Real estate developers should accept that business, as they have known it, is changing. By adopting new construction technologies, they can make project delivery more customer-friendly and homes more affordable for families.
Imagine if people could design and develop their dream homes simply by going online to find the solution that best suits their means and lifestyles. Imagine being able to pick from a menu of standard base designs and customise fittings, furnishings and smart equipment.
Then, imagine being able to use a digital interface to obtain quotes from vetted contractors for everything from surveying the plot to assembling the house. The pieces of the house itself arrive in the form of prebuilt panels and modules in a container from a centralised robotic factory. This is what is meant by “industrialised delivery systems”—and these will play a crucial role in the future of the real estate and construction sectors.
In reality, early versions of this future already exist, with several venture-funded home builders in the United States aspiring to channel the customer-experience revolution pioneered by consumer-goods companies into the residential-property space. We are likely to see the creation of standardised home-building platforms, with developers working with an ecosystem of companies that provide an array of fittings, furnishings and equipment solutions. The result is a seamless customer experience and a more sustainable end product.
Sceptics may argue that such industrialised delivery innovations will focus on the lower-priced and affordable segments of the market, while the construction of high-end real estate will remain unchanged. Early evidence suggests, however, that this will not be the case.
Industrialised delivery systems are poised to disrupt the real estate sector across all asset classes and price points. There is little doubt that the construction process adopted today badly needs innovation, mainly to improve the speed of delivery and reduce the dependence on manual interventions. A key enabler for this transformation is a modular design that is geared for production and assembly rather than field-based on-site work.
We are already seeing progress toward this future, and Singapore has been a global leader in the adoption of new technologies and innovations in industrialised delivery systems. Singapore has enjoyed some of the most productive residential construction projects in the world. This article explores three technologies already in use by the Singapore construction sector that are poised to further increase productivity in the real estate sector.
VIRTUAL DESIGN AND CONSTRUCTION (VDC)
Digital platforms, such as 5D building information modelling (BIM), enable the creation of a “virtual twin” of physical projects. This not only allows design optimisation—in the form of more precise estimates, value engineering, constructability and interface checks—but also provides transparency and project management oversight over the life cycle of the project. Given the benefits of BIM, the government of Singapore has mandated its use in public infrastructure projects. Coupled with emerging industry trends, such as integrated project delivery contracts, VDC is a powerful tool to help finish projects on budget, on time and on spec.
To realise the full benefit of using 5D BIM for projects, developers and contractors must fundamentally rewire their design, estimation and project management processes. That means contractors and clients must work closely together, backed up by clear contracts, to share both risks and gains.
PREFABRICATED, PREFINISHED VOLUMETRIC CONSTRUCTION (PPVC)
PPVC involves the factory-based construction of interlocking building modules, each equipped with internal finishes, fixtures and fittings. These elements are then transported to the site for assembly and installation.
PPVC is slowly but steadily gaining popularity because it accelerates the construction process, with productivity gains of as much as 30 to 50 per cent, according to case examples in Singapore. PPVC works particularly well for less complicated and standardised designs. Other benefits include higher, more consistent quality; less waste; and better health, safety and environmental performance because of the shift from chaotic field sites to a more controlled factory environment.
Singapore is one of the leaders in the use of PPVC. The city state’s Building and Construction Authority encourages deployment of this approach—not just for hotels, hostels, dormitories and industrial facilities, but also for middle- to high-end residential developments. Local property developers began using the technique—which can accommodate both concrete and dry walls and is also corrosion free and fire safe—after the government conducted successful pilots. So far, it has been used in buildings as high as 25 storeys and we should anticipate faster adoption in the future. Deploying PPVC implies changing design standards, assumptions and processes to adopt the Design for Manufacturing and Assembly approach. It also requires better production planning, supply chain and logistics management capabilities, given that modules need to be produced remotely and regularly shipped from factories to sites. These are areas in which many contractors are lacking. Few in the sector have anticipated this shift from construction to production, let alone budgeted and provided resources for it.
3D PRINTING
While 3D printing has not yet been widely applied in construction, developers and contractors should keep an eye out for innovations here. 3D printing will likely be an important part of the shift from the field to the factory. Experts believe that one core application of 3D printing could be in realising complex, iconic façades and architectural features previously thought too expensive or time-consuming to produce.
3D innovators are scaling up this technology by developing printers and design methodologies to create building units up to 200 square metres in size in less than a day. Significant R&D efforts are also under way in universities, including the Singapore Centre for 3D Printing at Nanyang Technological University. The community is researching how to print individual structural components and architectural features more efficiently.
PREPARE FOR CHANGE
The Singapore construction industry is poised for big cultural and technological shifts as it embraces digitisation across design and delivery processes. The real estate industry is set to gain from these developments, not just as the result of efficiency and productivity gains but also by providing a richer and more satisfactory customer experience.
The larger benefits could be profound. By cutting costs, speeding up construction and improving quality, industrialised delivery systems can also help provide the decent, affordable homes families around the world need.
MUKUND SRIDHAR
Mukund Sridhar is a partner in McKinsey’s Singapore office. He co-leads McKinsey’s Capital Projects & Infrastructure Practice in Southeast Asia, serving both asset owners/developers and contractors on topics such as optimisation of cost, schedule and risk for mega-projects, capital procurement and establishing world-class project delivery processes. With experience spanning 25+ mega-project teams (across housing, airports, power generation, transmission and distribution (T&D) utilities, roads and highways, smelters, refineries, water resources and others), he leads McKinsey’s research into the impact of digital and technology trends in construction and capital projects. He also serves owners, contractors, investors, governments and state-owned companies across asset classes such as real estate, EPC, transport infrastructure and utilities.
