BluHomes manufacturing puts prefab home components into shipments. BluHomes

Some estimates say that prefabrication can result in a 10 times productivity boost, especially if the supply chain is integrated. Moving the offsite construction is slowly gathering steam and offering additional efficiencies.

Call it what you want, offsite construction isn't going anywhere — except to more jobsites.

The construction industry’s productivity woes are nothing new to the companies trying to solve the problem. While the agriculture and manufacturing sectors have seen productivity gains upwards of 1,000% since the 1940s, construction has lagged behind at 6% growth as of 2016, according to Steffen Fuchs, a partner at research firm McKinsey & Company, speaking at the recent World of Modular conference in Hollywood, Florida.

Part of the problem, Fuchs said, is that the industry hasn’t invested enough in research and development — the kind of R&D that could give valuable insight into how to complete projects more quickly and more efficiently and that could boost the prefabricated construction market.

“Ninety-eight percent of projects run over cost and over schedule. But we found that every single increase in productivity increases margin,” Fuchs said. “If we address cost issues and schedule issues we actually see productivity goes up, which means margins go up, which probably means we all make more money — more money means people can invest in more things.”

And, for Fuchs, that investment might best be put toward technology, like prefabrication.

“[Prefabrication] is one segment where the industry has a massive opportunity to improve,” he said.

According to McKinsey data, prefabrication has the ability to boost construction’s productivity up to 10 times. And the companies that are maximizing that opportunity, Fuchs said, are those — like Katerra — that have integrated the supply chain. Whether other companies will borrow from Katerra’s or others’ model remains to be seen, but suppliers are already growing their stake in the offsite game for the first time.

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