One of the main themes of this newsletter is that the construction process is significantly constrained by geography. For work done on-site, workers and equipment need to be able to reach the construction site in a timely fashion, and that site will be different for each new building project. For work done off-site (prefabricated components, etc.) the same constraint applies - the material needs to be transported to the jobsite in an efficient manner. Since building materials are bulky and low-value, this has traditionally limited how far components can be shipped cost-effectively.
From a developer's perspective who has had a look at the viability of prefab, one of the biggest issues is finance. Generally construction finance is done on the basis of payment for works completed *on site*, so the nature of prefab currently necessitates much larger up-front payments. The key issue is that this means less ability for the funding party to secure collateral for their outlay.
Think: you pay your 30% up front to a Chinese factory to get started - there's a lot of situations where you won't have a lot of recourse if something goes wrong (and something always goes wrong!). As such many developers / financiers are not willing to get involved, yet.
Another interesting issue is a lack of international consistency in construction certification / standards. In Australia I have been told that if you want to have a prefab bathroom overseas for your apartment building, you literally have to fly out Australian-accredited trades (electrical / plumbing / waterproofing etc) to completed the relevant parts of the prefab product in the foreign factory. This undercuts the headline appeal of prefab - labour cost savings.
All that said, these are solvable issues - but indicative of the immaturity of the current prefab market imo!
Architects have failed at unionization and formal organizing consistently. The collapse of the effort at SHOP Architects is the latest example. This doesn't bode well for members of the profession being active participants in a 'community of practice'. The oft-cited reasons are vague and potentially self-sabotaging, but persistent (standardization undermines creativity, knowledge and trade secrets should be siloed). Despite the potential benefits of a platform, the profession's status quo is unfortunately oriented toward zero-sum thinking and fragmentation of risk.
> the first thing that we really did was decided to look to see what were the smallest number of parts that we could design to actually keep the skew count low
Should this be "SKU"? If not, I'm curious what skew count means in this context?
Thank you so much for this unique article! Our AMATEK startup is just based on a new material - high-density gypsum - creating a platform for the production of house sets for the subsequent rapid assembly of houses. You described our model. Amazing!
Good article!
From a developer's perspective who has had a look at the viability of prefab, one of the biggest issues is finance. Generally construction finance is done on the basis of payment for works completed *on site*, so the nature of prefab currently necessitates much larger up-front payments. The key issue is that this means less ability for the funding party to secure collateral for their outlay.
Think: you pay your 30% up front to a Chinese factory to get started - there's a lot of situations where you won't have a lot of recourse if something goes wrong (and something always goes wrong!). As such many developers / financiers are not willing to get involved, yet.
Another interesting issue is a lack of international consistency in construction certification / standards. In Australia I have been told that if you want to have a prefab bathroom overseas for your apartment building, you literally have to fly out Australian-accredited trades (electrical / plumbing / waterproofing etc) to completed the relevant parts of the prefab product in the foreign factory. This undercuts the headline appeal of prefab - labour cost savings.
All that said, these are solvable issues - but indicative of the immaturity of the current prefab market imo!
Architects have failed at unionization and formal organizing consistently. The collapse of the effort at SHOP Architects is the latest example. This doesn't bode well for members of the profession being active participants in a 'community of practice'. The oft-cited reasons are vague and potentially self-sabotaging, but persistent (standardization undermines creativity, knowledge and trade secrets should be siloed). Despite the potential benefits of a platform, the profession's status quo is unfortunately oriented toward zero-sum thinking and fragmentation of risk.
> the first thing that we really did was decided to look to see what were the smallest number of parts that we could design to actually keep the skew count low
Should this be "SKU"? If not, I'm curious what skew count means in this context?
I wonder how many people can guess the “old & busted” “new hotness” movie reference…..
Thank you so much for this unique article! Our AMATEK startup is just based on a new material - high-density gypsum - creating a platform for the production of house sets for the subsequent rapid assembly of houses. You described our model. Amazing!