the site areas that are under work per contractor at a time. When the areas are made smaller and they are handed over and taken under work daily, also their management and collecting information for situational awareness becomes daily. Without digitalization, the amount of work required for this can come as a surprise for a first-timer. Digitalization is inevitable for the construction site management, along with adopting mobile applications, in order to collect information to enable real-time leading with data with less running around the site. We can no longer afford collecting data into notebooks and then typing this information into follow-up spreadsheets. The process starts producing information from the site, but this, of course, requires discipline created through leading behavioral change strategically by the site management until we reach each and every site worker.
Shared situational awareness from the site helps everyone both at and outside the site. We are only taking the first steps in leading with data and learning more about it every day. Examples of this is the progress that has been untypically fast for our industry, in how dashboard screens start appearing in site offices, adopting GS1 is in the discussions or the takt production itself is becoming the normality. Digitalization will also have a significant role in managing supply chains and making pre-production easier. A lot of extra work and worry, something that is still today seen as normal assurance and contemplation, will be eliminated from the site as soon as we successfully combine the digital construction site with a digital supply chain.
The digitalized takt production has already started to produce us information, facts, based on which we can increase the pre-production rate and take steps forward in modular design. We have lacked as-built information in our industry because construction sites haven’t been digital the same way as factories are. We have lacked automatic feedback loop, information production, that helps us acknowledge when something is complicated to build at the site, or when designs are missing. Now this information that flows fro the site helps us continuosly improve the designs and the quality of pre-produced construction products. Pre-production, then, decreases the manual work done at sites, and enables better end quality with less production costs thanks to the factory environment. The change towards added value in pre-production isn’t easy, as it requires planning in the machine workshop level as well as assembly industry know-how on materials and tolerance management.
Modular design means two things for us: standardization and mass customization. It’s important to standardize details so that we can add to the design level of our buildings. We build too many buildings with incomplete or clashing designs, and we lack ways to measure the completion rate of designs, that is, how much details are left to be solved at the site. The more a given site worker must make decisions on details at the site, that is, improvise, the more likely it is that the solution clashes with a following construction phase. By standardizing the details and using them as a solution library, we can implement projects with designs that make building at the site easier and easier. This takes construction towards industrial assembly, where standardization and modular design play an important role. Their use, in turn, is guided by the feedback received from the digital takt production at the site.
Our goal is to industrialize the business model of construction so that building information modeling, technical design and production planning are the value creation part of our business, and our production the value capturing part of the organization. Intangible capital, construction know-how, is collected throughout the process into a digital recipe, equity of the company, starting from a solution design library and flowing all the way to the inspection methods of the quality matrix in the production phase. It all results in higher quality, faster, and smarter construction – in other words, something better for all project parties.
About the author
Fira CTO Otto Alhava knows the challenges of the construction industry, as well as the ins and outs of Lean thinking, BIM and mobile tryouts, but instead of focusing on them he comes with a passion for developing the productivity of work and an in-built need to not just understand but also solve the productivity problem of the construction industry – systemically. His background in software and telecommunication businesses give him great basis for this, since the issues faced there are systemic in nature, as well.
Otto has a vision on solving the building productivity issue in collaboration, making construction sites of tomorrow a valued work environment and buildings valuable for their users, all with a reduced carbon footprint.
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