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The existing built environment structure—arguably—is antiquated and must be disrupted to meet the rapidly changing demands of the industry. The built environment struggles with labor shortages, addressing demand, sustainability needs, cost controls, affordability and efficiency gains. Even with the advancement of emerging technology trends, the construction industry still lags behind more technologically advanced verticals.

What’s missing? Something is needed beyond incremental change that will truly disrupt the industry, increase the value of other innovations and tackle industry challenges. 

The answer is industrialized construction technology with offsite manufacturing as the cornerstone. Technology innovation becomes exponentially more valuable when placed in this context. Shadow Ventures, a venture capital firm focused on the built environment, set out to test these theories with verifiable research published this year in a report titled, “Disrupt a Broken Industry—The Industrial Construction Sandbox.” 

How Will Change Come?

Industrialized construction, also known as modular construction and prefabrication, is the future of the built environment. It possesses the capability to transform construction and fabrication, as well as the way contractors use digital technologies to design, manage and operate. It increases transparency and knowledge of how to procure and deliver projects. 

The questions that remain unanswered are: when will industrialized construction happen, who will lead the way and how will change come? This disruption will be felt by every stakeholder in the industry and every company in the value chain. Preparing now and understanding how this new structure will impact your business is key to success in the future.

The built environment keeps trying to innovate within the current and broken construct. Artificial walls and procedures create roadblocks, diminish transparency, destroy efficiency and generate massive waste. When most people discuss innovation in the built environment, only incremental changes are made to a broken system. These are flawed attempts to try and squeeze another percentage point of margin.

Emerging Technology

The technology and capabilities are there and have been available for some time, as demonstrated by other industries that went through this transformation in the 1820s during the industrial revolution. Is the built environment 200 years behind? Maybe. As other more advanced industries move into Industry 3.0, the construction industry is scrambling to enable 1.0.

Industrialized construction can bring a wrecking ball to the entire structure and construct a new industry, designed from the ground up. If contractors think big, the industry can completely disrupt the whole space. 

The impacts of emerging technologies such as robotics, AR/VR, blockchain, AI, big data, “Internet of Things” and more all become exponentially more valuable when applied to a new built environment structured around industrialized construction and offsite manufacturing.

In the past, offsite manufacturing brought about many challenges around the design, build and operations process. Today, with the rise of new technology and digital tools, those challenges no longer exist. Many of these digital tools will not realize their full value unless deployed in an industrial environment. Digital tools can streamline designs, accelerate construction and create never-before imagined supply chain transparency. 

Processes and People

The alignment of building demand, industry challenges, external forces and technology innovation have created a perfect storm for adoption.
"Modular Construction: From Projects to Products," a June 2019 report by McKinsey & Company, states that “design firms are looking to develop libraries of modules for the manufacturing process […] One client identified savings of almost 15% in design time through modular libraries.”

The moonshot vision for industrialized construction creates an ideal design-build-operate structure that the built environment has been imagining for decades. The goal of this new vision is to increase demand for offsite manufacturing solutions by creating more transparency (cost and schedule) and increasing knowledge (value, options and customization). Contractors should ensure they have a digital ecosystem that will prioritize both processes and people to ensure all stakeholders have the tools and capabilities to operate successfully.

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