18.9.10

Rethinking IBS:Part 2

By Kamarul Anuar Mohamad Kamar

1. Rethinking the old processes is now critical if the industry is to move forward in IBS. The industry requires change management and business re‐engineering to encourage new mindset.

2. The approach requires total synchronisation on construction, manufacturing and design processes. It needs emphasis on rationalisation, standardisation repetition, collaboration, supply chain partnering and more effective planning and project management with holistic mindset.

3. The incentives for IBS is still needed and not sufficient. IBS adoption requires more pull factors from the government. Due to the small profit margin, the change from conventional to IBS was not feasible and commercially viable, unless, more attractive incentive systems and benefits which can lure the conventionalist to IBS are in place. In current open and liberal market place, the decision to use IBS is commonly based on business judgment.

4. There is reluctance among companies to take risk which is mainly related to cost and unstable market and hence lack of investment. There is a critical need to manage the design and manufacturing differently from the traditional way as IBS is different and needs a different mindset along with the right environment. In this context, we might need to consider creating an IBS “economic cluster” to boost this industry by creating a partnership between government and private sector when and where it is needed.

5. The payment mechanism for IBS should be reviewed. The adopters require safer and more reliable payment mechanism and contracts. The construction industry should benchmark with other industry particularly in manufacturing and automotive to understand the mechanism that works for IBS construction.

6. IBS can be only benefit if decision to use it can be decided as early as possible not as afterthought during the project. This practice will allow manufactures, contractors and Mechanical and Electrical (M&E) specialists to get involve and share their knowledge early during design stage. The collaborative design team can be established by improving procurement and contract, establishing a clear statement of needs from clients or integrating the team starting from project briefing all by client’s initiative.

7. IBS should not be seen as a threat to traditional methods. The failure of IBS to penetrate the market is due to a misconception that it will eventually replace the traditional sector, while it actually should work closely in tandem to promote best practice in construction. The sharing of best practice between the two approaches is essential for the continued successful development of both construction sectors.

8. IBS requires fresh thinking and ‘blue ocean’ strategy to capture new demand, create new market space and offer customers a leap in value. The blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Value added IBS industry should be established (specialist installer, small parts producer, specialist facade manufacturer, specialist joints, specialst project coordinator, specialist designer etc.)

9. IBS is not well accepted by the construction companies because of the failure to adequately deal with risks in the IBS projects. In order to reduce risks, a careful risk strategy is very important. Sub-contracting and establishment of IBS subsidiaries can reduce some risk based on contractual ‘risk‐transfer’ solution. In addition, the contractor can attempt to own the prefabrication technology by devising a special relationship with one or more prefabrication subcontractor, such as project‐based joint venture, vertical integration or even internalization.

10. Supply Chain Management (SCM) and partnering concept has not been fully understood by the industry. Currently, the cooperation between contractors, manufacturers and suppliers is weak in many cases. Improving the procurement system and supply chain is the key to achieving IBS success for contracting companies. Partnering with suppliers and sub‐contractors from the earliest project stages is vital to ensure efficient and timely delivery of components and services

11. Availability of abundant cheap foreign labors doing manual job (at approximate RM 30 – RM 40 per day) is probably a root cause hindering IBS to compete with conventional. In a nutshell, foreign labors usually unskilled and it is already affecting the quality and productivity of construction. Foreign labors were also contributed to the outflow of our currency and often associated with crimes and social ills. The government to find solution sooner rather than later to get rid at least half the number of foreign labors (particular in doing manual jobs) in Malaysia but to retain the skillful one. The government are suggested to introduce minimum wage for construction workforce through levy system, reform construction workforce training, attract graduates and school leavers to join the workforce, and to retrain and reskill our construction workforce to work as IBS assembler or at IBS component factory or simply stop issuing new permit for foreign labors.

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