Industrialized Construction: Why Isn't The Construction Sector Building More Like IKEA?

Industrialized construction is entering a new phase of momentum. Faced with chronic labour shortages, schedule pressures, rising costs and stubbornly low productivity rates, more contractors and developers are exploring modular, prefabricated and offsite delivery methods.

And the capital markets are voting on it with their wallets. IES Holdings's $650 million acquisition of structural steel fabrication and industrial construction platform DBM Global was one of the largest bets yet on offsite fabrication in August this year. Smaller players are attracting capital too. Reframe Systems, for example, raised $20 million to scale robotics-driven ‘microfactories’ capable of manufacturing five single family homes per week, as part of a broader wave of investment targeting housing shortages and supporting wildfire recovery efforts.

The concept of industrialized construction itself is far from new

The Eiffel Tower was built using thousands of prefabricated iron components manufactured off site, then shipped and bolted together in Paris. Today, industrialized construction principles are being used to deliver everything from modular hotels and educational facilities to data centres and sports stadiums.

At its core, industrialized construction is simple: manufacture more in a controlled environment and do less on site, with design and construction aligned from the outset to support efficient delivery. In many ways, it's not unlike assembling IKEA furniture. The components are designed and produced elsewhere, with site teams focused on installation rather than building everything from scratch.

However, if the benefits are becoming increasingly clear, why haven't more contractors made the switch? The answer is usually less about technology and more about execution. Most firms don't struggle with the idea of industrialized construction, but rather the logistics and organizational changes needed to make it work at scale. As initial steps, firms seeking to pursue industrialized construction should begin to:

• Identify what makes sense to move off site.

  The first step is rarely a wholesale transformation of the supply chain. Instead, look for scopes of work that are repetitive and predictable enough to benefit from prefabrication. Good starting points, for example, often include bathroom pods, MEP racks and façade assemblies. Rather than committing to a fully modular project, choose one or two components on an upcoming job and treat it as a pilot by exploring what would be required to produce them off site. Just as importantly, map the logistics before production starts, determining where modules can be stored if the site isn't ready and how transportation constraints will affect sequencing. These practical considerations often determine success more than the manufacturing process itself.

• Build internal buy-in before chasing technology investments.
  The organizational challenge can be even harder than the logistical one. Many industrialized construction initiatives stall because nobody truly owns them. Having a senior sponsor who can champion a pilot, remove obstacles and maintain momentum often makes the difference between success and a short-lived experiment. It also helps to review recent projects retrospectively and identify what worked well, what didn't and where opportunities for improvement exist. Standard room layouts and façade details are often where the easiest opportunities for standardization are hiding.

The firms making the most progress aren't necessarily the largest or the most technologically advanced, but those solving for standardization, logistics and internal alignment before focusing on AI or automation.

For more on how to use AI to scale industrialized construction in practice, keep an eye out for the upcoming Verdantix report Best Practices: Six Ways To Advance Industrialized Construction With AI.