PROFILING THE AUSTRALIAN PREFABRICATED CONSTRUCTION INDUSTRY

The Australian building and construction industries contribute more than $218bn to GDP (10%) of which it is believed the prefabricated housing sector contributes $6.5bn (3%). Since industry knowledge is not centralised, it is difficult to confirm the actual size. However, there is an urgent need to gather market data and create segment definitions and sizing parameters. Is the current market share really 3% and is it 3% of volume or value?

In 2015 a survey was carried out in the UK by the National House-Building Council (NHBC) that included 61 respondents operating in the private and social residential sectors. The key drivers for prefab were the ability to help overcome the skills shortage, faster construction, increased output and improved build quality. Forty-four per cent of house builders claimed prefab reduced costs and boosted productivity. The perceived constraints reported were standardisation, the need for an early design freeze, and transport logistics. The majority of respondents also waited for others to demonstrate the success of prefab before they adopted it within their business.

The 2013 McGraw Hill Construction Prefabrication and Modularization: Increasing productivity in the Construction Industry SmartMarket Report surveyed 101 architects, 190 engineers, and 518 contractors in the US on key industry metrics related to prefab including project schedules, costs, safety, quality, waste and creating green buildings. The greatest driver for prefab was reportedly productivity improvements (82% of respondents) with 75% of respondents considering the adoption of prefab as a strategic move to improve competitiveness. Among all respondents 66% reported prefab had positive impacts on project schedule and 65% reported prefab had positive impacts on project budget. From a site safety perspective 34% believed prefab improves site safety, 10% believed prefab reduces site safety and 56% believes the impact of prefab on site safety is neutral. According to 77% of respondents, prefab reduced construction site waste and 62% believed prefab reduces material usage.

“The 2013 McGraw Hill Construction Prefabrication and Modularization: Increasing productivity in the Construction Industry SmartMarket Report surveyed 101 architects, 190 engineers, and 518 contractors in the US on key industry metrics related to prefab including project schedules, costs, safety, quality, waste and creating green buildings. The greatest driver for prefab was reportedly productivity improvements (82% of respondents) with 75% of respondents considering the adoption of prefab as a strategic move to improve competitiveness.”
Dr David Heath – CAMPH and Damien Crough – prefabAUS (quoting from survey.)

The Permanent Modular Construction – Process, Practice Performance (2015) publication reports on a survey including 312 respondents of which 93% used prefab components in their business. Respondents were applying prefab in sectors including commercial construction (57%), industrial (51%), healthcare (45%), education (37%), multi-family (24%), hospitality (23%). The greatest benefit of prefab was reported to be schedule reduction during construction and the most significant barrier to prefab was design and construction culture”.

An international industry survey conducted by the University of New South Wales and reported in 2016 (Performance and perception in prefab housing: an exploratory industry survey on sustainability and affordability) surveyed 43 individuals operating in the application of prefab via volumetric, panelised and mixed/hybrid systems. Shorter project schedules and shorter on-site duration were considered the greatest drivers for prefab whilst the greatest constraint was a lack of awareness/training/experience among builders, contractors or developers as well as finance industry/bank policies.

A survey of the Hong Kong prefab industry, titled ‘Towards adoption of prefabrication in construction’ and published in 2007, surveyed 64 representatives from government departments, developers, consultants, main contractors and sub-contractors. While quality was the highest rated benefit, a lack of flexibility for design changes was considered the greatest hindrance. Consideration of prefab during the early stages of design was also considered the factor that would create the greatest opportunity for growth in the use of prefab.

In China, cheap labour and materials have been an impediment to the uptake of prefab, reported in the 2013 journal article ‘Increasing the level of sustainability via off-site production – a study of the residential construction sector in China’. A survey of 110 people including architects, engineers, developers, contractors, manufacturers and suppliers noted very little prefab activity. However, the greatest driver for prefab was the ability to reduce waste, while the greatest barrier was the lack of available codes and standards.

The Global Watch Mission Report titled ‘Modern methods of construction in Germany – playing the off-site rule’ (2004) reports on a survey of 6300 people undertaken by a large German mortgage lender (LBS). The survey found 20% of respondents lived in a factory built (prefab) home, 82% would consider buying a prefab home, and 95% of respondents perceived prefab as trustworthy and a practical and sensible way of building. Moreover, 92% of respondents knew prefab homes could be planned to their specific requirements. This represents a substantial difference in culture relative to Australia.

“The Global Watch Mission Report titled ‘Modern methods of construction in Germany – playing the off-site rule’ (2004) reports on a survey of 6300 people undertaken by a large German mortgage lender (LBS). The survey found 20% of respondents lived in a factory built (prefab) home, 82% would consider buying a prefab home, and 95% of respondents perceived prefab as trustworthy and a practical and sensible way of building. Moreover, 92% of respondents knew prefab homes could be planned to their specific requirements. This represents a substantial difference in culture relative to Australia.”
Dr David Heath – CAMPH and Damien Crough – prefabAUS (quoting from survey.)

A 2014 publication titled ‘Predicting Australian builders’ intentions to use prefabrication’ surveyed 454 representatives from building companies in Queensland and Western Australia. Seventy-five per cent of respondents reported a willingness to increase their level of prefab use if market conditions were supportive. The two greatest drivers for prefab were increased construction speed and increased quality of finished product. More advanced use of prefab correlated with the delivery of higher volume and multi-residential housing projects. The leading incentive for the application of prefab was reported to be access to trained.

CAMPH will be undertaking an industry survey in 2018. The survey will cover industry associations, peak industry bodies, architects, engineers, manufacturers, construction managers, supply chain representatives, and other stakeholders in Australia’s prefab industry. Incorporating a number of seminars, an online survey, and focus group discussions, the initiative will:

• Determine how to establish a detailed market profile for the prefab sector.
• Establish current prefab sector capability and improve understanding of prefab manufacturers involved in the construction market.
• Determine, from known facts, the estimated volume associated with prefab manufacturing within the construction market.

Results from the survey will be published in a final report. Growth opportunities will be identified for domestic and international markets that will benefit strategic investment decisions. Domestic and global supply chain opportunities will be identified. Case studies will be uncovered that demonstrate Australian organisations adopting industrialisation techniques and skills transfer from medium and high-volume industries, such as the automotive industry. The next frontier of prefab research needs will be uncovered together with collaborative opportunities between research and industry.

Past surveys from around the world reveal the greatest driver for prefab is the ability to reduce project schedule while the greatest barrier relates to design, specifically the lack of guidance, experience and culture. The learnings from past surveys together with the findings from the CAMPH industry survey will bolster growth in Australia’s prefab industry. Arguably, without this insight the prefab industry will struggle to gain a foothold in the construction industry that is overwhelmingly dominated by traditional construction methods.■

Dr David Heath———————-National Technical Manager ARC Centre for Advanced Manufacturing of Prefabricated Housing

Damien Crough———————-Board Chair, prefabAUS.