Today, each construction project is managed as a discrete effort and building models are still commonly delivered as drawings. General Contractors analyze the drawings, itemize the parts needed, order them from suppliers and ship them to a site where they are installed by craftspeople.
With off-site manufacturing and assembly, parts are first shipped to a prefab shop and pre-assembled so tradespeople are not running into each other. Some specialty contractors can work indoors. Processes have industrialized, the work is somewhat more efficient, but the traditional sequencing of processes remains the same.
In the near future, construction will be organized like a multi-tier manufacturing chain, which is exponentially more scalable. What does this transformation mean for the individual players within the construction value chain?
In The Next Normal in Construction, McKinsey & Company projects that GCs risk losing 20% to 25% of their value in a fully productized value chain in the coming years and specialty contractors risk 9% to 13% of their already modest slice. By resisting change, GCs will be disintermediated from the building delivery process. They will find themselves competing against module manufacturers and the firms that partner with them. In contrast, those who embrace productization and adapt as follows will retain the most value and demonstrate the most resilience through the transformation of the industry.
