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30 May 2024

Most Construction Work Should Relocate To Factories


Manufacturing large modules for a building off-site and then assembling them in a couple of days on site has all sorts of benefits over on site stick built construction. And, this is one area where China is far ahead of the United States in technology and economic organization.

U.S. construction firms, to a great extent, operates like pre-industrial craft shops in the manufacturing industry, that never updated themselves to the modern, maximally automized and optimized factory production model.

Manufacturing large modules for a building off-site in construction projects is significantly cheaper than getting the same work done on site.

The number of workers required is significantly lower without the hurry up and wait of traditional construction projects. You can spread the work over the entire years rather than being limited by weather to the building season, which provides more stable employment with a steady paycheck and regular hours. Workers at a factory can live close to a factory whose location never changes that can be transit accessible, and workers who drive to work can use designated factory employee parker that doesn't disrupt the neighborhood where they are working. Factory workers can use real bathrooms with running water and sinks, instead of porta-potties and sometimes hand sanitizer, and can enjoy pleasant break rooms with refrigerators and microwaves and nice coffee machines and TVs, or go to familiar neighborhood restaurants to have lunch. 

In contrast, in the status quo, most construction work is seasonal, workers work unpredictable long hours when conditions are good and have unpredictable unpaid interruptions due to weather and other onsite project delays associated with sequencing tasks in the complex PERT chart that face all sorts of random interuptions, and workers have to drive to different construction sites on a daily or weekly basis all over the region where their construction firm operates. 

On site workers swamp the neighborhood's publicly available parking on and off for weeks, have to use grotty temporary toilets, often can't wash up with running water, constantly contend with dust, mud, dew, frost, wind, chills, heat, pre-existing electrical and gas lines, darkness, glare, and construction debris at sites whose configurations constantly change even during the course of a single construction project.

For example, many of my Colorado relatives on my father's side, are dry land farmers on the Eastern Plains which occupies them during planting and harvesting season, and then migrate to Front Range cities and mountain towns for construction work much of the rest of the year to make ends meet. not that I'll ever really get why they sink so much multifaceted skill and expensive land, water rights, and equipment into something so uncertain due to fires, droughts, hail, etc. and so unprofitable in all but the best of years.

When you construct a building on site, you need to negotiate new combinations of subcontractors on a project by project basis and have only limited control over how those subcontractors do their jobs, which adds a great deal of administrative and management expense, while impairing quality control, uniform safety rules, and efficiency. In a factory, in contrast, you don't have to renegotiate the organizational structure of the factory for each new project.

Since everyone in a factory is an employee you can impose stricter quality control and safety rules and use workers more efficiently. It is easier to get workers in a factory who smoke to do so in designated areas that spare fellow workers secondary smoke and prevents fire risks,  than it is to enforce that at an on site construction project.

In onsite construction, construction workers are notorious for showing up late or not at all. This isn't simply a matter of construction workers being worse people than other employees. 

An office or factory worker can follow a routine and let habits take over, and when they arrive, what they need to start working will generally naturally and almost automatically be in place be virtue of the structure of the workplace which doesn't change much. And, office and factory workers aren't exposed to the same risks of occupational injuries and illnesses (and the away from work time necessary to treat them), that on site construction workers are on a daily basis.

In contrast, construction workers have to have the bandwidth every day to keep up with a constant barrage of changing schedules at different places with unfamiliar transportation times to get there due to traffic and construction and have to keep track of all the tools, equipment, safety gear and supplies that they need for each particular job. Often, at least somebody has been hurt or get sick from events at some previous job (often different jobs for different workers). And, those construction workers aren't conditioned to the expectation that everything will be on time, because often it isn't and they don't feel the obligation to hold themselves to higher standards. The delays that foster disrespect for exact work times flow, in part, from the fact that project managers need to make sure that everything the workers need before they can do their job from permits, to prior steps in the construction process, to construction waste dumpsters, to portable toilets, to heavy equipment, to parking spaces for worker vehicles, to partial road closures is in place before those workers show up in a process that has to be repeated from scratch with every new job and has numerous potential chokepoints that can stop everything, even before considering weather conditions and supply chain issues that add additional layers of unpredictability to the process.

When you hire general contractors and subcontractors to do on site construction, the workers generally have to pay force and finance their own equipment and tools, sometimes financing it with their own subpar credit or cutting corners on what they buy because they can't afford the best equipment and tools for the job. And, the financing costs of those equipment and those tools, and a profit margin on those purchases, gets passed along to the general contractor and the owner of the land buying the building. But, in a factory, the factory owners can buy the optimal equipment and tools with a much lower financing cost, and any profit margin is collected only once at the factory level rather than at the general contractor level and at each layer of subcontractors right on down to individual employees of subcontractors who supply their own tools and equipment and safety gear.

The predictability of the in-factory part of the construction process also makes it easier to manage the cost and timing involved in procuring the necessary construction materials. Less uncertainty about when you will need construction materials, which is subject to constant rushes and delays in on site construction, means you don't need as much warehouse and construction yard space. But you also have fewer surprises about what you will need when, which allows you to shop for deals better and allows you to avoid paying premium prices when supplies are in the highest demand at particular points in the construction season that the weather allows.

Workplace injuries are an order of magnitude lower and tend to be less serious. The work environment can be better controlled, can be monitored and improved upon over time as the same space is used for one project after another. The work is done in a temperature controlled setting that is dry and has good lighting, where everything is in a familiar place that you don't have to relearn with each new project. The factory is free of the dust, mud, frost, dew, bugs, wind, excessive heat, cold, construction debris, and pre-existing natural gas and electrical lines that are ubiquitous in on site construction. Random strangers and neighbors are much less likely to wander into a factory than a construction site. Only absolutely necessary final assembly work takes place at great heights, or in windy or wet or dark or high glare conditions.

The amount of building material waste is an order of magnitude lower and you can be smarter and more efficient about what you do about the waste that you do generate. For example, it is much easier to pre-sort construction waste into five different kinds of materials each with different recycling options that don't have to be landfilled at a factory than it is to do that on site. And, the temptation to throw out, useable bits of leftover lumber or screws or paint from one job rather than trying to save it and reuse it on another project is much smaller in a factory setting. You can also power your tools and equipment with electricity from a greener, cheaper, and more efficient power grid at a factory, while you frequently have to resort to on site diesel generators in traditional on site construction projects.

The precision and quality control in the final building is greatly increased, which also makes the finished building better at withstanding storms and minor earthquakes which aggravate weaknesses caused by minor imperfections. Concrete components that can be made in the factory can be made in optimal temperature and moisture conditions that aren't dependent upon the whims of the weather which can impair their quality. The materials in the building also aren't exposed to weather that can cause them to be damaged or deteriorate for long periods of time from heat and cold cycles, warping from sun exposure, and moisture during the construction process. 

You can use heavier machinery that is better for getting certain parts of the job done efficiently and well, rather than being limited to what a construction worker can carry. You can also build with heavier building components (e.g. large cast metal or wooden single beams with no subparts that provide weak points) rather than multiple smaller components fitted together on site like smaller girders or pieces of wood that are screwed or nailed together, even if larger building components are better from an engineering and architectural perspective, but aren't used because workers at a construction site can't easily carry them to the places where they need to go (e.g., in the interior of higher stories of multistory buildings).

You don't need to tie up expensive and scarce tall building cranes at the job site for long periods of time. 

The disruption to people in the neighborhood where the building is going up is vastly less because there is so much less on site construction time. You still need to prepare the foundation and water main, sewer, and utility main hookups in advance which can't be done in just the flashy three stories a day of onsite construction of the building itself that is shown in the video. So it isn't quite as instant as it seems. But you are still talking a few weeks instead of a few months or couple of years of disruption to the neighborhood. And, when a stick built mid-rise building looks complete on the outside it is really only about 50% done, while a modular build like this is is more like a week or two away from being ready for occupants to move in since the interior finishes and electrical and mechanical work is mostly already in place.

The inspection and permitting process for the factory made components can be done on a predictable and routine basis in the factory, rather than making every inspection a scheduling chore and bottleneck in the process that has to be coordinated on a job by job basis that requires the inspector to climb all over half-finished buildings often many stories tall, on a construction site at critical points in the course of the project whose timing is hard to predict.

Some of the cost benefits just boil down to economies of scale. It is more efficient to add plumbing and electrical fixtures to a hundred bathrooms on an assembly line at a factory, to have twenty subcontractors add these fixtures to an average of five bathrooms each in two or three buildings each, in a work load often interspersed with a decent share of repair work in existing buildings. But the construction industry in most major metropolitan areas, where about 80% of the U.S. population and where an even larger share of new building construction takes place, is large enough to support building component factories large enough to benefit from these economies of scale.

Also, in the current site built construction paradigm, to get any kind of meaningful construction economies of scale at all, you have to build a lot of nearly identical buildings next to each other in Levittown style residential subdivisions or giant multi-building apartment complexes, or office parks, or industrial parks. But, in a factory build module system, most of the economies of scale happen at the factory, so you can get most the same construction efficiencies of scale by building thirty similar office buildings that are spread out over infill sites spread all over a metropolitan area, as you can from building all thirty office buildings right next to each other in a massive, single use office park. As it happens, that isn't how it is actually done in China, which builds massive apartment complex and office parks and rapidly builds whole new towns and cities from scratch on green fields several times a year. But it could be done that way in the U.S. where the pace of development, even in the fastest growing metropolitan areas, isn't nearly as frenetic, because the U.S. economy is more mature and has already done a lot of the economic development that it needs to do over many decades. The U.S. economy hasn't had the pace of rising demand for new construction that China is experience since the 1950s and 1960s.

The construction industry has been stubbornly unable to materially improve its productivity, cost structure, and quality for decades. It has one of the highest rates of workplace injury and death in the entire economy (neck and neck with farming, fishing, and mining). And construction defeats in the site built construction paradigm are routine, can be expensive to fix, and can lead to long, complicated, and expensive construction defeat litigation.

Greatly increasing the share of construction work that is done in factories could revolutionize the industry in a way that is cheaper, faster, safer, and far less prone to construction defects and the litigation and insurance costs that go with it. It would create a better situation for construction workers, would be more environmentally sound, and would dramatically reduce the impact that construction projects have on the neighborhoods where they a located.

Doing more construction work in factories wouldn't solve the affordable housing problem by itself. In places with soaring housing costs, rising land values are more of a problem than construction costs which are often only a minority of the total cost of housing and have been quite stable over time and between markets compared to land values. But, even if the construction module factories had a higher profit margin, they would still materially reduce the cost of building new housing which would help address the affordable housing problem.

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