Research conducted by KPMG1 on how offsite manufacturing can transform our industry states “One of the key drivers for whole-life cost savings when using offsite manufacturing is in the enhanced quality of the factory product. Reduced failure rates and more reliable asset performance help to reduce OpEx costs over the life of the asset but also support the development of more accurate and robust asset management investment plans.” To gain an international perspective on the findings of this research, we asked AIQS member, Ajantha Premarathna, MSc (Pro. Mgt.), MBA, FAIQS, FRICS, FIQS-SL, ACIArb, Senior Commercial Manager, wasl Asset Management Group in Dubai, to respond to the following question:
From your experience as a QS, how can offsite/modular construction impact whole-of-life costs and OpEx?
“Offsite construction as an industry has come a long way and is now an integral part of the day to day operations in the construction industry. Precast concrete, prefabrication works, proprietary products can be considered as the primary offsite construction elements from the early days. From the evolution of the precast technique, offsite construction has now moved to more advanced modular construction methods which are now widely used in all sectors of the industry from residential to commercial and civil engineering construction projects (e.g. Dubai Metro).”
“Due to its precision planning and vigorous quality controls at both offsite and onsite operations, the quality of end products often achieve very high standards. Further, repetitive operations in both cycles on and offsite enhance the learning curve of all the stakeholders in the industry including designers, manufacturers, operators and end users. High degrees of accuracy eliminate unnecessary wastage and time cost of resources not being effectively utilised, making offsite and modular construction very cost effective.”
“…repetitive operations in both cycles on and offsite enhance the learning curve of all the stakeholders in the industry including designers, manufacturers, operators and end users. High degrees of accuracy eliminate unnecessary wastage and time cost of resources not being effectively utilised, making offsite and modular construction very cost effective.” Ajantha Premarathna, Senior Commercial Manager, wasl Asset Management Group.
“According to the U.S. Bureau of Labor Statistics, 57%, of activities on construction sites are wasteful and non-value adding when compared to offsite fabrication. Manufacturing is directly opposite, with 62% of all activities being value adding. Replacing the wasteful elements of construction with manufacturing benefits through modular processes can remove waste and increase value for projects thereby reducing construction costs2.”
“Operation and maintenance costs of finished products frequently tend to be overlooked by the designers and end users. Depending on the usage and functionality of the asset’s cost of operation and maintenance, OpEx is invariably a significant portion of the whole life cost or lifecycle cost of an asset.”
“However, due to vigorous quality control and quality assurance processes during offsite fabrication and similar control being carried out again onsite, the operations and maintenance costs are often less than those incurred as a result of traditional onsite construction. For example, a number of researchers have concluded that offsite modules outperformed insitu bathrooms in term of maintenance and operational costs3.”
“Offsite and modular construction techniques are very useful in the Middle East. The harsh weather conditions and lack of labour resources naturally pushes designers to consider offsite techniques to reach specified standards and to be more cost effective.”
- KPMG Research Report: Smart Construction – How offsite manufacturing can transform our industry. Published April 2016.
- Ryan E. Smith (2016) Off-site Modular Construction Explained: National Institute of Building Science.
- Pan, W and Gibb A.G. F (2009), Maintenance Performance Evaluation of Offsite and Insitu Bathrooms. Construction Innovation: Information Process Management- Special Issue on Offsite Manufacturing, 9(1), 7.21.■
Grant Warner – CEO, Australian Institute of Quantity Surveyors (AIQS)
Ajantha Premarathna, Senior Commercial Manager, wasl Asset Management Group