Visionary design firm and ace construction crew: check and check. These are key personnel ingredients to a successful building process, and typically require multiple players, subcontractors, consultants, vendors, and contracts to get the job done. But what happens when you can use technological innovation and a product-based building processes to check all the boxes at once?
At Skender, we have a habit of asking new questions. The more our team pondered this one, the more we realized the potential value of bringing traditionally disparate pieces under one umbrella, using advanced manufacturing and technology.
After all, skyrocketing construction costs that are straining the entire industry appear to be here to stay. As of Associated General Contractors of America’s September’s report, construction input costs have jumped another 6.2 percent in 2018. Ongoing labor shortages are also taking a toll, stymying development timelines and making it harder and costlier to find skilled, experienced talent. Compounding those challenges is the fact that fragmentation drives costs up, too. We’ve probably all seen examples of how a disjointed team can cripple our industry, creating silos between stakeholders who could be more effective, if only they had the chance to collaborate and share ideas more rapidly.
So, to stay competitive amidst these challenges and leverage new potential from PropTech, we’ve decided to bring all the players together under one roof. The idea is simple: to increase efficiency, eliminate waste and time spent on coordination, and reduce costs by fusing design, manufacturing and construction into a singular process. By creating a more efficient production line, from initial rendering to factory floor to onsite assembly, we are confident we can cut out inefficiencies, while ensuring high accuracy, high design, high quality and high client satisfaction.
Appetite is growing for more effective construction solutions
Data confirms there is hunger for more productivity-oriented construction solutions: According to McKinsey Global Institute research, productivity can be boosted 50-60 percent by rethinking design, improving procurement and supply chain, enhancing onsite execution, and infusing technology and supply chain. McKinsey researchers also found that a five to 10 times productivity boost is possible by moving to a manufacturing-style production system.
These types of revolutionary solutions are already gaining traction. According to JLL, venture capitalists have already poured $1.05 billion into ConTech startups in the first half of 2018, a record high, and nearly 30 percent higher than the 2017 total.
At Skender, we are actively answering this call to action, most recently with the opening of our advanced manufacturing facility in Chicago’s Southwest side, following our vertical integration in early 2018. In this 105,560-square foot facility, our in-house crews will produce volumetric building modules for multifamily, healthcare, hospitality and other commercial buildings to be assembled throughout Chicago. Through vertical integration, Skender is the first and only builder in Chicago designing and constructing high-rise multifamily buildings using advanced manufacturing and modular methods with steel.
But being first isn’t the most important thing to us. What’s most important is that our new business model demolishes the silos between design and construction, and welcomes manufacturing into the fold. Together with our Lean project delivery approach and commitment to investing in technologies that add further efficiencies across design, construction and manufacturing, we’re able to significantly curb risk, delays and waste.
Three keys, one door: Revolutionizing how the industry builds
It’s PropTech’s time to shine. We’re beginning to leverage new capabilities and move beyond the traditional building model. From putting designers and construction project managers in the same office and integrating new tools like virtual design and augmented reality, to increasing efficiency and decreasing risk by bringing operations indoors, to designing the most-desirable buildings and components for the manufacturing assembly line, following are three strategies central to our vision of a more united and effective operation.
1. Shatter the silos and unite talent. For too long, the construction industry has weathered various breaks in development due to the natural disconnect between unaffiliated architects, developers and contractors. Vertical integration brings all teams under one roof, bridging gaps through the entire development process. As a full-service shop, we are better equipped to think through all the pieces in a more holistic fashion, saving time and driving quality.It is of course key to invest in the right people to bring such a vision to life. For example, our executive team members have deep construction and tech experience, both being vital to all aspects of our operations. And for similar reasons, we recently acquired a team of 12 research-based, tech-savvy architects and designers who are providing the design expertise required to fully integrate the building process.
2. Integrate technology every step of the way. Vertical integration can reduce overall costs, but it also takes the right technology strategy to get the job done well. That’s easier said than done, considering that, for decades, construction companies have typically considered technology to be an extraneous line item in their budgeting, threatening the best ideas with red ink. Institutionalizing technology, however, makes it inherent to the building process and actually creates efficiencies that reduce costs. So at Skender, we’re proactively integrating operations-focused technologies into our day-to-day business, such as virtual design and construction (VDC), laser scanning, robotics and building information modeling (BIM). And we’re already seeing the merits of this tech-oriented approach. After all, when a digital 3D model of your design can serve as the single source of truth throughout the construction process, the 2D sketch becomes obsolete, and the larger design process becomes more consistent and accessible. Digital renderings of projects serve as a single, easily accessed source of truth for designers, construction teams, and manufacturing plant crews.We’re also embracing emerging technologies like virtual reality, augmented reality and drone imaging in the effort to ensure all end-users can properly visualize the project at hand. Artificial intelligence (AI) will soon help us sort through the big data that affects advanced manufacturing practices.
3. Blend product-based design and focused manufacturing. Anyone can manufacture building components in a warehouse. The key to truly revolutionizing the industry is designing high-quality, desirable buildings that are optimized, not compromised, for the assembly line. Then, the benefits of offsite construction are many. By bringing the construction process indoors, we can significantly reduce the effects of Mother Nature. The manufacturing process not only eliminates weather-related delays, it also centralizes and stabilizes the workforce, standardizing assembly to create even higher-quality building components.
What’s next? For Skender, it’s all in the design
Skender’s first advanced manufacturing project will be a six-story, 110-unit, 80,000-square-foot multifamily building located in Chicago’s West Loop neighborhood, and modules for the building will roll off the assembly line later this year. Foundation and podium construction of steel chassis is slated to begin in early 2019, with completion of the entire building expected by mid-2019. That makes the total project timeline approximately seven months, which is about 30 to 40 percent faster than the traditional building process. We also anticipate the total project development costs to be reduced by 10 to 20 percent, compared with a more conventional building process.
This is only the beginning, but we are committed to using technology to challenge industry norms and boundaries, now and into the future. By integrating design, manufacturing and construction under the Skender umbrella, we believe we can help our communities better achieve their goals of more efficient and enjoyable places to live, work and play. And that’s a strategy worth pursuing with everything we’ve got.