Unlocking scalability for GCs in the post-pandemic construction boom
By Kevin O’Meara, Chief Executive Officer, DIRTT
The “next normal” in construction is here. Two years ago, McKinsey & Company predicted that a shift away from conventional construction and toward factory-built solutions would change how space gets built. Last year McKinsey wrote about how the growing number of challenges with conventional construction would lead to modular and prefabrication becoming part of the next normal in construction.
The post-pandemic recovery is accelerating what McKinsey predicted. Construction activity is already on the rise, reflecting pent-up demand from the steep decline over the last year. The Dodge Momentum Index, a monthly measure of planned non-residential building projects, reported a 12-year high in April.
And now general contractors (GCs) trying to keep up are forced to run a gauntlet of challenges — project backlogs, changing needs, surging cost of materials, labor shortages, and supply-chain disruption. This has led to heightened concerns about how the industry will manage this sudden upswing in demand.
GCs now have to figure out how to restart paused projects, land new builds, and complete multiple jobs on shorter schedules.
Achieving those goals today requires a different approach than conventional methods used even a few years ago. To successfully scale interiors now, GCs need to use off-site, modular construction because building this way provides cost certainty, faster construction and installation, fewer labor requirements, increased safety, and future adaptability. This level of predictability means GCs can confidently take on more concurrent projects while continuing to deliver exceptionally built spaces on schedule.
Yes, it is possible to be on time and on budget — even when the market is unstable
The risk factors for GCs who choose conventional construction for interior solutions have grown in magnitude as the market continues to be in flux in multiple areas. Steel prices have skyrocketed and drywall is in short supply. Labor shortages are expected to be the biggest hurdle in the next year. And I’m constantly hearing about job site delays.
With on-hold construction projects resuming and new projects kicking off, right now is an opportune time for GCs to look for partners who can prefabricate and deliver interior construction solutions with certainty. DIRTT solutions directly solve many of the problems compounded by current market realities.
Here are the two most important considerations to avoid risk and achieve scale:
- Budget and timeline certainty: When spaces are designed with DIRTT’s construction software, pricing is calculated in real time, right to the penny. Once the design is finalized, the build specifications are sent to our manufacturing facilities and the entire space is built and shipped to the job site in 21 days or less, reducing the potential for change orders. Pricing (including delivery and installation) is determined up-front, which eliminates the fear of cost overruns or day-two charges.
- Fewer labor requirements: Because the interior space is manufactured off-site, GCs can dramatically reduce the number of trades they manage. For example, DIRTT can prefabricate a wall with built-in technology, power, and networking components so GCs need fewer trades on the job site. This simplifies the building process, minimizes disruption, and increases physical safety as there are fewer people needed on location.
As Ken Simonson, chief economist with the Associated General Contractors of America, said in a recent media release, “Contractors are experiencing unprecedented intensity and range of cost increases, supply-chain disruptions, and worker shortages that have kept firms from increasing their workforces….[these challenges] will make it difficult for contractors to rebound as the pandemic appears to wane.”
To be resilient, GCs need space to be adaptable
It wasn’t long ago that space was built with the intention of going unchanged for years — workplaces, hospital rooms, and even college classrooms. The opposite is true today. Now, more owners and facilities managers are taking a second look at their spaces and asking if they’re set up for a post-pandemic world.
They’re considering the following:
- How to adapt to accommodate a hybrid workplace.
- How to build space that enables collaboration while also being cognizant of health and safety protocols.
- Whether their space has the right design when the future is unknown.
- How to plan for change.
Prefabrication and modular interior construction solutions answer these questions for owners and facilities managers while creating scale opportunities for GCs.
For owners and facilities managers, modular solutions allow walls to be moved in 48 hours. Surface finishes can be updated by swapping out panels in a matter of hours. Technology can also be integrated or removed from rooms as their purpose evolves. And all of these changes can be done with minimal — or no — downtime to the business because the modular components can be simply swapped.
A high level of customization is possible, too. Finish, materials, color — everything can be customized and is made from high-quality materials that are often more durable than conventional ones. DIRTT’s lean manufacturing process ensures everything meets rigorous quality standards so the finished product is as close to flawless as possible.
The business benefit of prefabrication and modular interior construction for GCs is that they meet their clients’ needs quickly and on budget, which frees up time to take on more projects.
Modular off-site construction enables GCs to scale
For years, I’ve seen DIRTT’s systematic and automated approach deliver results for clients.
For example, in a project in San Antonio, TX., a bank needed to build a new corporate headquarters in a short timeline as the lease on its old building was coming to an end. The new space sprawled 460,000 sq. ft. over 15 floors in an office tower and the team wanted to maximize view and allow natural light to find its way to everyone in the tower. Using DIRTT’s prefabricated elements allowed glass and hidden millwork to be installed across every floor in the tower in just five months. And the extensive use of glass meant every office, meeting room, and cafe had lots of natural light in order to feel connected to the outside world.
In another project in Lawrenceville, GA., DIRTT was selected to outfit the interior of an inpatient critical-care environment. If conventional options were used it would mean drywall, tape, and mud — which require eight hours of drying time between stages. Instead, DIRTT’s prefabricated interiors were shipped and precision-installed in only eight weeks into 71 acuity-adaptable patient rooms that included nurses stations, bathrooms, and support space.
Speed and efficiency are big ah-ha moments for many of DIRTT’s GCs looking to grow.
Mike Johnson, the company’s principal, likes to tell a story about a project that happened 15 years ago. The company’s owners wanted to completely rebuild their space. Their instructions were to demo everything. As Mike began the teardown, he found himself drilling out rivets from existing prefabricated walls. But, then it hit him — he didn’t have to disassemble to destroy; he could, in fact, disassemble to reassemble. So, he went back to the owners and explained he could reuse components of their existing prefabricated office fronts and panels and cut weeks off the schedule, as well as save money. They gave him the green light. Since then he’s grown a business that embraces prefabrication.
Mike shared that this year, Q1 was a record quarter for his business, and he credits the ability to provide guarantees via prefabrication and off-site manufacturing of interior spaces as his company’s secret weapon.
When we work together as business partners, the outcome is better for everyone
The post-pandemic recovery is an opportunity for all of us in the construction industry to try new things, forge new partnerships and strengthen existing ones, and continue to tackle challenges head-on.
By working together and playing to one another’s strengths, GCs and prefabricated modular can reduce risk, minimize disruption, and enable a return to profitability for every organization rapidly shifting to adapt to current circumstances.
Shifting sector values will continue to be important as the industry works through pent-up project demand in the coming years. All of the interior construction trades are part of a broad, thriving ecosystem that must work together to embrace new technology and solutions that provide resiliency and remain relevant for clients as the world continues to change.