Construction Labor Shortages Might Boost Off-Site Work

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Elliott T. Dube

Construction contractors struggling to find enough skilled labor for work at project sites are increasingly getting more work done off-site.

The “assembly line manner” of prefabrication helps make it the “perfect solution” for contractors looking to reduce their dependence on skilled labor, Tom Hardiman, executive director of the Modular Building Institute, told Bloomberg BNA in a March 3 email.

Prefabrication, also called modular construction, is an alternative to the traditional method of bringing basic building materials to a site and putting them together there. Under the prefabrication method, entire components of a structure—a preformed concrete foundation or a panelized wall, for instance—are assembled off-site in a factory or other manufacturing setting before being moved to the site.

“The key difference is that in the factory, employees work together on completing the module, rather than segregating work strictly across trade lines,” Hardiman said. “The repetitive nature as well as use of technology and manufacturer techniques means that many tasks do not necessarily require a master carpenter.”

There is a “relatively small, fast-growing cottage industry of prefabrication innovators,” but many other contractors are having trouble making prefabrication effective, according to a February survey of almost 200 companies by FMI Corp. and the BIMForum. FMI is a management consulting and investment banking service provider for the construction and engineering industries, while the BIMForum promotes industry adoption of building information modeling.

Many construction officials interviewed for the survey said their companies won’t be able to undertake their current amount of work a decade from now because they won’t be able to fully replace senior superintendents, field managers and other experienced workers, Sabine Hoover, FMI’s content director, told Bloomberg BNA March 3. This realization is forcing contractors that might have been merely “dabbling” in prefabrication to get more serious about it, she said.

“It’s complex, it’s not an easy business philosophy and it requires a huge cultural shift in how you go about designing, manufacturing and constructing things,” Hoover said. However, the industry is at a point now “where there’s just no other option,” she said.

Survey Shows Hike in Prefabrication Work

The amount of project work using prefabrication almost tripled between 2010 and 2016, the FMI/BIMForum survey found. During that period, contractors have gone from investing about 12 percent to 20 percent of their labor hours in prefabrication, it found.

Prefabrication shops typically “leverage a few experienced people to supervise the work of many less skilled workers,” the survey said.

Survey respondents indicated that skilled labor shortages are a significant factor affecting the demand for prefabrication. Respondents also cited the reduction of the need for on-site skilled labor and the improvement of worker safety as significant benefits of prefabrication in terms of their importance to project success.

In an August workforce survey by the Associated General Contractors of America, 13 percent of responding companies said they had increased their use of off-site prefabrication during the prior year because of difficulty in filling positions.

But a large portion of the construction industry hasn’t yet warmed to prefabrication. For instance, 2 percent of new single-family houses completed in 2015 were built using the modular method, while 97 percent were built on-site, according to U.S. Census Bureau data.

Every major industry except construction has “evolved into some greater form of automation, assembly, and labor efficiency,” Hardiman said.

Contractors that have tentatively waded into the prefabrication waters have found the building method less effective than those companies that have dived into the deep end, the FMI/BIMForum survey indicated. It found that contractors using prefabrication on more than half of their projects are more effective compared with those companies that do less prefabrication. Most contractors track the effectiveness of their prefabrication work by measuring unit per labor hour or cost savings, the survey found.

There could be a “rude awakening” for companies that have been reluctant to embrace prefabrication if they don’t “get on board in figuring out how to do work differently, because these other companies are figuring it out,” Hoover said.

In addition, “new players” including manufacturers and software companies are exploring the prefabrication market, Hoover said. “These are companies that are used to investing big-time and rolling out solutions on a huge scale.”

To contact the reporter on this story: Elliott T. Dube in Washington at edube@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

For More Information

The FMI/BIMForum prefabrication survey is at http://src.bna.com/mJn.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Labor & Employment on Bloomberg Law