It’s often hard to find valuable academic research on construction - the number of useful papers seems low, beyond just what would be implied by Sturgeon’s Law. It largely seems written for an audience of other academics, and tends to be fairly disconnected from the nuts and bolts of actually putting a building together.
Another good article Brian. I have noted that "the way we always do it" is stronger in single family residential (reaching a peak in production housing) than institutional buildings. There is a direct correlation to the detail of the design documents and also design fees. The design effort and documentation for a production home is very sparse, and yet they bang them out by the thousands. A courthouse today will have hundreds of full size drawings and thousands of pages of specs.
Also, the 3000 parts count in a house is very low. If you count each shingle, brick tie, and brick, each electric face plate, and floor tile (each part handled by a human installer), you get closer to 30 000 than 3000. There are over a thousand asphalt shingles in a modest house. Toyota says that their cars have over 30 000 parts but they count fasteners "down to the smallest screws" (and they often show up on parts diagrams). If you count fasteners, then 30 000 parts in a single family home is easily exceeded. I cant see how a larger building like a federal courthouse would not have 600 000.
Complexity and Lean thinking is defined by the time it takes to complete. I have heard of homes in Phoenix built in 30 days, my friend does complete bank renovations in 2 weeks working 24/7. In China a highrise floor every 48 hours. Any studies on applying lean to construction?
Great post. Glad to have found your site. I have been a commercial builder for 20+ years now. First in the Air Force as a Civil Engineering officer, then as a project manager for a large GC, and now as the owner of a drywall, metal stud, and acoustical ceiling subcontracting company. I also have a prefabrication warehouse where we prefab load bearing metal stud walls for multi-story projects. I am doing a boutique hotel in Nashville, TN right now, but I am dealing with all the issues you stated above relating to prefab. You nailed it. The cost of prefabbing that 9,000 SF 3-story building was 5% more than traditional wood framing, but that was back in Oct '20, when wood prices had increased, but metal had not. Since then, metal had increased more than wood, and is still rising.
As I have tried to explain construction to my non-construction friends that may understand or have implemented "innovative management processes/products" into their businesses, I make two points: 1) Construction is messy...your address this above in the lack of detailed drawings and reliance on the community of practice, as well as the weak relationships between various subs on a job which is the source of so many problems I deal with day to day. 2) Unlike the typist who lost his/her job if they didn't innovate and adopt to computers, within the construction industry almost any subcontractor can still perform their craft using the tools/processes from 50+ years ago. I can think of very few other industries where using the old tools/equipment/processes of the past still allow one to run a profitable business.
Thanks for writing this, I found it very interesting.
The bad dynamic here makes me think of Coase's Theory of the Firm https://en.wikipedia.org/wiki/Theory_of_the_firm which argues that one of the reasons why firms exist (rather than just having separate market transactions for each input that goes into a production process). I'm curious why there is not more vertical integration along these lines in the construction industry. e.g. if a construction company directly employed the variety of specialists it needed (plubing, electrical, hvac, insulation), then it would be able to avoid some of the problems highlighted here. For example it might be able to train all its employees to work towards the new standard (rather than the old local optimum). It also could help reduce some of the adversarial dynamics that come from fixed-fee bidding from separate project teams.
From the 1950's "when the boys came home" from WWII, until the 1980's we builders had our own employees build a house. Subcontracting came into play as a means to lower costs (an HVAC contractor has installation methods optimized, workers trained), higher quality (a plumber who does only plumbing can specialize, producing consistent quality, lower cycle times (specialty subcontractors are faster at doing the one task they are responsible for), and lower overhead costs (what do you do with a plumber when there is not plumbing to do today?). The low bid process has pros and cons. One of the pros is affect on driving costs down.
The answer; integrate specialty subcontractors into the builder's processes like Toyota does with their suppliers. Work together to lower each other's costs and improve each other's operational efficiencies.
Hi Ken, How do you see that integration happening? It seems like many subcontractors work with many GC's. So they would have to be fully integrated with 3-4 GC's, increases their costs and loosing the most of the benefit of the relationship.
Great question, Konner. I have a lot of passion around this topic; so much that I just finished writing a book with the intention of sharing the lessons learned during my career and hoping that builders and GC's will improve upon them. My book, "How Much Is the Milk?" is focused on residential construction because the principles are easier to envision when applied to the predictable repetition of homebuilding, but the methods can also be applied to commercial construction in varying degrees of effectiveness.
I'm fighting the urge to write more than is appropriate for this post, but an important factor in applying the methodology laid out in "Milk" is a wide distribution of "SKUs" and "Date Needed" data throughout the supply chain, giving them time (60 days is ideal) to optimize mfg and distribution operations, ensuring the right materials are in the right place, at the right time, every time. Then... great things can happen.
Thanks for the introduction to the concept of the "community of practice"! It explains a lot of what I see every day. It really is amazing some times how much gets built with very little overt coordination. Do you know of any studies showing the time it takes for the industry to adopt a new technology or technique? ie. How long does it take to change the practice?
Another good article Brian. I have noted that "the way we always do it" is stronger in single family residential (reaching a peak in production housing) than institutional buildings. There is a direct correlation to the detail of the design documents and also design fees. The design effort and documentation for a production home is very sparse, and yet they bang them out by the thousands. A courthouse today will have hundreds of full size drawings and thousands of pages of specs.
Also, the 3000 parts count in a house is very low. If you count each shingle, brick tie, and brick, each electric face plate, and floor tile (each part handled by a human installer), you get closer to 30 000 than 3000. There are over a thousand asphalt shingles in a modest house. Toyota says that their cars have over 30 000 parts but they count fasteners "down to the smallest screws" (and they often show up on parts diagrams). If you count fasteners, then 30 000 parts in a single family home is easily exceeded. I cant see how a larger building like a federal courthouse would not have 600 000.
Complexity and Lean thinking is defined by the time it takes to complete. I have heard of homes in Phoenix built in 30 days, my friend does complete bank renovations in 2 weeks working 24/7. In China a highrise floor every 48 hours. Any studies on applying lean to construction?
Great post. Glad to have found your site. I have been a commercial builder for 20+ years now. First in the Air Force as a Civil Engineering officer, then as a project manager for a large GC, and now as the owner of a drywall, metal stud, and acoustical ceiling subcontracting company. I also have a prefabrication warehouse where we prefab load bearing metal stud walls for multi-story projects. I am doing a boutique hotel in Nashville, TN right now, but I am dealing with all the issues you stated above relating to prefab. You nailed it. The cost of prefabbing that 9,000 SF 3-story building was 5% more than traditional wood framing, but that was back in Oct '20, when wood prices had increased, but metal had not. Since then, metal had increased more than wood, and is still rising.
As I have tried to explain construction to my non-construction friends that may understand or have implemented "innovative management processes/products" into their businesses, I make two points: 1) Construction is messy...your address this above in the lack of detailed drawings and reliance on the community of practice, as well as the weak relationships between various subs on a job which is the source of so many problems I deal with day to day. 2) Unlike the typist who lost his/her job if they didn't innovate and adopt to computers, within the construction industry almost any subcontractor can still perform their craft using the tools/processes from 50+ years ago. I can think of very few other industries where using the old tools/equipment/processes of the past still allow one to run a profitable business.
Thanks for writing this, I found it very interesting.
The bad dynamic here makes me think of Coase's Theory of the Firm https://en.wikipedia.org/wiki/Theory_of_the_firm which argues that one of the reasons why firms exist (rather than just having separate market transactions for each input that goes into a production process). I'm curious why there is not more vertical integration along these lines in the construction industry. e.g. if a construction company directly employed the variety of specialists it needed (plubing, electrical, hvac, insulation), then it would be able to avoid some of the problems highlighted here. For example it might be able to train all its employees to work towards the new standard (rather than the old local optimum). It also could help reduce some of the adversarial dynamics that come from fixed-fee bidding from separate project teams.
Oops sentence got cut off in the middle here:
"... argues that one of the reasons why firms exist ... is to reduce transaction costs and economize on the costs coordinating economic activity"
From the 1950's "when the boys came home" from WWII, until the 1980's we builders had our own employees build a house. Subcontracting came into play as a means to lower costs (an HVAC contractor has installation methods optimized, workers trained), higher quality (a plumber who does only plumbing can specialize, producing consistent quality, lower cycle times (specialty subcontractors are faster at doing the one task they are responsible for), and lower overhead costs (what do you do with a plumber when there is not plumbing to do today?). The low bid process has pros and cons. One of the pros is affect on driving costs down.
The answer; integrate specialty subcontractors into the builder's processes like Toyota does with their suppliers. Work together to lower each other's costs and improve each other's operational efficiencies.
Hi Ken, How do you see that integration happening? It seems like many subcontractors work with many GC's. So they would have to be fully integrated with 3-4 GC's, increases their costs and loosing the most of the benefit of the relationship.
Great question, Konner. I have a lot of passion around this topic; so much that I just finished writing a book with the intention of sharing the lessons learned during my career and hoping that builders and GC's will improve upon them. My book, "How Much Is the Milk?" is focused on residential construction because the principles are easier to envision when applied to the predictable repetition of homebuilding, but the methods can also be applied to commercial construction in varying degrees of effectiveness.
I'm fighting the urge to write more than is appropriate for this post, but an important factor in applying the methodology laid out in "Milk" is a wide distribution of "SKUs" and "Date Needed" data throughout the supply chain, giving them time (60 days is ideal) to optimize mfg and distribution operations, ensuring the right materials are in the right place, at the right time, every time. Then... great things can happen.
Hi Ken, I guess I'll just have to wait for the book then ;) I have been wanting to study more about supply chain so that'll be a good start.
Thanks for the introduction to the concept of the "community of practice"! It explains a lot of what I see every day. It really is amazing some times how much gets built with very little overt coordination. Do you know of any studies showing the time it takes for the industry to adopt a new technology or technique? ie. How long does it take to change the practice?
Thanks Brian
Fantastic post.
This is fantastic. I never thought about construction this way before, but it makes a lot of sense!
Brian,
I enjoy your research and writing more than I can convey.
Thank you for the work you do and for sharing so generously.
-Paul