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Modular construction: From projects to products. McKinsey Report

Speaking about modular construction we would like to share a very short review in trends and driving forces for growth of modular construction. A McKinsey Report.

Modular construction: From projects to products

Shifting construction away from traditional sites and into factories could dramatically change the way we build. Will modular construction make a sustainable impact this time around?

 

For decades, construction has lagged behind other sectors in productivity. Modular construction offers the industry an opportunity to make a step change: shifting many aspects of building activity away from traditional construction sites and into factories with off-site, manufacturing-style production.

Modular (or prefabricated) construction is not a new concept, but technological improvements, economic demands, and changing mind-sets mean it is attracting an unprecedented wave of interest and investment. If it takes hold, it could give the industry a huge productivity boost, help solve housing crises in many markets, and significantly reshape the way we build today. Our new report, Modular construction: From projects to products, dives deeper into the issues.

 

 

Potential for profound impact

Construction is one of the world’s largest sectors, so a profound shift in the sector can have a major impact on global economic productivity—and recent modular projects have already established a solid track record of accelerating project timelines by 20 to 50 percent.

 

 

The modular approach also has the potential to yield significant cost savings, although that is still more the exception than the norm today. As supply-chain players advance along the learning curve, we believe that leading real-estate players that are prepared to make the shift and optimize for scale can realize more than 20 percent in construction-cost savings, with additional potential gains in full-life costs (for instance, through reducing running costs via energy and maintenance savings).

Under moderate assumptions of penetration, the market value for modular construction in new real-estate construction alone could reach $130 billion in Europe and the United States by 2030.

 

Unmet demand coincides with labor shortages

To date, prefabricated housing has achieved a sustainable foothold in only a few places, including Japan and Scandinavia. In markets such as the United Kingdom and the United States, it has been in and out of favor since the postwar era. However, modular construction in European and US markets has the potential to deliver annual savings of up to $22 billion, and there is reason to believe the current revival could be different. The industry is adopting new, lighter-weight materials as well as digital technologies that enhance design capabilities and variability, improve precision and productivity in manufacturing, and facilitate logistics. Countering the old reputation of prefabricated housing as an unattractive, cheap, poor-quality option, some builders are focused on sustainability, aesthetics, and the higher end of the market. New entrants and first movers that are unwilling to tolerate the industry’s fragmentation and lagging productivity are starting to disrupt the market and change the mind-sets of incumbents.

In many countries, modular construction is still very much an outlier. But there are strong signs of what could be a genuine broad-scale disruption in the making.

Many factors determine whether a given market is likely to embrace modular construction, but the two biggest determinants are real-estate demand and the availability (and relative costs) of skilled construction labor. In places such as Australia’s East Coast, Germany’s major cities, the southern part of the United Kingdom, and the US West Coast, labor shortages and large-scale unmet demand for housing intersect, making this model particularly relevant.

A real-estate disruption in the making

Capturing the full cost and productivity benefits of modular construction is not a straightforward proposition. It requires carefully optimizing the choice of materials; finding the right mix of 2-D panels, 3-D modules, and hybrid designs; and mastering challenges in design, manufacturing, technology, logistics, and assembly. It also depends on whether builders operate in a market where they can achieve scale and repeatability.

In many countries, modular construction is still very much an outlier. But there are strong signs of what could be a genuine broad-scale disruption in the making. It is already drawing in new competitors—and it will most likely create new winners and losers across the entire construction ecosystem. Different stakeholders face a series of choices.

Realizing the benefits of modular construction will require different stakeholders to make a series of choices. Developers, for example, need to identify segments of the portfolio that can serve as their “product core”; investors, on the other hand, must focus more on markets likely to be disrupted and trends defining winners and losers.

For example, a good starting point for developers is to identify the segments of a portfolio where volume and repeatability come into play. These can be designed as a “product core” that remains consistent across developments. Developers should assume that successful modularization will require more than merely asking suppliers for tender offers on existing designs; rather, they will need to work with the supply chain to optimize for manufacturability and make the right trade-offs among quality, cost savings, and time savings.

Meanwhile, for investors, the anticipated disruption will create a very different-looking landscape. This makes it a particularly interesting sector for smart investors seeking alpha at this time. They should look to understand the markets that will most likely be disrupted and the detailed trends, strategies, and capabilities that will set the winners and losers apart.

Building-materials suppliers will face a shift in the choice of materials available to customers and prefabricators. For instance, cement companies will be affected if cross-laminated timber and steel-frame-based modules gain market share. Materials suppliers may also face an entirely different go-to-market landscape. Their customers may no longer be fragmented installers or traditional distributors but rather larger manufacturers that are optimizing for different objectives. However, these suppliers may be well positioned to enter the prefabrication space, given their knowledge both of traditional construction and of efficient manufacturing and supply-chain environments.

Modular construction in European and US markets has the potential to deliver annual savings of up to $22 billion.

Public-sector entities, like private-sector developers, will be able to capture cost savings and productivity benefits by taking a modular approach with any large-scale publicly funded projects that have repeatable elements, such as schools and affordable housing. At the same time, the public sector has an additional role to play in facilitating modular adoption by modernizing building codes—which dovetails with the goal of removing barriers to more housing. Approval processes can be faster and more efficient if product designs and production processes can be approved in factories rather than on each individual project site, thus reducing the on-site inspection burden solely to assembly verification.

Finally, engineering and construction companies should consider preempting the trend that will see on-site construction becoming a smaller and more commoditized part of the value chain. Today, general contractors manage complex on-site projects with many subcontracted trades involved, but they may risk being cut out of a value chain focused on simple module assembly that brings with it a high degree of cost and schedule certainty.



After decades of relatively slow change, an at-scale shift to modularization—alongside digitization—looks likely to disrupt the construction industry and broader ecosystem. All players should evaluate the trend and impact, and assess their strategic choices, to ensure they can benefit rather than risk being left behind.
 

Downloadable Resources

  1. Briefing Note (PDF-120KB)

  2. Full Report (PDF-1MB)

Source: McKinsey

June 2019 | Report

By Nick Bertram, Steffen Fuchs, Jan Mischke, Robert Palter, Gernot Strube, and Jonathan Woetzel


 

 

Vilnius Kindergarten project is now out for delivery

Finally, after a long delay, based on disagreement between Vilnius municipality and client, we are now able to deliver kindergarten for Vilnius municipality. Works began on June 24th and by september the 1st kindergaten will be ready to meet and greet Vilnius children! few additional kindergartens are coming to Vilnius soon, once we have a "green light" from municipality and client.

Ryterna modul modular kindergaten Ryterna modul modular kindergaten
Ryterna modul modular kindergaten Ryterna modul modular kindergaten

 

Summer event we all are waiting for! Ryterna modul Mototourism rally 2019

 

Today is the World Motorcycle Day! On this occasion, we would like to remind you that together with Mototourism Rally we are preparing another cool event - Ryterna module Mototourism Rally 2019!

Those who are not afraid of motorcycles, good time and adventures are welcome to register until there are remaining places!

Asking how a modular building manufacturer relates to motorcycles? In no way. We simply believe that business must not to create wealth only for itself, but also to share it with other members of society. Together with event organizers, we want to give the public a lot of good and warm emotions! After all, it is fun to see the happy faces of children when Birštonas streets are flooded with motorcycleswhich makes children feel happy and happy kids means happy parents!

More about event: http://www.mototourism-rally.lt/mtr2019/#competitor-info

News from our company life

This year, we decided to share the joy of Christmas, not only inside of our company, but also with other members of our society – elderly people from the Panemunė elderly people day house in Kaunas. We aimed to support our elderly with at least minimally better living conditions for those who have worked, created and raised for us.
Pleased with the goodness and understanding of our company team, we have given a few cabinets to store clothes of elderly people while they spend their day in day center. While not in a major and dramatic change way, but still improving the quality of life of at least 8 elderly. Yes - this is not a new building with 5 star service, but these small steps lead us forward!

Fishing! How are we without it!
This year, the number of participants in the winter fishing competition was very high, and we are glad that the average age of our participants is decreasing! The fun was all around as, children playing – having fun, their parents’ joking, bonding and celebrating with music and dances all night long!
 

 

 

Improvement

Young people seeking knowledge, bringing new nad innovative solutions to our daily lives are the foundation of our future and the opportunity to grow as a team, as a company and as a professional, not only in terms of production, but also in our company's culture. We are glad to have people who work with us from the company's business start, and those who are willing to join us and actively seek to find new, more convenient or optimal ways to improve the quality of our products, their construction principles or exploitation opportunities.

Ryterna modul Architectural Challenge 2019 SUBURBAN HOUSE

We are very proud to announce our fifth international competition for architects - Ryterna modul Architectural Challenge 2019 Suburban HOUSE

Our 2018 tiny house competition gain a big media attention and became quite a hit. This year we are back with truly interesting project, yet it is still about the modular house, but this year task ask you to deal with fictional family characters to create spaces for their needs within a house. To add more, all of you will be playing in the same playground, we prepared an actual piece of land for you or your team to work on.

SUBURBAN HOUSE is the theme for our modular competition this year. You will have  a 12 ares piece of land to work and create the best possible house for our family of 4, which has quite a different needs, so your brains will have to really think on how to bring all four different personalities into a happy living space under one roof.

We would like for you to take a look at our rules and regulations file as it has some more details for your project - like family description, their budget, location of their land.

Worth to mention that your designed suburban house should feature modular construction which is transportable by truck.

In our Jury you will find: last year competition winner Abdolrahman Kadkhodasalehi and also our two time 3rd place winner in 2014 and 2015 competition Donatas Cesiulis! This time they will be working together with other experienced Independent architects, company's CEO on selecting the best 3 designs..

The AIM of this year challenge is to present a SUBURBAN HOUSE which fits the family needs and qualifies under other criteria presented in our rules and regulations files.

The best 3 designs will be awarded in cash prizes:
1st place – 1 000 EUR
2nd place – 500 EUR
3rd place – 250 EUR

Here are the dates to be aware of:

  • End of registration - 2018 November 25th
  • Submission of the final work - 2019 January 28th 23:59 EET/UTC+2h
  • Competition results announcement - 2019 February 15th

Rules and regulations: HERE

Location: file in DWG format

Link for REGISTRATION
 


For the ones that are curios, what has happened in previous competitions you could take a look at them here:
1. Ryterna modul Architectural Challenge 2018: TIny House
2. Ryterna modul Architectural Challenge 2016 CODE: Restaurant;
3. Ryterna modul Architectural Challenge 2015 
4.
Competition for architects 2014

New cars

Change is good and we think our head of production unit Donatas and constructor Vytautas would agree without a doubt, who recently switched their old company cars to brand new and shiny bluemotion VW Golf! By buying  new cars we not only increased the level of satisfaction for these employees to work with us, but also slightly decrease our impact on our generated CO2 emissions and you know what saying says - all small things count!

Special lightweight modules for transportation with helicopter

Our partner client came to him with a very specific task of making light weight modular building to be suitable for transportation with helicopter for worker to live while they are setting up new electrical lines. Due to geographical nature and being in remote location the only way to get modular building there was to fly it there. Take a look at the video of how the end process looked like:

Ryterna module light weight modules transported by helicopter

ryterna module light weight modules Ryterna modul, modules delivered by helicopter

 

Looking back at 2018 so far

A long time has gone by and we haven't been updating our page that often as we should, so we felt like it is time to share with you what we have been experiencing during our first 6 months of 2018!
Let's start with the newest experiences so far:
We celebrated our parent company Ryterna 25th anniversary this year and met all of our dealers from other countries! We enjoyed birthday program and especially enjoyed an experience that was offered by the Dinner in the Sky guys!

Ryterna 25th birthday Ryterna 25th birthday
Ryterna 25th birthday Ryterna 25th birthday
Ryterna 25th birthday Ryterna 25th birthday

To feel comfortable during international Ryterna birthday celebration the one who did not understood English have learned it and could communicate with foreign partners with easy during Ryterna birthday
Ryterna modul learning english

In 2018 RESTA exhibition we introduced the actual project that won 2016 year Ryterna modul Architectural challenge Code: restaurant competition and invited project architects to see their creation in real life!
Ryterna modul RESTA 2018 Architectural challenge CODE: Restaurant 2016 winner work turn into real project

We celebrated Eastern with huge egg at Josvainiai assembly line!

Ryterna modul Eastern Ryterna modul Eastern

And finally we dance into the night during Christmas eve and New Year celebration party!
 

Ryterna Christmas eve and New Year Ryterna Christmas eve and New Year
Ryterna Christmas eve and New Year Ryterna Christmas eve and New Year

 

Ryterna modul Architectural Challenge 2018 TINY HOUSE Winners


 

It's sad... That it's over.
But hell! WE have WINNERS to announce!!!

All things, good or bad eventually come to the end. No exception and our competition. Sadly, today it ends for us with Ryterna modul Architectural Challenge 2018 TINY HOUSE. But happily we have winners to announce! And this is the moment you all been waiting for!

We had big board of jury this year. And all of them there pretty different - some of them there very technical, some of them there dreamers and some there somewhere in the middle, but eventually, after long debates, bunch of theories, approvals and denials we came to the conclusion and managed to select best works from all of those 150 submitted projects.

I bet you can not wait no more! So here we GO!

Ryterna modul architectural challenge 2018 TINY HOUSE winners

1st place:Ryterna modul Architectural challenge 2018 TINY HOUSE - Wavehouse

2nd place:
24052705 - Julia & Stas Kaptur

3rd place:Ryterna modul Architectural challenge 2018 TINY HOUSE

Honorable mention:Ryterna modul Architectural challenge 2018 TINY HOUSE

CONGRATULATIONS from all of Ryterna modul team, as well as from all of jury members!

What's next? All the winners will be contacted in person via e-mail in which you will find details on further steps.

We sincerely want to thank you all, for taking part in our competition. Please take a look at the video (see below) were you will find what jury had to say about the projects that won.

We hope to see you all taking part in next year competition. Which will be the 5th annual international competition! We can not believe it ourselfs, that we all together made it so far!

Ryterna modul Architectural Challenge 2018 TINY HOUSE winners

This is why our competition winners took part in our competition and brief information about them:
1st place winner:
"The attractiveness, novelty of the subject and small scale of this project interested me to work on it." - With respect, Abdolrahman Kadkhodasalehi.

Abdolrahman a 30 years old from Iran. Graduated from Islamic Azad University of Mahabad and received Masters Degree in Architecture, and he is currently an architect and has established his own architecture office - BAO 

2nd place winners:
"We've taken part in Ryterna Module Competition, because it is a big dream to create spaces in picturesque hard-to-reach places, such as a river bank, or deep-deep forest. Also we like the scale of project, it possible to design it with nice details. We like such fact, that organizer of competition is a building company, that has opportunity to realize projects of architects." - Julia and Stas Kaptur.

 

Julia Kaptur,  a 29 years old, architect, partner of ceramic studio "Fira Project", author of theTelegram chanel "Fragments".

Stas Kaptur,  a 29 years old, architect in bureau "Tsimailo, Lyashenko and partners", Moscow.

3rd place winner:
"This year Ryterna modul Competition created a great opportunity for me to explore and contribute my ideas to tiny house movement" - William Samin.

William Samin, a 23 years old. Graduated and earned bachelor's degree in architecture from North Sumatera University, Indonesia (LinkedIn)

Honorable mention:
"The program and the scale of this project allow architects to develop their architectural philosophies and methodologies in the design process. Additionally, concentrating on a modular dwelling space inspires architects to rethink and reveal the atmospheric potential while people completely neglect the familiar circumstance around them in everyday life." - Clarence Zichen Qian.

Originally from China, he received his Master of Architecture from University of Waterloo, School of Architecture. Currently he is working at Quadrangle Architects in Toronto and is in pursuit of becoming a registered architect in Canada.

 

THANK YOU for being part of our yearly competition and we hope to see you next year in our upcoming new competition!

Sidor