Lean, Green Construction: Manufacturing Buildings as a Way Forward

The construction sector has an outsized impact on the world’s resources, accounting for 40% of global energy use, 30% of energy-related greenhouse gas emissions, and produces up to 40% of annual solid waste. Can wider adoption of green construction methods be both competitive for the private sector and have the ability to reduce its carbon footprint? This article explores several conditions which could optimise its economic, social and environmental gains.

What is green construction?

Green construction can be broadly defined as a holistic approach to improve the efficiency and sustainability of the engineering and construction (E&C) sector. This encompasses building materials, construction methods and the design of buildings to meet stricter environmental and social standards. Three important interrelated functional forms of green construction are modularization, pre-fabrication of building materials and offsite construction, which will be the focus of this article. (a) Modularization is a process in which ‘modules’ of a building is constructed offsite, often in a factory under controlled conditions. Modules of a building can comprise of entire buildings, or semi-assembled components to be put together on-site. By definition, all off-site construction (often delivered in modules) is pre-fabricated given that the design and structure of the modules have to be specified prior to on-site assembly, based on precise measurement and executed using innovative and sophisticated technology. These methods shift the construction process towards a manufacturing approach, where up to 95% of a building may be assembled within a factory. The entire planning, design, procurement, assembly and transportation of parts of buildings would take place in an off-site space, as opposed to a conventional piece-meal on-site construction process.

The momentum towards green construction are already underway as a means to improve competitiveness and sustainability of the industry. For example, at least 45% of new homes in Sweden are built using pre-fabricated modules. Australia's construction industry vision 2020 promotes prefabricated construction systems as one of its eight key visions to improving performance. Globally, the modular construction market is valued at $106.15bn, projected to increase to $157.19 bn by 2023 with a compound annual growth rate of 6.9%. While the key players in the green construction market are largely dominated by firms in developed countries, modularized construction in Asia Pacific dominated the market in 2017 in terms of value and is projected to grow the fastest.

Potential gains from off-site, modular construction

The adoption of greener, leaner construction methods can disrupt the sector in three main ways.

Economic: The most often cited economic benefit is the speed of construction. When part or whole buildings are constructed in controlled environments, many processes can be automated at higher precision at a faster pace. The time required to construct and commission an offsite building is typically 50-60% shorter than conventional construction. For businesses, off-site construction can deliver large savings in labor and energy costs and achieve economies of scale, due to bulk production processes with higher automation. Automated processes using highly sophisticated machinery also reduce imperfections and defects in the design and construction process.

Environmental: On balance, environmental benefits are seen to be significant. The sources of environmental benefits for offsite construction range from reduced emissions due to lower road traffic movements (i.e. in terms of materials and worker transport to construction site), reduced energy use during construction, lower energy-in-use for the constructed buildings and lower material waste. Quale (2012) estimates that on average, green house gas emissions from conventional construction are about 40% higher compared to modular construction. In terms of waste, conventional construction typically produces 10% of waste per raw material tonne, while manufacturing processes are much less wasteful, averaging 1-3%. Furthermore, waste produced upstream, within a factory setting, is more easily managed compared to downstream waste, which could lead to higher rates of pollution. Pre-fabricated building components can also be constructed to meet or exceed sustainable building codes, leading to lower energy-in-use for a commissioned building.

Social: There are advantages in terms of worker safety and employment conditions for off-site construction. Construction within a controlled, factory environment reduces the risk of injury and accidents, and offers enhanced indoor working conditions. In addition, there is higher job security for an employee working off-site, compared to on-site, given the all-weather, stable working conditions, compared to on-site construction work which may be tied to specific construction projects.

Caveats and Limitation

Suitability of Market and Location: According to the 2018 Thomas Industry Update, almost 40% of low-rise office buildings worldwide incorporate modularly constructed elements. In comparison, few complex, novel designs such as museums incorporate modular design and construction. The predominance of these segments is due to the suitability of off-site construction to build repetitive units that have standardized features, such as one-storey affordable homes, office units and schools. It is less suitable for complex projects which require significant coordination and planning between many parties.

Cities that have a rapidly increasing populace, dense urban structure coupled with a reliable network of transportation could reap the highest benefits of off-site construction. Off-site construction is able to deliver the needs for production of large volumes of affordable homes, schools and hospitals (high degree of standardization in terms of specification and repetitive units). Dense urban structures pose an impediment to on-site construction which have a higher level of disruption to the surrounding neighbourhoods during the building process. Given the bulk transportation needs of off-site construction, having roads or railways that can allow for such transportation is a prerequisite. Off-site construction is also more suitable for cities that have a predisposition for building new units that can be assembled from scratch, rather than retrofitting or renovating older structures.

Macro-environment: As with any adoption of disruptive technology, there will be winners and losers. The increasing adoption of off-site construction would entail higher automation in production, where conventional on-site construction necessitates higher hiring of manual labour. Therefore, countries that are already experiencing a shortage of labor in the construction industry would benefit the most from shifting construction into a manufacturing process.

There is also uncertainty on the impact of the offsite construction industry on intermediate sectors, such as independent producers of panels and modules of an off-site assembled product. With the increasing standardization of modules, independent suppliers of individual parts of a module (e.g. doors, windows) could face increasing pressure to produce in bulk while meeting uniform specifications. Off-site construction companies may opt to backward integrate their process and produce these units themselves, leading to a Schumpeterian decease of small-scale, custom-made furnishing industries.

In addition, bulk production of building modules could lead to higher efficiencies in terms of economies of scale, which could alter the balance of import or export of construction materials. For example, the lower cost of bulk orders could lead to increasing demand for imports of raw or intermediate materials which become cheaper when ordering in bulk.

Conclusion

Off-site, modularized buildings present an attractive opportunity to spur innovation and competitiveness in the construction sector. While there are winners and losers to the adoption of these methods, increasing digitalization and Industry 4.0 technologies promote an inevitable shift towards higher automation in any industry, including construction. Going forward, stricter environmental standards that stipulate lower carbon emissions of the construction industry could inevitably serve as an impetus to adopt innovative ways to increase efficiency and sustainability of construction.

Notes:

(a) Other functional forms of green construction include green building certification (e.g. EDGE, LEED), and green household appliances.

Opinions expressed in the article are the author’s own.