In the mid-2010s, a wave of optimism gripped the residential construction industry. Companies like Ilke Homes and L&G Modular opened enormous factories, exceeding 200,000 square feet in size. This wasn't just about increased production; it signified a bold promise: offsite construction would revolutionise building. Faster project delivery, improved quality control, and a reduced environmental footprint – these were the hallmarks of the offsite vision.
However, a decade on, a different story unfolds. The factories of Ilke, L&G, Swan Housing, and UrbanSplash – all stand silent, their doors closed. This isn't an isolated incident. Established players like Caledonia Modular have also faced significant difficulties. The recent collapse of Lighthouse Construction serves as a stark reminder – the challenges plaguing offsite construction remain unresolved.
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| Swan's factory closing down |
Over the past six years, I've witnessed these struggles firsthand. Not just within the companies I directly worked for, but also through interactions with colleagues at other offsite firms and conversations with former employees across the industry. Their stories paint a similar picture: unfulfilled promises and persistent hurdles.
While the specific reasons for each factory closure may differ, a closer look reveals common themes that paint a broader picture of the challenges faced by the offsite construction industry.
- Fixation on Automation: Companies invested heavily in highly automated factory setups, often exceeding actual production needs. This resulted in high upfront costs and limited room for flexibility as project requirements and market demands evolved.
- Buzzwords Over Process: Trendy industry terms like “Lean”, "Design for Manufacturing and Assembly" (DFMA) and "Industry 4.0" are commonplace. However, a clear understanding of how to translate these concepts into practical workflows for offsite construction was often missing.
- A Disconnect from Customer Needs: The focus on rapid production overshadowed the importance of delivering to the customer. Getting the factory to 4 or 6 a day was the factory priority as opposed to handing keys over to the end customer, as such factories had to have off site storage including an airfield of modules that have now had to be disposed of.
- Communication silos and Inefficient Workflows. Without a strong connection across the whole value stream, communication between the design team, the factory and site fragmented.
It's not uncommon for "work started on the line" to be a driving key performance indicator (KPI) highlighting a disconnect from the overall delivery process. This metric emphasises production speed over optimising the entire offsite construction workflow, from initial design to final handover to the customer.
These problems and more have led to long project delays and failures, in the worst cases finished buildings having to be demolished.
While companies may have projected a customer-focused image and despite publicity of Lean and modern manufacturing principles. Core lessons on building a collaborative culture, optimising pull-based production flows, and mapping the value stream weren't effectively implemented and a crucial element was often missing – a concrete delivery plan.
The anecdote about a factory starting with a "back-of-the-serviette" sketch exemplifies the lack of comprehensive planning. While publicly questioning a similar approach, early in my offsite career might not have been the smoothest tactic, the underlying concern was valid – a clear and well-defined plan is essential for success.
At lighthouse the early days followed much the same pattern, we had won work and needed to deliver, focus was on the short term and also very reactive, just like those before us this lead to issues which caused delays and projects overrunning. It’s easy in that environment of firefighting and pushing to deliver to get wrapped up in the short-term needs, I’ve done it myself on a number of occasions. However, the company built a strong team of experienced people and we had begun this process, a large internal project mapping out the value stream and identifying gaps and risks in our processes. By doing so we identified a number of key projects which would help prevent these issues occurring again and given more time was setting the groundwork for a strong company.
Unfortunately for Lighthouse this groundwork was too late, while the trigger like all the factories discussed was unique, in hindsight it’s highly likely that it could have been avoided if that groundwork had been in place early on. It is always much harder to make change and rework than it is to build something right first time.
Technical debt (also known as tech debt or code debt) describes what results when development teams take actions to expedite the delivery of a piece of functionality or a project which later needs to be refactored. In other words, it’s the result of prioritizing speedy delivery over perfect code. [1]
Like technical debt in the IT industry this build-up of process debt is in part, why these factories fail, in nearly all of the new wave factories great things have been achieved, stories of vast improvements come from across the board, things for their teams to be proud off but ultimately it turned out to be too little too late.
Having had such a tough time, the industry is suffering from a lack of confidence and apprehension for potential customers, so now more than ever we need to demonstrate expertise and take a more calculated approach, akin to fable of ‘the Tortoise and the Hare’ often associated with Toyotas manufacturing philosophy.
In the coming posts, we'll delve deeper into these common themes and explore how Lean principles can be applied to address them. We'll move beyond buzzwords and translate them into practical tools for creating a robust delivery plan that prioritises customer value and operational efficiency in offsite construction.
1. https://www.productplan.com/glossary/technical-debt/
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