why we build the way we do, and what we can do about it!

Industrialization and off-site production in construction? Why we build the way we do… and what we can do about it?

Christian Thuesen

chth@dtu.dk

dk.linkedin.com/in/matute

PM@DTU 2 DTU Management Engineering, The Technical University of Danmark

Order Chaos Disciplinary Interdisciplinary Hierarchy Network Standardized Unique Efficiency Creativity Linear Iterative Bureaucratic Dynamic Codifying Experimenting Repetition Innovative Class Individual Degeneration Stress

Challenges of Project based Production

PM@DTU 3 DTU Management Engineering, The Technical University of Danmark

Agenda □The development of construction

□Societal development

□Production practices in construction

□Off-site production in construction

□Is off-site production the right strategy?

PM@DTU 4 DTU Management Engineering, The Technical University of Danmark

Innovative learning

Enter the site:

http://m.socrative.com

And join room LC2013

PM@DTU 5 DTU Management Engineering, The Technical University of Danmark

Socrative Question What characterizes a building? Is it standardized or unique?

Standardized --------------------------------------- Unique

William Isaac Thomas

"If men define situations as real, they are real in their

consequences“

PM@DTU 7 DTU Management Engineering, The Technical University of Danmark

The structuring myths of construction “…a space of representation which bears no relation of continuity with the dominant 'structural objectivity'. Myth is thus a principle of reading of a given situation, whose terms are external to what is representable in the objective spatiality constituted by the given structure.” (Laclau 1990: 61) Reality

Myth

Modern construction (products and practices)

Standardized

Postmodern construction (products

and practices)

Unique

Source: (Thuesen et al 2009/2013)

PM@DTU 8 DTU Management Engineering, The Technical University of Danmark

Modern Construction

Standardized

Empire state building

Gellerup

Herlev sygehus

Timeschedule

Production

PM@DTU 14 DTU Management Engineering, The Technical University of Danmark

Postmodern Construction

Unique

↑ Hundertwasser Zoetermeer

Bispebjerg bakke

Timeschedule

Collaboration

PM@DTU 20 DTU Management Engineering, The Technical University of Danmark

□The development of construction

□Societal development

□Production practices in construction

□Off-site production in construction

□Is off-site production the right strategy?

Agenda

PM@DTU 21 DTU Management Engineering, The Technical University of Danmark

Socrative Question Are you similar or unique?

Similar ----------------------------------------- Unique

PM@DTU 22 DTU Management Engineering, The Technical University of Danmark

We are all unique … but also similar

Biologically Cultural

we are all, regardless of race, genetically 99.9% the same

PM@DTU 23 DTU Management Engineering, The Technical University of Danmark

How unique are we?

Source: Samsung

Source: Whats Next

PM@DTU 25 DTU Management Engineering, The Technical University of Danmark

Generation Me The book argues that those born after 1970 are more self-centered, more disrespectful of authority and more depressed than ever before… both as consumers and employees.

Some interesting quotes: • "In the early 1950s, only 12% of teens aged 14 to

16 agreed with the statement 'I am an important person'. By the late 1980s, an incredible 80%, almost seven times as many, claimed they were important“

• " 81,384 high school and college students ... completed questionnaires measuring what psychologists call 'agency': a personality trait involving assertiveness, dominance, independence, and self-promotion ... the average 1990s college student scored higher than 75% of college boomers from the 1970s“

• "Seventy percent of late-1990s high school students expected to work in professional jobs, compared to 42% in the 1960s ... In 1999, teens predicted they would be earning, on average, $75,000 by the age of thirty. The average income of a thirty-year-old that year? $27,000."

• Furthermore Twenge shows, high self-esteem is _not_ correlated (or maybe it's negatively correlated) with achievement in school or at work. It is correlated with criminality, narcissism, and bad relationships, though

PM@DTU 27 DTU Management Engineering, The Technical University of Danmark

Market development

Source: Stanley M. Davis, Future Perfect

PM@DTU 28 DTU Management Engineering, The Technical University of Danmark

The long tail …a consequence of a more individualized society

Mass production Mass customization

PM@DTU 29 DTU Management Engineering, The Technical University of Danmark

The long tail and “production” paradigms

Mass production Mass customization Individual customization

Ford Model T 1908 – 1927 Sale more than 15,000,000 Number of variations : 1

Mercedes E-Class: Introduced in 1993; currently on offer Sale more around 4,500,000 so far Number of variations: 3,347,807,348,000,000,000,000,000

Mercedes E-Class Mass production Mass customization Individual customization

Ford Model T 1908 – 1927 Sale more than 15,000,000 Number of variations : 1

Mercedes E-Class: Introduced in 1993; currently on offer Sale more around 4,500,000 so far Number of variations: 3,347,807,348,000,000,000,000,000

Mercedes E-Class

Aston Martin V8 1969 -1989 Sales number 4,021 Number of variations: hand crafted

Aston martin

Developed based on Anderson (2006)

Source: (Thuesen et al 2009/2013)

PM@DTU 30 DTU Management Engineering, The Technical University of Danmark

The long tail and construction

Mass production Mass customization Individual customization

Con

stru

ctio

n in

1960

-197

0

Traditional construction today

Source: (Thuesen et al 2009/2013)

PM@DTU 31 DTU Management Engineering, The Technical University of Danmark

□The development of construction

□Societal development

□Production practices in construction

□Off-site production in construction

□Is off-site production the right strategy?

Agenda

PM@DTU 32 DTU Management Engineering, The Technical University of Danmark

Socrative Question Is the management of construction significantly different

from management of other project activities?

YES YES&no yes&no yes&NO NO

PM@DTU 33 DTU Management Engineering, The Technical University of Danmark

Construction in the light of myths Standardized Unique

Societal frame Modern ► Postmodern

Timeframe 1900 – 1970 ► 1980 ->?

Driver of identity Classes ► Individualism

Architectural credo Form follows function ► Form follows fiction

Characteristic of the building process

Complex - but known ► Chaotic

Production paradigm Mass Production ► Individual Customization

Value chain Integrated ► Fragmented

Vehicle for realization Prefabrication ► In-situ

Management paradigm Scientific Management ► Project management

Productivity High ► Low

Implementation of Lean Long term planning

(Line of Balance) ►

Short term planning (Last Planer System)

Source: (Thuesen et al 2009/2013)

PM@DTU 34 DTU Management Engineering, The Technical University of Danmark

Are we better of with unique buildings?

Source: wulffmorgenthaler.com

PM@DTU 35 DTU Management Engineering, The Technical University of Danmark

… are buildings unique?

Ørestaden

PM@DTU 36 DTU Management Engineering, The Technical University of Danmark

Do we need to view them as beeing unique?

"If men define situations as real, they are real in

their consequences“

PM@DTU 37 DTU Management Engineering, The Technical University of Danmark

What if we view buildings as both standardized and unique?

“Mass Customization = producing goods and services to meet individual customer's needs with near mass

production efficiency". Tseng and Jiao (2001, p. 685)

Source: (Tseng and Jiao 2001, p. 685)

PM@DTU 38 DTU Management Engineering, The Technical University of Danmark

□The development of construction

□Societal development

□Production practices in construction

□Off-site production in construction

□Is off-site production the right strategy?

Agenda

PM@DTU 39 DTU Management Engineering, The Technical University of Danmark

The rationality behind Mass Customization C

osts

/ w

illin

gnes

s to

pay

Diversity in range of products

Unit cost

Customer value

Margin ?

Mass production Mass customization Individual customization

Source: (Thuesen et al 2009/2013)

PM@DTU 40 DTU Management Engineering, The Technical University of Danmark

Order decoupling points… and the long tail

Sta

ndar

d

Standard parts and modules

Configuration of

buildings

Standard products

Select variant

Norms and standards

Engineering

of product

Standard parts and modules

Configuration

of building parts

ETO

ITO CTO

MTO

Custom

ized

Mass production Mass customization Individual customization

Source: (Thuesen et al 2013)

PM@DTU 41 DTU Management Engineering, The Technical University of Danmark

Off site production network

Building concepts (top-down) • Think in terms of holistic architectural and system solutions and develop re-usable solutions which can be re-used

• Address the market and not just the individual building project

Transformation

Transformation

Transformation

On site assembly

System products (bottom-up) • Producers of building materials develop (sub)systems which are intended to be a part of a building

• Specify interfaces and design rules, so as to achieve configuration rather than engineering

Transformation

Top-down vs bottom-up

Source: (Thuesen & Hvam 2013)

PM@DTU 42 DTU Management Engineering, The Technical University of Danmark

Installation shafts

Source: (Thuesen & Hvam 2013)

PM@DTU 43 DTU Management Engineering, The Technical University of Danmark

Mass production Mass customization Individual customization

NCC Komplett

The German Platform

NCC Komplett The German platform 90% Fabrication 90 % Insitu

High fixed costs, unable to control costs

Low fixed costs but still 30% cost reduction

Couldn’t compete with traditional construction practices

Established a new market – high quality and low cost

Komplett vs. the German platform

Source: (Thuesen & Jonsson 2009)

PM@DTU 44 DTU Management Engineering, The Technical University of Danmark

Frankfurt/M. Munich

Berlin Hamburg

The German platform

PM@DTU 45 DTU Management Engineering, The Technical University of Danmark

Different markets – the same platform

The technical platform

60% 90% 100% Apartments Row houses Holiday immobiles

Source: (Thuesen & Hvam 2011)

PM@DTU 46 DTU Management Engineering, The Technical University of Danmark

The platform – a platform for growth Apartments Single family houses Holiday immobiles

High end product

Mid-range product

Low end product

Row houses

Source: (Thuesen & Hvam 2011)

PM@DTU 47 DTU Management Engineering, The Technical University of Danmark

Platform development through incremental innovation

Source: (Thuesen & Hvam 2011)

PM@DTU 48 DTU Management Engineering, The Technical University of Danmark

Experinces • Working with platforms is no rocket science,

substantial benefits can be achieved by using existing construction practices and tools

• No fancy IT-systems are needed for the implementation of platforms. The platform can be situated within a combination well defined skills and organizational culture.

• Implementation of platforms requires a strong commitment and loyalty from the whole organization

• Important to have a specific customer focus (target costing)

• Platforms require incremental and systematic innovation with a clear separation between the continuous development of and the production based on the platform.

Source: (Thuesen & Hvam 2011)

PM@DTU 49 DTU Management Engineering, The Technical University of Danmark

□The development of construction

□Societal development

□Production practices in construction

□Off-site production in construction

□Is off-site production the right strategy?

Agenda

PM@DTU 51 DTU Management Engineering, The Technical University of Danmark

Exercise: How many figures can you build using

6, 2x4 blocks of the same color?

915.103.765

Source: http://www.math.ku.dk/~eilers/lego.html

PM@DTU 52 DTU Management Engineering, The Technical University of Danmark

What is modularization? The anatomy of modularity •Modularity is an attribute of a complex

system that advocates designing structures based on

– Minimizing interdependence between modules and

– Maximizing interdependence within them

that can be mixed and matched in order to obtain new configurations without loss of the system’s functionality or performance (Baldwin and Clark 1997; Langlois 1992).

•Each module communicates and interacts with the others via standardized interfaces that allow modules’ decoupling

Source: (Campagnolo & Camuffo 2010)

PM@DTU 53 DTU Management Engineering, The Technical University of Danmark

Types of modularity

Source: (Campagnolo & Camuffo 2010 & Thuesen 2012)

Process modularity

Organizational modularity

Product modularity

Source: Thuesen (forthcomming)

Projekt

Aktører: Virksomheder: Arkitekter, Rådgivere, Entreprenører, Håndværkere Interesse Org: DB, FRI, Danske Ark, Tehniq, Muro…

Markeder: Nybyg, renovering Boliger, sygehuse, Erhverv Anlæg…

Aktører: Virksomheder: (producenter af bygge- materialer, grossister,) Interesse Org.: DI Byg, DB Bygge-materialer,

Regulering: Obligatorisk: BR (krav om styrke, brandsikkerhed og sundheden), DS (normer), MK, VA, ETA, CE mærkning Frivillig: Betonvare Kontrollen, Dansk Murstenskontrol… FSC, svanemærkning

Aktører: Energiselskaber (Gas, EL og Varme) Vandværker Renovation Regulering:

Krav om CO2 reduktion for energiselskaber

Regulering: Byggeloven, Bygningsreglementet Energimærkning

Markeder: Service (FM) Vand Varme EL

Forretningsmodel: Service, abonnement Høje variable/faste omkostninger

Forretningsmodel: Mass produktion, Høje faste omkostninger

Forretningsmodel: Licitation baseret, Engineer to order, Høje variable omkostninger

Markeder: Byggematerialer (beton, Vinduer, isolering,…) Distribution (Grossister, transport…)

PM@DTU 55 DTU Management Engineering, The Technical University of Danmark

BOT

DBO

PSS

System- leverancer

Projekt

BIM, LC, Partnering, OPP

FM Automation

ESCO

LCA

C2C

DGNB, LEED, BREAM

Source: Thuesen (forthcomming)

PM@DTU 56 DTU Management Engineering, The Technical University of Danmark

PM@DTU 57 DTU Management Engineering, The Technical University of Danmark

Central references Baldwin, C.Y. and Clark, K.B. (1997). Managing in an age of modularity. Harvard Business Review, 75, pp.

84–93.

Campagnolo, D. & Camuffo, A. (2010) The Concept of Modularity in Management Studies: A Literature Review, International Journal of Management Reviews, Blackwell Publishing Ltd and British Academy of Management, pp. 259-283

Thuesen, C. (2012) Understanding Project Based Production through Socio-technical Modularity, The Academy of Management 2012 Annual Meeting, Boston, MA,US

Thuesen, C., Jensen, J. S., and Gottlieb, S. C. (2009), “Making the long tail work—Reflections on the development of the construction industry the past 25 years.” Proc., 25th Annual ARCOM Conf., Association of Researchers in Construction Management, Nottingham, U.K., pp.1111–1120

Thuesen, C., Jensen, J. S., and Gottlieb, S. C. (2013), Enabling Mass Customization in Construction : Making the long tail work, In Piroozfar, P.A.E. & Piller, F. T. (eds.) Mass Customisation and Personalisation in Architecture and Construction, Routledge

Thuesen, C. & Jonsson, C. C. (2009) The Long Tail and innovation of new construction practices - Learning points from two case studies. In A.S. Kazi, M. Hanus and S. Boujabeur, (eds.) "Open Building Manufacturing: Key Technologies, Applications, and Industrial Cases", Manubuild

Thuesen, C. & Hvam, L. (2011) Efficient on-site construction: learning points from a German platform for housing, Efficient on-site construction: learning points from a German platform for housing", Construction Innovation: Information, Process, Management, Vol. 11 Iss: 3, pp.338 – 355

Thuesen, C. & Hvam, L (2013) “Rethinking the Business Model in Construction by the Use of Off-Site System Deliverance: Shaft Project” Journal of Architectural Engineering, Vol. 19, No. 4, December 1, 2013.

Tseng, M. M., and Jiao, J. (2001). “Mass customization.” Handbook of industrial engineering: Technology and operationmanagement, 3rdEd., G. Salvendy, ed., Wiley, New York.