Prefabrication Report

Mark L. Johnson / October 2017

Do you build and install any prefabricated assemblies? If not now, you probably will soon. Prefabrication has expanded greatly in recent years. And, more owners and general contractors expect some prefab work to be included in contracts, say the participants in a new survey.
    
The “2017 FMI/BIMForum Prefabrication Survey” from FMI Corporation gleaned insights from nearly 200 specialty trade contractors, general contractors and construction managers. Together they generate approximately $38 billion in annual revenue, mostly in commercial building.
    
The survey found the amount of project work using prefabrication almost tripled from 2010 to 2016. Over the next five years, contractors plan to double their labor investments in prefabrication operations, the report says.
    
What key trends are shaping today’s prefabrication environment in construction? Here are three of them.

Becoming Contractual
FMI’s report identifies the potential for prefabrication to become a requirement on projects in the future. In 2010, the average use of prefab was about 13 percent. In 2016, that figure increased to 35 percent. Some contractors see this increase as a signal that prefab is moving beyond just being optional on projects.
    
“We’re seeing more and more written into the contract that off-site fabrication is mandatory,” says an electrical contractor cited in FMI’s report. Speaking of large commercial projects, this contractor adds: “The owners are not giving us a large laydown yard on-site. And if I’m already seeing that now, after the past three-year push, I can only imagine what’s going to happen in the next five to 10 years.”

Driven by Technology
New technology is driving the broad use of prefabrication, FMI says. Technologies in the form of “ubiquitous digital connectivity, cloud computing and advancements in X-D modeling and 3-D printing” enable companies to prefabricate assemblies faster and with greater precision, the report notes. Such technologies are creating new production economies of scale, and that means savings for you and your customers.
    
So, have you formed tech groups to integrate technology into your operations? Are you planning to hire more IT people? These aren’t easy questions to answer, but you’ll need to address them soon. The industry is changing rapidly.
    
“We’re going to need more people with tech backgrounds,” says Sabine Hoover, FMI’s content director and co-author of the prefabrication report. “The potential is there for bringing some fresh blood into construction.”
    
I believe it’s important to stay abreast of technology, but remember that prefabrication is fundamentally about people.
    
“We strongly believe that your people will prevail as the foundation of your success,” says the FMI report.

Doubling Down on Labor
FMI’s survey also learned that contractors want to double their labor investments in prefabrication over the next five years. Do they feel that prefabrication can resolve the labor shortage issues they face? Not necessarily. Only 13 percent of FMI’s survey respondents cited the tight labor market as a “primary factor” driving their push to prefab assemblies. In fact, they say the total annual labor hours saved due to prefabrication is minimal.
    
But our industry tells slightly different story here. AWCI’s Construction Dimensions has reported that prefab manufacturing environments featuring high levels of quality control can lower assembly costs. Prefabrication can improve safety performance. Workers’ compensation rates for shop workers often run significantly less than rates for field workers. And, prefabrication allows for construction to be compressed, since work in the shop and the field can run on parallel schedules.
    
Rob Aird, president of Robert A. Aird, Inc., Frederick, Md., sees labor efficiencies to be gained through panelization and prefabrication. His firm remains focused on the prefab niche.
    
Tim Wies, president of T.J. Wies Contracting Inc., Lake St. Louis, Mo., sees opportunity in “semi-prefabrication.” Wies has formed partnerships to prefabricate “pods” for the health care sector. An example includes teaming up with mechanical contractors to prefab the pipe racks and head walls for hospital rooms. It can be a money-maker, Wies says, so long as he gets in early to coordinate with the MEP trades.
    
So there you have it. Confirmation of prefabrication moving forward at a rapid pace. What are you going to do? To prefab, or not to prefab, that is the question.

Mark L. Johnson writes regularly about trends affecting construction firms. Reach him at @markjohnsoncomm, and at linkedin.com/in/markjohnsoncommunications.