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The Time for Offsite Construction
The Alliance is making a major commitment to helping the industry move to a more efficient way of building.
If you missed last month's Offsite Construction Solutions event in Phoenix, don't worry. It was just the kickoff of a long-term collaborative effort during which the Alliance will bring players from every part of the building industry together to explore ways to move from trade-dependent stick-building to an engineering-based factory approach.
One clear takeaway from Phoenix is that production builders have a strong interest in this approach. Five years ago there was, at best, some curiosity. Today they're searching for practical insight into how to make it work.
It's not hard to understand why. North America is the only place where wood-framed homes are routinely built on site by a traveling circus of tradespeople rather than being assembled in a factory, as is the case in many parts of the world. This inefficient use of ever-more-scarce labor is a big reason U.S. builders will only deliver about 1 million of the 1.6 million homes they could potentially sell next year.
Offsite construction—which includes more use of components as well as panelized and modular construction—could close that gap by reducing the need for skilled labor and by bringing more operational efficiency to the jobsite.
The event included presentations by industry experts as well as roundtable discussions between a range of players: stick builders, modular builders, panelizers, developers, component and product manufacturers, technology providers, architects and financial analysts – to name a few.
It concluded with a tour of Katerra, a panel manufacturer founded by a group of Silicon Valley entrepreneurs and venture capitalists from the high-tech world. Katerra considers itself a technology firm that happens to be in the construction space and is one of a growing number of players from outside the U.S. homebuilding industry who believe the industry is ready for a major transformation.
But although the move to offsite seems to be underway, most builders will have to get onboard by evolving a traditional construction business in ways that keep them profitable. So it was no surprise that while about half of the builders at the event seemed sold on the idea, the other half came armed with concerns they wanted to be addressed. Here's a small sampling of what we heard:
Will offsite really reduce construction costs, and if so how by how much?
How much cycle time can it save?
How do relationships and sourcing approaches change with suppliers and others along the delivery chain?
What other business practice changes are needed?
How does a builder get their framers and other subs to embrace a building process that many of them view as a threat?
How does optimizing a house for panel construction affect the design process?
What about zoning issues?
Clearly, builders need help making this work.
The Alliance will address this need by devoting considerable time and resources to offsite over the next year – looking at the issue from a production-building and housing community development perspective. We will bring people together to answer the above questions, as well as many others, and to explore innovative ways we can work together to move our industry forward and benefit everyone. Our planned efforts include:
AN OFFSITE ROADMAP. In January we will issue a preliminary document that maps out the potential paths from stick framing to offsite, including some actionable insights builders can start leveraging in their businesses now. It will be distributed to Alliance members, then revised later in the year based on feedback from and discussions with our membership. The Alliance intent isn’t to advocate for one method of construction over another, but rather to give builders a bigger arsenal to work with in scaling production and improving quality and productivity as demand for new housing continues to grow.
BI-MONTHLY CALLS. We will be hosting a serious of conference calls every other month throughout the year, beginning in late January. Those members who participate will be considered part of our Program Council – helping to drive these efforts and others. The primary focus will be on discussing ways to implement offsite.
ONLINE DISCUSSIONS. Through our members-only portal, we will drive monthly discussions on specific topics related to offsite. These discussions will include feedback on our evolving roadmap.
VIRTUAL CASE STUDIES. We will be creating case studies of builders and developers who have implemented offsite successfully. The case study content will be tailored to what our members say they want to learn, and will be presented in an interactive webinar format – or “virtual round table” – bringing our live think-tank model to the web.
SUMMIT DISCUSSIONS. Our annual Housing Innovation Alliance Summit in New Orleans in April will include a segment on offsite. It will be a key part of a general Summit focus on the future of homebuilding.
A FINANCE EVENT. At PCBC in late June we will hold a meeting focused on a topic that everyone has expressed interest in: how the financials are working for builders and developers who have embraced offsite, and how those numbers compare to site building.
MANUFACTURER VISITS. We're planning at least two road trips to cutting-edge housing manufacturers in May and September. These will be in-depth learning opportunities, and all members will be invited to attend.
We expect that the relationships formed through these efforts will generate other, innovative solutions that we haven't yet considered. We will keep our members informed of these as the months pass.
The bottom line is that the inability of builders to meet consumer demand for housing and to stay consistently profitable are among the industry's biggest problems, and offsite is one of the most promising solutions. Of course implementing a change of this magnitude is a huge task that requires players from different parts of the industry to work towards a common goal, but managing that kind of collaboration is where the best builders will excel.
We hope you will decide to join us in this important Alliance effort.
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