8.12.12

Case study report - IBS contractors

Successful IBS contractors as observed are not an existing conventional contractor changing their practices to IBS. Successful IBS contractor started to use IBS from the beginning of their inception. They start their trade by doing a joint venture or partnership agreement with international firms. This has accelerated the company learning curve. Others are coming from infrastructure background and had utilised their pre-cast’s expertise and knowledge into building industry. In one of the case company, the management of the company has to recruit the entire design and construction team directly from the competitors. This evidences shows that the transformation of contractors to IBS is indeed a very difficult task unless one acquires sufficient knowledge on IBS.

The structure of the company and its positioning in the market is also important, it can be concluded that the more successful companies are either subsidiary of property developer or is directly owned by the government agency. The companies were established to focus on IBS construction. This is important and perhaps a decisive factor which determine IBS success. Their parent or holding company is normally has initiated a target plan or estimation plan on the volume of construction. In many case, they guaranteed a volume for the company. This guaranteed volume or ‘critical mass’ allows contractor to plan for investment and help the contractor in term of production continuity. This has also allowed innovation. Other benefits are sharing of know-how and risk sharing in term of trying untested processes and systems. The parent or holding company also acts as a safety net for the company in economic downturn. The companies which are a stand alone entity have faced difficulties to plan for investment or to embrace in IBS production since the critical mass is not guaranteed.

Successful IBS contractors as observed are not a ‘user of technology’ or limiting its role as project manager and assembler. Most of successful IBS contractors have their in-house manufacturing and design capacity. They also invest and invent on system, not only depend on existing manufacturer. In-house production capability to supply in their project is important and perhaps also a decisive factor since profit distribution is not the same as in the conventional method. Unlike in the conventional project, contractor operates without the manufacturing capability need to purchase components from the manufacturer and this only has put away a huge amount of contract sum from them. As a result, the contractor was left to work out on a very thin profit margin. By acquiring manufacturing capability one can have control on the process, and the wealth distribution can be adjusted accordingly by the company across IBS projects embarked by the company. However, effort to develop own system requires project continuity and guaranteed volume. This also needs knowledge and the contractors acquire them by having a partnership or joint venture agreement with more established companies. The capacity and capability in design is important as IBS can be profitable if one can accommodate design which is preferable to their own system. For example, the shear wall system is best to accommodate with the vertical load, so the designers can make use of it to the benefit of the companies. Design team can find way to gain benefit by thinking the best possible way building to be constructed using the system and perhaps can accommodate some pre-assembly principal.

As observed in all cases, IBS requires a radical and substantial change from a traditional building process towards a manufacturing process. It is a massive transformation since construction is a conventional industry with plenty of deep-seated practices and it is a fragmented industry. As observed in the case studies, IBS construction requires strong vision and corporate motivation to lead the way forward. Good leadership attributes is also important to deal with cultural issues, internal resistant to use IBS, and during the introduction of collaborative work at site and design office. Moreover, due to limited demand and volume in IBS, it was reported that sometimes, the adoption is based on company’s pure intention to use IBS rather than the commercial judgments alone. It means leadership and top management decision are extremely important to venture IBS. The leadership ensures the right motivation and commitment from the whole team. The top leaders in organisations would normally begin by setting a new vision and strategy. They attract the right people to the company and get rid of the wrong people. The corporate leaders also maintain unwavering faith to IBS that they can and will prevail in the end, regardless of the difficulties and at the same time have discipline to confront the most difficulties in implementing IBS.

IBS requires new business approach, investment planning and careful financial planning. In all cases, business model specific to IBS were implemented including effective combination of cost control and selection of project that giving enough volume. In all cases, the contractors focused on government tenders since the use of IBS is made mandatory for the construction of public building project in Malaysia. It is a huge market given that the government is still the main construction clients in the country. It was also observed in all case companies that the key strategies for those companies are ability to get a volume and the ability and knowledge to manage the design, manufacturing and construction under one roof. To position well in the market, all case companies are indeed moving from the contractor roles to be a total solution provider to clients. They claimed themselves as IBS one stop centre providing a wide range of products and services from design until installation with the capability to provide turnkey services for every stage from contract, design, and production to construction. This is important to capture a larger market for the entire project value chain since not many in the industry are knowledgeable in IBS processes and implementation. It can be argued that the main business strategy is to monopolise. The case companies or their subsidiaries companies play the role of designer, producer and installer of IBS proprietary system across the supply chain. This can only be done by having all the activities to be conducted in-house, in one link of subsidiary companies and in a close system.

Selection of technology is a new findings derived from the case studies. The factor has not been mentioned earlier in the literature, but in all cases, it was highlighted in case studies as highly critical for business continuity. It was observed from the case companies that successful contractors mostly avoid rushing into technology fads and bandwagon, yet they become pioneers in the application of carefully selected technologies at time. They use IBS as an accelerator of momentum, not a creator of it. None of the cases began their transformation with pioneering technology, yet they all become pioneers in the application of technology once they grasped how it fit their construction systems. Several case companies established partnership with foreign companies to acquire knowledge in IBS. But overtime, they buy back their share and operate as their own. There is important to note that IBS may not suitable in every project. The technology used has to be selected according to the volume, type of buildings and type of projects. The case companies are mostly aware of its capabilities and they could identify particular system that suited the project. Inconsistency of volume over time and lack of business continuity resulted the investment in latest innovation is not commercially sustainable. There is a need to realise that precast concrete IBS is not suitable for every project. If more people were aware of its capabilities, they could identify particular projects that suited the system.

Procurement and contract: The construction team in all case companies had worked across all procurement methods, but has found that when it is involved in the project from the conception stage, it has proved more beneficial to the whole project. Effective ways of bringing specialist knowledge holders into the design process at an earlier stage should be established. 

All case companies prefer dealing in turnkey or Design and Build (D&B) type of contract. The companies claimed that 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 the project teams including the manufactures, sub-contractors and M&E specialists to get involve and share their knowledge early during design stage. Translating conventional design to IBS shopdrawings for manufacturing and construction is a painstaking activities and not benefiting adopters in all case companies. It is also observed in all cases, the contractors applied procurement strategies that clearly identify suppliers with the right capability, competence and capacity.

All case companies were having emphasised on good Project Management practice. Planning in IBS requires thorough arrangement of detail design, work delivery schedule, most cost effective way for installation and logistic. It was observed in all case companies that a well manage delivery phasing and scheduling by well considering the planning and deliveries enabled smooth flow of work on-site and avoid wasteful in labour and logistics. Detail planning and meticulous attention to detail results in the most cost effective installation with minimum unproductive time. Tighter and longer period of planning are required to allow for design, logistic and installation planning, procurement and approval procedures. Communication is also vital. In the case companies, communication is established in a simplest way possible. Extensive planning must be completed well in advance which lead to better project performance, coordination, better scope control and ensure smooth project sequence.

All case companies were putting emphasised on good supply chain management practice. In all case companies as reported above, the integration of components or modules into the building requires the various parties and supply chain to cooperate closely. Management of supply chain requires very careful definitions and management of interfaces between contractors and suppliers and good communication channel. This includes attention to detailed management of all stages of the supply chain, enabling correct and timely information to be available. As observed in all case companies, partnering with suppliers and sub-contractors from the earliest project stages can be vital to ensure efficient and timely delivery of components and services. Partnering will ease communication problem between parties. Partnering empowers designers, managers and specialist to do their best work by establishing communication link and feedback system. Partnering assists the stakeholders to fully understand other interest as well as their own during IBS implementation. Any dispute will be easier to be resolved in minimum time. Partnering in supply chain will ensure better coordination and smooth flow of production and installation. 

All case companies were having emphasised on good design management practice and adopt design integration. Initiating good working collaboration between design team, manufacturer and project coordinator can identify and deal with problem early and push forward improvement in productivity and quality. Design management also established forward thinking in planning particularly in the issue of transportation and installation particularly on the issue of manufacturability and constructability. This to reduce any cost of repair and reap maximum benefit for implementing IBS. It important to note that in all case companies, they have claimed that IBS can be best implemented where aspects that can benefit the projects including standardisation, pre-assembly, manufacturability and constructability can be incorporated through the design. Design freeze principal has been introduced to clients and architect into the program as these will help to mitigate the effects of any late design changes, which may not be as easy to incorporate when using IBS.

All case companies were having emphasised on continuous improvement particularly on the management of processes particularly on components’ installation. Continuous Improvement is an ongoing effort to improve products, services or processes. These efforts can seek incremental improvement over time or breakthrough improvement all at once. It was observed in all cases that the repetitive nature of IBS processes allowed the company to apply continuous improvement and shorten the learning curve. The repetitiveness and standardisation nature of IBS allowed efficient installation through continuous improvement and potentially reduced some waste along the way.

There is a consensus of opinion that the important factors in successful project implementation lies in good site management, planning and control of overall process in project life cycle. This in turn, leads to recommendation that experience and well-trained labours are very critical. All case companies having emphasised on people. People development is the most important aspect in the organisations. If the company has the right people, the problem of how to motivate and manage people largely goes away. On the other hand, if the company has the wrong people, it does not matter whether, they discover the right direction it is still difficult for company to embrace change. Great vision without great people is irrelevant. Good contractor’s organisations tend to have rigour cultures, cultures in which leadership consistently applies exacting standard at all time and all levels and good company put their best people on the biggest opportunity not the biggest problem. All the case companies reported that understand the truth that if the company begins with “who” rather than “what”, they can more easily adapt to IBS. 

All case companies claimed that IBS required extensive training to and continuous education to labour and professionals. Although IBS is used to address skill shortage problem in construction industry, evidences suggested that a skilled workforce in specific skill areas such as in integration, coordination and component installation become more important than in conventional method due to a different undertaken roles and project methods. Therefore, to address this problem, scholars in this field had highlighted the importance of continuous education and training program of trades especially to people involved in design, handling, positioning and erecting the finished product. Adequate training of the trades especially people involved in those handling, positioning and erecting the finished pre-fabricated and pre-assembled products. Training labour in innovative method by ensuring the team received appropriate and thorough training in new and unfamiliar method in advance of the installation.  However, they type of training were limited to hands on and on the job training. 

Information Technology (IT) is an important enabling factor to IBS contractors. IT is a vital and reliable support tool to improve tendering, planning, monitoring, distribution, logistic and cost comparison process by establishing integration, accurate data and effective dealing with project documents in IBS projects. Given an increase of coordination involved in IBS project, effective communication and information flow are necessary. It is a reliable support tool to improve communication between project team and suppliers and as a medium for quality control of overall IBS project deliveries. It was observed in all case companies, IT was an important support tool for the design purpose. Without proper IT capacity and capability, the manual process to design and manage IBS will be more complicated and difficult. It was observed that the design teams have used latest design software available in the market like Stead Pro and AutoCAD. It was also observed that all case companies have yet fully utilised IT at maximum level where the utilisation was only limited to accommodate design activities. Perhaps in the future, the companies should utilise IT as a tool in logistic, project management and procurement and acquire better software for information integration management such in Building Information Modeling (BIM) to track the panel and visualise end products. Disciplines and processes need to be streamlined using integrated IT systems, including development of IT-based project management systems to coordinate subcontractors and integrate the process. The contractors need to learn from system from other industry from design through order and production.

The case studies also revealed the relationship between factors. Adopting better procurement and contract strategy affected technology selection and facilitate design management and integration. The improvement in project management will lead to better management of supply chain and also enable design management and integration.

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