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Charting the Prefabrication Journey in Five Phases

May 28, 2024
For all trades the journey breaks down into five phases, each with distinctive logistical, financial, technological and cultural challenges.

For companies ready to make a jump into off-site fabrication and Building Information Modeling (BIM), it may be helpful to understand what’s ahead in your journey:

  • How many FTEs (full-time equivalents) will be required?
  • What principal challenges will you face at each phase of your journey?
  • What level of investment will be required?
  • How much of your work will be prefabbed, at first and ultimately?

To answer these questions, we conducted research among contractors that were experienced in building off-site prefabrication capabilities. About half the research participants were in plumbing or mechanical trades. While the remaining half were in electrical, our research focused on the commonalities among the trades as they made their way through the prefabrication journey.

For all trades, we found the journey breaks down into five phases, with distinctive logistical, financial, technological and cultural challenges surfacing during each of these phases. Because our research was qualitative, based on in-depth interviews, we were also able to capture verbatims documenting the challenges, as well as common solutions. Let’s briefly explore the journey.

Phase 1: Startup

Resources: 2-3 FTEs (full-time equivalent employees)

Typical Square Feet: < 5,000

Percentage of the Business Prefabricated: ~10%

Startup Costs: $1 million to $1.5 million

Contractors usually start with smaller, easier applications—ones they are familiar with. At first, they are staking out manageable opportunities, creating a trial, and aiming for success on a small scale. In mechanical, the focus might be on cutting pipe. In plumbing, carrier groups are often prefabricated.

The most significant organizational challenge in Phase 1 is company buy-in and education. All levels of the organization need to understand what off-site prefabrication is: what it will be at first, what it can become, why the organization is undertaking it, and why it will take some time to ramp up.

Without this kind of grounding across the organization, prefabrication managers come up against various forms of resistance (e.g., skepticism, lack of cooperation), which may slow down the process and inhibit results, according to the research participants.

Ramp up can be a difficult process, with the first project being the most challenging hurdle. Many companies report that “it gets worse before it gets better.”

That’s why there needs to be total support from the upper levels of the organization. As a new business venture, off-site prefabrication requires an investment without an immediate return. One manager of a prefabrication program explained the challenge like this:

When push comes to shove, it is difficult to get it going. It’s not turnkey. It is not a profit center. What you do in prefab is to save labor and cost on job, not to save money in shop. To get ownership to buy in, you are saying we are going to give this money to the department for free for a while.

Along with financial support, management needs to support a culture of learning. To ramp up prefabrication requires a high degree of trial and error. Not everything is going to work right the first time around. People need to be encouraged to try new things and, if they don’t work out, share their mistakes so everyone can learn. Obviously, this type of culture is very different from the traditional culture of the trades, which reveres self-assurance and mastery.

Because off-site prefabrication is new territory for everyone, many participants in our research looked for support from noncompetitive peer organizations. They identified like companies through trade associations, formed informal groups, and met a few times a year to exchange ideas. One prefabrication manager recalled:

The most important input was from live people from our peer group. Once a year they fly in and look things over. We have five to six companies around the country who are committed to a once-a-year get-together to share ideas.

Phase 2: Expanding the Portfolio

Resources: 4 FTEs

Typical Square Feet: < 5,000 (no change)

Percentage of the Business Prefabricated: ~25%

Costs: Incremental expenses for tool acquisition

In Phase 2, many companies round the bend in terms of support within the organization. Prefabrication managers report feeling more trust from their colleagues in the field. Management is now behind them. The volume of prefabrication is increasing.

On the other hand, this phase represents another major transition. As volume increases, challenges arise around space (i.e., sufficient square footage) and the flow of work and storage within that space.

One research participant explained:

We are running out of room. It is creating a logistical nightmare to move stuff around in the warehouse. It’s a good thing because it means more work, but I would like two times as much room.

This is a time when contractors often begin to restructure the shop to improve flow. It may also be a time when contractors invest in larger prefab-specific equipment (e.g., table benders, positioners or pipe spinners, a pipe fabricator, groover, sub arc welder or plasma pipe cutter).

As a result, another challenge in Phase 2 is the shortage of skilled labor trained to operate large equipment, a problem that most companies address by forming an internal training program or recruiting new, promising and appropriate talent from outside the organization. 

Phase 3: Expanding the Facility

Resources: 12+ FTEs

Typical Square Feet: Varies greatly

Percentage of the Business Prefabricated: ~35%

Costs: Significant costs for expanding the facility and inventory

In Phase 3, off-site prefabrication becomes the rule rather than the exception. Volume is growing, and the organization is making the transition to a manufacturing mindset, with greater attention to the design of the space, flow, productivity and efficiency.

Phase 3 is often the time when consultants are brought in to help measure and project future growth, as prefabrication’s potential becomes more evident. During this phase, companies are looking for ways to quantify time and materials per task, job and person.

In addition, the size of the facility is going to increase, either by redesigning the current space or moving into a new space that is designed from the ground up. With more space, there are greater opportunities to address the problems around flow (which first arise in Phase 2). Many shops move toward a linear setup, with materials being received at one end of the facility; assemblies being prefabricated in the middle; and storing and shipping occurring at the other end. As one prefabrication manager explained:

The amount of time touching something is where you will spend a lot of time. Also, you spend a lot of time receiving raw materials, packaging and reshipping the final product. These are the bottlenecks. Putting the product together is not that bad. It’s before and after.

Here are a few common practices that help with flow:

  • Assign a control number and brief description to all incoming materials so pallets with related materials end up right next to each other and workers are not wandering around looking for parts.
  • Allow for some work stations to be multipurpose so they can be adapted to different jobs at different times. Other stations may be dedicated to a single task, like pipe bending, because they require specific, stationary equipment.
  • Put everything on wheels so it can move or spin. Materials can be anchored during work, but make sure they can always move again.

Phases 4 and 5: BIM and Multi-Trade Integration

Phases 4 and 5 enable off-site prefabrication to reach its full potential in terms of productivity. During Phase 4, Building Information Modeling (BIM) becomes integral to the prefabrication process by enabling automated three-dimensional design of the various MEP utilities. Then, these spools are pushed directly to fabrication and cut tables on the shop floor, eliminating many manual steps and processes.

In Phase 4, the principal obstacle to BIM integration is design expertise. This hurdle is surmounted in one of two ways: (1) contractors learn the software or (2) software users learn construction. Ideally, both things happen at once because the two groups can learn from each other and the company’s capabilities can grow faster. In either case, some form of outside expertise and a robust training apprenticeship program are necessary.

Phase 5 occurs when companies are prefabricating multi-trade assemblies, drawing on mechanical, electrical and/or plumbing expertise from within one company or through a coordinated effort between companies. In the context of Virtual Design and Construction (VDC), this level of cooperation represents a tremendous upside in terms of efficiency.

Companies that are ready for this level of prefabrication find that the principal challenge, not surprisingly, is finding qualified and willing partners in the other trades.

Conclusions from the Research

Our research into off-site prefabrication shows that contractors in all trades are passing through the same phases and facing the same kinds of challenges at each phase. In other words, no company is really alone in their journey.

Second, there are mainly two types of challenges that contractors are facing as they undertake off-site prefabrication: (1) those relating to a shift toward a manufacturing model of work (e.g., space, flow, efficiency, larger equipment, larger volumes) and (2) those relating to software integration, including BIM design, benchmarking, dataflow and measurement. Success requires skill sets in both areas.

Finally, the research shows that at the start of the process (Phase 1) progress is slow and requires dramatic cultural change, but as companies proceed to Phases 2 and 3, the momentum picks up. According to the 2020 Dodge SmartMarket Report, most companies in the plumbing and mechanical trades ultimately prefabricate 30%, 50% or even 75% of their work, because the return on investment—in terms of quality, productivity and safety—is so good.

Aaron Heilbrun is the Director of Trades for Construction Technology at Stanley Black & Decker. He’s worked for different industrial manufacturers across all segments of construction during the last 20 years. Even after all that time, he never tires of seeing how contractors turn design into reality. 

Ward Smith is the Director of Product Management within the Power Tool division at Stanley Black & Decker. He has traversed a variety of sales and marketing roles within Stanley Black & Decker for the past 19 years, covering a wide range of portfolios from battery development to concrete drilling and dust management.

About the Author

Aaron Heilbrun

Aaron Heilbrun is the Director of Trades for Construction Technology at Stanley Black & Decker. He’s worked for different industrial manufacturers across all segments of construction during the last 20 years. Even after all that time, he never tires of seeing how contractors turn design into reality. 

About the Author

Ward Smith

Ward Smith is the Director of Product Management within the Power Tool division at Stanley Black & Decker. He has traversed a variety of sales and marketing roles within Stanley Black & Decker for the past 19 years, covering a wide range of portfolios from battery development to concrete drilling and dust management.

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