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Configurable Construction Systems

BY MÅNS RIDZÉN & TOBIAS MARTIN
CONSTRUCTION

How to Improve Productivity in the Construction Industry?

By Måns Ridzén & Tobias Martin

Construction has a hard time to match the productivity of other industries. 

Although there have been multiple phases of industrialization, these changes have had varying degrees of success. And despite efficiency gains, the construction industry remains relatively traditional. 

For example, despite the promise of prefabrication to deliver higher quality at lower cost, there’s an evident risk that product quality is sacrificed for process efficiency. And even these process benefits can be questioned compared to improved on-site production methods.

What’s clear is that construction companies are looking for ways to improve productivity. 

What’s also clear is that there’s not a one-size-fits-all solution. 

Configurable Construction to Meet Stakeholder Needs

Industry stakeholders want different things and these differences are driven by location and climate, regulations, respect for local traditions and the balance between the needs of construction companies, real estate owners and consumers.

This variety of needs is well suited to a modular approach, where different modules can be interchanged and rearranged thanks to standardized interfaces. The result is a construction system that can be configured to meet the needs of the market and provide solutions to satisfy all stakeholders.

Configurable construction systems can add value for construction companies and end customers through increased productivity, reduced lead-times and improved quality and product performance. This article looks at how companies can move from more traditional, custom-crafted construction to a configurable, truly industrialized system that meets all stakeholder needs.

From Custom-Crafted to Configurable

Start With What Delivers Value

Before starting out on a journey to create a configurable system, it’s important to set clear targets and plan how to reach them. These targets must be set specifically for your organization and will depend on company strategy, legacy and starting point.

Some companies see competence limitations in construction design as one of the biggest risks, and therefore set design re-use and CAD-automation as one of the main targets for their construction system. Others focus on direct material savings, quality improvements, value add for customers or digitalization. Successful companies understand what to focus on, how to set targets and how to connect them to actionable KPIs.

If the scope is wide, there will be reason to question whether it’s possible to select one technical or process solution for the whole range. For example, in a high-value segment a standardized kitchen setup might be used to enable a high degree of prefab. But in a high-price segment, the end customer wants more freedom to design the kitchen, including cabinet interiors, pushing the variance point later in time, pushing down the possible prefab degree.

One of the biggest long-term effects of utilizing a construction system is to be able to improve it continuously over time. Project-based businesses traditionally have a hard time to close feedback loops and continuously improve the product over time. Instead, there’s a risk that the wheel is reinvented in each new project. Construction is project based by nature, but this does not stop the central definition and governance of a construction system.

From Project Based to Configuration Based

Avoid Pitfalls

While the potential value is great, if you approach a new construction system from the wrong angle it can lead to big problems. Even when interfaces are in the right position and module variants are specified according to market demands, value will not materialize unless your processes, IT-systems, suppliers and company culture are adapted and aligned.

If strategies are not aligned properly, and not incorporated into the construction system itself, there will be a gap between company vision and implementation. 

Experience suggests that many companies fail to properly assure that the construction system is flexible enough to be used in construction projects with different needs, thereby forcing projects to depart from set interfaces. Other companies risk focusing more on internal needs than the needs of end users, resulting in poor product performance. If you don’t attack these issues head on, your investment in productivity improvements is likely to fail.

Configurable Construction Systems and Prefab

A common misconception is that moving to prefabricated construction elements is the same thing as implementing a construction system. 

The choice whether production should be located onsite or offsite is part of the construction system’s supply chain strategy, and it’s not clear that a bigger prefabricated share will help realize productivity improvements. For example, market requirements, such as flexibility and late customization, may drive production activities to onsite. 

It’s important to carefully match product flexibility with process capability and customer value. For example, customization that generates significant customer value can be be made onsite, while other elements should be optimized for efficiency and prepared offsite.

A construction system should rather be defined as a system prepared for configuration. 

The first step is technology selection, i.e. standardizing on a specific frame system or multiple systems depending on market requirement. The second step is to have predesigned parts that are configured into a building. The higher the degree of centralized preparation, the less work needed in the design of each building. In reality, different parts of the building system will have different levels of preparation depending on the market challenge. Following this, the level of prefabrication can be optimized for each part to reach efficiency and configurability targets.

How Prefabricated Construction and a Construction System Work Together

How to Start?

Construction has some of the most complex and extensive products of any industry, varying from large buildings to huge infrastructure projects. One of the earliest and most important decisions is how to scope the construction system.

A building is a complex system made up of numerous sub-systems structured in multi-layered hierarchies. Dependencies between sub-systems and variance of execution between projects drive complexity in the design, production and maintenance of a building.

Even if the long-term vision is to have all or at least most of the building’s sub-systems as part of a construction system, it makes sense to slice things up in bite size pieces. Before digging into each sub-system, you can benefit from analysing the current state and identify which sub-system has most potential in relation to investment needs. This enables you to plan the overall journey to a configurable system and materialize that potential in iterative steps, starting with the part of the product that will give most return on investment.

Industry Disruption: Risk or Opportunity?

New actors tend to disrupt markets and leave established actors behind if they fail to adapt. The construction industry is likely to see an increasing level of disruption in the coming years, especially in some markets.

Decentralized production, complex permit processes, exposure to economic cycles, competence shortage and a multifaceted legacy are just some of the challenges facing the industry. What has been considered efficient before is no longer good enough. Industry specific conditions has held the industry back from some of the technological and organizational advances seen elsewhere.

As innovation continues at speed, we’ve reached a threshold where systems, technologies and processes can deal with the needs of the construction industry, and we’re seeing how leading organizations are adopting. Companies that find the balance of when and what to invest in will be greatly awarded, even if it’s a fine line and there are several uncertainties going forward. Whatever the right path is, you will have to be fast, flexible and efficient, which makes an investment in a configurable construction system important. Configurable construction will enable you to meet different stakeholder needs, stay on top of market trends and keep your organization together.

In the near future we’re likely to see new constellations of vertical integration. Larger construction companies will take a life cycle management approach to buildings, where the second and third tenant is a new customer. And this places new requirements on the construction system, with stable interfaces for future upgrades, and on the information management systems needed to handle the lifecycle perspective of the buildings.

The construction industry is changing fast and a construction system that can be configured to meet changing needs could well be a prerequisite for success. Either you adapt as competitors set the framework for the future or you lead the change.

QUOTE

Configurable construction systems can add value for construction companies and end customers through increased productivity, reduced lead-times and improved quality and product performance.

Måns Ridzén,
Modular Management
CASE
PEAB PGS
SOLUTION
PALMA SOFTWARE

PALMA®

This is the world-class solution for product management.

Standing for Product Assortment Lifecycle Management, PALMA is cloud-based strategic software to create, document and govern modular product architectures. With this unique structured approach you can design and document product architectures. You can also connect enterprise systems and secure business goals.

Built on an in-memory database platform, PALMA is faster and more capable than anything else on the market, so you can create configuration rules without coding, govern product architecture life cycles and create a business advantage.

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HOT TOPIC

Executive Dilemma

BY MART TIISMANN

The executive dilemma is how to optimize operational excellence, customer intimacy and product leadership – all at the same time 

As CEO of an international company, I learnt it’s possible to connect products, customers and organizations. Modular product architectures, together with a well-structured information model, make it possible increase efficiency, meet individual customer demands and innovate. The executive dilemma is therefore possible to solve.

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HOT TOPIC

The Executive Dilemma

BY MART TIISMANN

The executive dilemma is how to simultaneously optimize operational excellence, customer intimacy and product leadership. And it can be solved.

As CEO of an international company, I learnt that it’s possible to connect products, customers and organizations. Modular product architectures and information management tools make it possible.

How to Solve It?

Profitability is secured through the management of business fundamentals.
So what are they?

Treacy and Wiersema present a model in their book ‘The Discipline of Market Leaders.’ The authors identify three value disciplines – or axes – that serve as measurable and manageable fundamentals: Operational Excellence, Customer Intimacy and Product Leadership. Based on these axes, the executive challenge becomes how to reduce costs (operational excellence), increase market share (customer intimacy) and increase price premiums (product leadership) at the same time?

This model is rational, practical and I like it. Systems associated with each axis can connect your teams and the KPI output can populate your management dashboard. But how?

Why am I Sharing This?

I’ve always been interested in the bigger picture. How do things work? How does everything stick together? How can we improve?

After reading illustrated how-to books as a child, I completed engineering and business degrees in Sweden and the US. My professional career began in engineering at Scania. After that I moved into regional management at Eaton Corporation and the product divisions of ESAB, and then joined Sidel Group as President and CEO in 2008.

Now I’m a Board Member at Modular Management, world leader in modular product architecture, and at Starcounter, the in-memory database specialist. You’re welcome to link in, but I’m not here to reminisce about my career. Instead, here are a few ideas about how executives can bridge strategy and results. And connect organizations without drowning in complexity and Microsoft Office documents.

Connect Systems to Value Axes

Operational excellence means optimizing processes to deliver the highest value at the lowest cost. Fast, lean and agile supply chains are part of this. Total operational cost is a key measurement and the supply chain head (COO) has the task of optimization.

System: ERP

Customer intimacy means products and services that suit individual customer’s needs. Every customer is unique and wants an individual solution. Fast. Do this well and you can build long-term customer satisfaction and loyalty. Market share is the driving KPI, and sales (CSO) and marketing (CMO) often share responsibility.
System: CRM and CPQ

Product leadership means first-to-market with new and innovative products. Do it well and you get a price premium. Sales of new products are key performance indicators and your innovation teams drive this, with R&D and product management (CTO) at the forefront.
System: PLM and CAD.

And as CEO, you get the lot.

The authors of ‘The Discipline of Market Leaders’ suggested that companies should focus on one axis to increase competitiveness and become market leader. But how can a CEO succeed with responsibility for all three axes by focusing on just one? Instead, let’s look at a solution for the Executive Dilemma.

Disaggregate

One size doesn’t fit all, which is exactly why disaggregation into a modular architecture is important.

Modularity is defined as ‘the degree to which a system is made up of relatively independent but interlocking components or parts.’ A modular product architecture is the foundation for tailoring your hardware, software and services to the needs of your customers.

Products can be built up of modules. Each module has a technical function, as well as specific parameters in terms of company strategy and customer needs.

For example, product X is built up of 20 separate modules and each module is available in five different variants. If the modules have standardized interfaces, each variant can be combined differently to create completely different products, which can then be configured by individual customers. The result? 95 trillion product configurations quickly produced with fewer parts and lower overall costs.

Since one size doesn’t fit all, make sure that you can disaggregate your products into modules that each combine these three key variables: strategy, function and customer needs.

Each module should have a clear, documented purpose, not just functional/technical, so the full interdependencies between modules is clear. Modular design means each module is available in different variants to be easily combined and connected though standardized interfaces. Customers can configure customized solutions and you can deliver fast without drowning in complexity.

Reaggregate

Once you’ve disaggregated products into modules, you have a modular product architecture and its accompanying, documented information model. Modularity, configuration and digitalization then combine to solve the three-axis executive challenge.

With a modular product architecture, each customer knows what is and isn’t possible to configure. And you know too. The bill of materials (BOM) is such that customers get what they want, fast. Your organization knows what you’re selling, making, delivering, servicing and reselling. You sell what you have, not what you don’t, and you focus your product development on those modules that really make a difference. Your support systems are connected, thanks to the universal information model connected by nodes, and your organization is able to share the same information in real time.

Do

  1. Make sure everything you do is anchored in solid strategy. Building a modular architecture does not start with standardization, it starts with understanding your customers’ needs.

  2. Adopting a modular architecture is by its nature transformative and requires persistence. Build faith and momentum by going after low-hanging fruit and make sure you deliver short-term gains throughout the program, even if some of those steps might not be directly critical for the end result.

Don't

1.       Don’t underinvest in your R&D. That can be a tempting way to optimize short-term results, but rebuilding a depleted technology pipeline is very tough. Avoid ending up there.

2.       Don’t underinvest in your people. And when you drive a transformation, make leading the change a visible path career booster for your high-potential talents. 

Mart Tiismann

Mart Tiismann

BOARD MEMBER
Customers want innovative products, fast. Companies want to make customers happy and be 21st century lean. So how does all that work? Modular Management delivers clarity, performance and customer centricity so clients can reduce complexity and accelerate value creation.
EXECUTIVE SUMMARY

The Executive Dilemma is how to optimize operational excellence, customer intimacy and product leadership

You can solve this dilemma if you disaggregate products and services into modules and then reaggregate. A modular product architecture, with accompanying information management tools, enables you to connect your products, customers and organization.

Customers want innovative products fast. Customers want to customize. Producers want to make customers happy and a modular product architecture, based on my experience, makes this possible. Modular design enables you to manage all three value axes at the same time. And your  products and services can be customized on line, en masse.

Thanks for reading and don’t hesitate to get in touch.

"One size doesn’t fit all, which is exactly why disaggregation into a product architecture is important."

Mart Tiismaan
PALMA® STRATEGIC SOFTWARE

PALMA stands for Product Architecture Lifecycle Management. It’s the world-class solution for product management and I strongly recommend you take a look.

PALMA