13.11.12

Offsite construction - Terrapin Ltd


Interview 1 (Terrapin Ltd)

Q: Can you tell me about the company?

A:  Terrapin is always been in offsite right from it conception. It is not been in the traditional constructor and then move to offsite. It’s been a progression of the change within the offsite sector. Over the years, Terrapin has to reinvent itself to progress, in new products, new services, new technique etc. It started out with housing, prefabricated housing after the last war about 60 years ago. So, it has a lot of alteration, changes and influences. It is one of the older more established names, some brand 

Q: What is it in offsite that is differed to traditional build?

A: Offsite sector sit in the different position in the supply chain, so whereas the traditional contractor will generally be contractors and subcontractors, the offsite sector has to get to the specified or large clients and repetitive clients which has been specified or identified at the first place.  To be involved later in the project usually is not successful; you have to be considered very early on the process.  Early contractor’s involvement is very important in term of offsite construction. To elaborate on that, most building project awarded in competitive tender in this country. At the stage of tender, building has been design, in general term etc. If offsite is not considered before that tender, there is a problem

Q: What is the best business strategy for offsite in order to win tender and survive in the competitive market?

A: That must have to use the old fashion expression USP (Unique Selling Point). Some of the selling point is very clear and obvious such the time scale, but the time scale in design can be absolutely be longer when using offsite because you have trying to identify everything before you can prepare it for offsite fabrication etc. You can not changing your mind during the process, randomly or economically, But it can be a lot quicker, but it also more predictable in term of outcome, so quality and performance are should be, I say should be, by far more predictable. So you can tailor the product to get to the client. There are other secondary benefits, which are not a primarily concern to the client is health and safety and waste and some extend energy which becoming important now but I think primarily, it is speed and performance. That not always available to the client, often when the client have a short program to construct than the offsite sector become an obvious way to deal with that thing. Cost can go either way, if it is not design for offsite at the beginning, it often more expensive to use offsite solution, its depend on the volume as well, where with high demand, continuity and repetition, cost can come down without effecting the quality. That more variable aspect to determined cost, some time its more expensive and sometime it is cheaper. Quality is very important selling point. Very good point as well is the energy. In 2012, the European standard suggesting that construction could be carbon neutral, the manufacturing and offsite industry in much better position as compared to traditional build, where the production of components are in the controlled environment. The Critical Success Factors (CSFs) has to be quality and energy consumption. Most evidence at this moment suggest that energy is going to be a big benefit for offsite but we are at the early days of that thing, but in the future energy become more important. Perhaps in the country like Malaysia, ventilation and humidity is an important issue. You can not always draw a complete parallel between two technologies, I do not know but I guess lightweight structure can be very beneficial to that sort of climate. Perhaps the lightweight steel or lightweight timber tend to be the most popular, in housing, timber is by far is the most common offsite technique

Q: What is it in leadership and corporate motivation that exhibits your move to use offsite?

A: Absolutely, it is often do with the company size as well, it become more difficult the larger the company to has a figure head who understand all the requirement, you can get it on Virgin as an example, Sir Richard Branson is a brand of course, but in small and medium sized company, generally you will find that leadership is originated from somebody who has an idea or has a drive to make something happen and make offsite work. You are almost automatically got a degree of leadership. Weather that leadership is complete in term of sufficient skill set and in term of management of technology is not always but the wise one in offsite get the people around them work and his vision which usually make company succeed or fail. Leadership, vision and direction of company are the key important. In Terrapin, the original founder had a vision and stuck with it until in his mid 80s and until then he is still influencing the direction of the company. He eventually get in touch with technology and so on, but he still want the company to have the same vision of offsite manufacture even tough the technique has change. So that vision and determination is very important especially in small medium sized of companies. Offsite companies are tending to be the small and medium sized enterprise. Very few offsite companies in the world that have managed to get into major size of manufacture. The exception could probably be Japan, which many companies has going towards automation and advance manufacture and other sector has moved in the sector as well. On the other hand, there are lesson to be learned, the Americans has tried over the years and most of them have success and then decline. There is something in offsite that inhibits them to become a large corporate company. I agree with that, the American has tried exceedingly hard and again when we look at the Critical Success Factors (CSFs), and up until now our registration scheme is fantastic and unique and also the consideration of insurance and finance guarantee have severally restricted to the uptake of offsite. I haven’t experience in such the same way, I think we are distance about that, because here the consultant and client is influence by them. The unknown that is different, am I taking a risk? Do I know about this? I don’t understand it, therefore there is risk, and therefore I would not do it. The insurance companies are influenced by that scenario. Most of the insurance companies has been involved actually find the risk is lower, so that is benefit to them. Offsite is not in mainstream so they have not got a large portfolio of risk and they are not too worried about it.

Q: What is the risk in offsite?

A: Often in the client discomfort about not knowing the outcome. Client’s architect and engineer all saying that they do not know much about offsite. It actually influences the clients. If the client is big enough, and has it own expertise, it will understand about offsite which will make the project more efficient and effective. Some big clients that have a serial or repetitive contract find offsite very successful. Two reason worth mentioning that, the first one in America, the housing manufacture that producing efficiently but the demand was not there. The second one was in Sweden, where they produced very high quality manufactured houses, but the finance dried up, purely and simply because it is uncertainty over the insurance and demand. It’s NCC. The link in both finance and insurance are both very necessary to the company. I can’t disagree with that, my own experience in Barret for instance; we had to get the product thoroughly endorsed, we gone to BRE to get the product endorsed. You have to go more third party endorsement for offsite product as opposed to the traditional method where you just can go to site and start building, as far you can follow to the regulation. In offsite, you have to prove that it meet all the regulation before we start eventually. It getting worse if you are trying to export or you trying to import, the process you need to go trough is very elongated and more barriers. As an organisation you need to understand that, you are importing particular products, it needs to get the BRE approval in particular, there are certainly more barrier. If the organisations understand it at the first place it is fine, but you certainly need to be aware of that. Positive side of that, if there is any organisation going into offsite, want third party endorsement and third arty check and endorsement that their product is good, although it will add to the cost of entry, once you got that, it give you security and confidence. It is important to get a global recognition on it. Lloyd is one example, I took Terrapin trough it. My reason, is when I due to retire, when I leave the company, all the knowledge and the system and procedures are embedded in the company. So as the experience left, it did not leave a vacuum. We can do that intuitively but I prefer it to be formalised.

Q: Can you explain the ‘hire and lease’ concept for offsite building introduced by Terrapin?

A: The concept is not new. Lease is probably new ideas, but hire is not. Terrapin hire and recovering them and rehiring them for building since probably about 40 years. So, we got a lot of experience. Now we are talking about conserving energy and wastage, it actually wonderful greens approach to accommodation because you don’t waste anything. The building is design to come back, dissemble, refurbish and go back out again as new. It works extremely well in medium term hire probably in 2 – 5 years. The problem occurred when regulation are changing rapidly, so can you design a product and will be upgrade later in term of insulation and so on without causing a lot of wastage and ineffective construction. We try to predict the regulation 3 -4 years ahead so it does not become redundant. The lease is slightly different, it is a different financial arrangement but it is also already tailored to longer term for about 20 years. Building should be probably higher in performance; they tend to be the bigger building. You must certain that the client would be able to lease the building for 20 years and to be there for 20 years with financial certainty is needed for both arrangements. The market perception is difficult because when you are hiring the building, it is temporary equal cheap. That is not true at all. It is mainly because people associate it with cabins, builder’s accommodation which is temporary but in fact its offer very tremendous quality at very cheap price, not non-conforming in term of insulation and so on. So this would lead Terrapin to another market range which requires extremely high quality of building such as Operation Theater which is design to be mobile. The spectrum of building type is huge in that sector.

Q: How does the company identify the market segment for offsite?

A: In term of education, we are trying to reach every education authority to make them aware of the products and explore all the market media, exploring journal, try to get in articles, maybe direct mail, internet activity and try to get people to look into the product in the website. The website has become incredibly important, no doubt about it. That in turn, you need to keep it up to date. You need to work hard, to keep the website visited by the people you want to work for, that itself is quiet a difficult task to tempt people come to your website. The other thing, Terrapin has done historically is probably unusual is it had a population of clients and which will regularly speak their views on the product, what they need and their interest in the future etc. Trough an independent marketing agent, to some extend independent will access what the market view are, interviews at the regular interval, so it got direct feedback from the market. We also look and benchmark with our competitors, looking on what is they doing etc. We also a member of all sort of organisation to find out what is happening currently, what is likely to happen in the future, and keep the network open. Maybe look at the future construction look like particularly in the issue of regulation, carbon footprint and waste. It very important to keep informed on what is happening and by doing that we come across with the people whom are interested with the products.

Q: What is your view on strategic alliance and partnering with suppliers and specialist sub-contractors?

A: Absolutely, partnering is including the entire supply chain, down and up. Terrapin has what it called as domestic sub-contractors, it has encourage in the past, that factory operators to set up their own organisation, to become specialist sub-contractors to the erecting process etc. It uses people who know the products and the process exceptionally well, particularly on sub-contractors whom doing the work onsite. Suppliers also have a long term relationship with Terrapin, for instance relationship with joinery suppliers which goes back on 30 years. Its mean you can get product that adapted and suited to Terrapin’s system because it not just taking a standard product and flopping it in, often it does need consideration on the factory production site, consideration on future change, or can we taken it out and replace it with the different windows. Cladding similarly, cladding which appropriate for offsite manufacture, supplier of steel, supplier of timber, supplier of board material which come in exactly the correct size to the manufacture so no off-cut, no wastage, and we vacuum handle them on the production line, so we can reduce any jointing issues. They all have competent skill and a major part of decision making. Going up the other way, it is important if you have access to good engineers, good architects, you have a good relationship with core client based. Good example of sort of team approach recently, which Terrapin is responsible on the 3000 bedroom unit for the military in Colchester. The main contractor is Sir Roberts Mc Alpine. The services suppliers is absolutely critical as well as the manufacture so we actually encourage the main contractor to have representative in the factory, so they will understood what is going on. Main contractor help to balance of production, so for continues supply and actually provide interim storage, so de-risk the project. Manufacture of offsite services, had come to our factory and install them and again come to our site and responsible for the completion of them. So it is continuity again of the responsibility, all this sort of thing is very important. If we can do that it’s a win-win for everybody. The risk of that approach is that people could become uncompetitive, but you can deal with it in some extend by having at least more than one suppliers, which actually important to de-risk in case they are run out of business or get to busy etc. You need more than one supplier in many cases.

Q: Explain offsite estimation, bid and tendering as opposed to traditional build?

A: The estimation and tendering is very important. That need quit a lot of effort. It is very resource greedy activity, cost quite a lot. It often interpreting other people work hopefully something to a very close to original concept and if you are successful, then we have another greedy use of technical skill, to produce all the data to manufacture. Then you got manufacture and operation etc, and you got the transportation, construction site, and closing the loop with feedback to sales, design and the post document requirement etc.

Q: Explain optimisation and standardisation requirements for offsite?

A:  My view on standardisation is exactly the key, we do it all the way, and building is always been standardise. People are pretend they are not, but when you go back to mediaeval times, its was standardisation, the component was standardise, but the building necessarily wont standardise, but that I think a fundamental step, we tend to have standard material, but when we can use it in an optimum way, we will save wastage etc. and the cost. But I think it is a bit of rejection is to the visual standardisation. So we got to be claver the way we design things. The claver the way we design thing, so the visual impact of offsite does not necessarily show how it got to put together. There is another architectural view that you should express everything and this is also valid. Standardisation is a key at different level, the most important level is fundamental or basic, and the materials and then it need more flexibility on how they assemble. There is optimum level in different factory approaches in some in which also automated, quit a high level of standardisation of components and maybe fairly flexible in delivery CAD/CAM and IT can help all that tremendously and make it more flexible. So, I think standardisation is a key, but a visual standardisation is not. It is standardisation without boring repetitive elements. It how you treat the façade and modeling with the skill of the designers.

Q: What is the Critical Success Factors (CSFs) for an offsite company?

A: The CSFs for offsite companies is continuity and that is the most difficult. There is one and two company that close to continuity but they find it difficult. So if you get a very large contract, get the continuity for a while and you dependent on other project following in. The factory is big mouth to feed in. It a big fat overhead which general contractor or traditional contractor does not have, you got to keep working otherwise you got the problem. This period in this country is a recession makes it very difficult to be able to see continuity, while major project is going out of program.  That makes it a very difficult thing to offsite manufacture to keep that factory busy. The second CSFs are image and brand. There are incredibly important. Because brand recognition at the first place, get you to talk to the people you want to talk to. Terrapin used to be very successful in the 70s for school building. That becomes a marketing block, if you already have the image. In one time Terrapin used another name for its products that one we called ‘matrix’, and the product is good but the brand penetration we didn’t achieved. Brand is actually very important because is in the people concept and perception. The third one is technical competence and design competence. There a lot of skills for offsite that is different from the rest of the industry. You tend to find there is a pool of expert, in demand, that is critical to get that expertise. If you get it wrong in this business, it is very costly in term of profit etc. The training is very important, we tend to recruit the specialist to train multi skill, less specified worker which work in multi job environment in factory.

Q: How important is the ability of organisation to get and adapt to change?

A:  Yes, that is important in any organisation; I think it is common to all companies, but it does become more difficult in offsite construction companies because we got factories, procedures etc. If we not building flexibility in those, it is become difficult, it is a big decision in term of management, if you have a factory, which is very flexible. The most flexible is in shed and nothing in it, just bring people in. Or you have a highly mechanize manufacturing technique, with high investment, high standardisation and when thing change you got the real problem, so because the nature of our industry, the continuity thing, most people go to somewhere in between there have a degree of mechanisation, with their tools and technique, that what I usually called primary manufactures, to make up panels and then you used quiet a lot of intervention, and produced flexible products and achieve the degree of flexibility in there. 

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