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Out-Law Analysis 8 min. read

Industrialising construction is the route to rebuilding Ukraine

An industrialised approach to construction is needed to deliver the scale of the rebuild of homes and other infrastructure required in Ukraine at speed.

The challenge ahead for Ukraine’s authorities and its international partners is not only to restore the physical assets that have been destroyed or damaged in conflict but go further to ensure the country has a modern, safe, low carbon, built environment to support a modern and vibrant economy.

Ukraine’s wider economic recovery will be linked to how quickly new homes and infrastructure can be built, but there are constraints on the country’s ability to rebuild itself – this will be a mega-project of the scale not seen in Europe since the aftermath of World War Two: it will take substantial capital and resources – people, equipment, and technology. Industrialisation of the construction process can help Ukraine overcome the many constraints it faces and deliver many of the building back better benefits.

Industrialised construction uses new technologies and different ways of working. It means moving away from a one-off process of designing and constructing infrastructure and buildings towards a more standardised approach that is data-led and digitalised and delivered by alliances of all project stakeholders working collaboratively.

A move to using standardised building components can help contractors move to a circular business model, which federations representing the breadth of Europe’s construction industry have endorsed. That is because such components can be deconstructed and reused. One leading example of a circular business model in operation is at Rolls Royce, where up to 95% of a used jet engine is recovered and recycled.

In rebuilding Ukraine, concepts associated with industrialised construction, like design for manufacture and assembly (DfMA), where designers ensure that building components can be manufactured easily at scale, will be vital. It promotes mass production of a standard set of building components at off-site factories – timber or steel frames and prefabricated rooms can all be manufactured at scale on a standardised basis at factories situated away from the construction site before assembly on site in a similar way to how the automotive and aerospace sectors work. DfMA has been a feature of the Singaporean construction industry, which is one of the leading countries globally, along with UK, Australia, and Hong Kong, for industrialised construction.

Hear Nigel Blundell discuss this story on The Pinsent Masons podcast here or wherever you get your podcasts.


Productivity in construction has been stagnant for many decades. UK construction productivity has fallen by an average of -0.6% each year between 1997 and 2019, according to ‘trust and productivity’, the private sector construction playbook, published in November 2022. Over the same period, productivity of the whole UK economy rose by 2.8% while manufacturing grew by 3.9%.

It now takes a larger workforce to build the same output in real terms, which makes traditional construction more expensive than it need be and has led to a downward spiral of low margins and low investment. This, combined with high levels of fragmentation, makes innovation almost impossible. It will be essential for Ukraine to close the productivity gap.

Blundell Nigel

Nigel Blundell


Simply passing risk down the supply chain will only encourage an adversarial approach between parties and will not incentivise the level of collaboration needed to support new ways of working

There is already evidence of how off-site manufacturing can boost productivity. At Liverpool Street station in London, new platforms for Crossrail were manufactured off-site in a factory in the north of England and then assembled by a seven-person team of site operatives whose work took 2,492 hours to complete. In contrast, identical platforms at Tottenham Court Road station were traditionally constructed on site using a 57-person team in a total of 82,080 hours.

While Sweden delivers the highest proportion of homes using modern methods, around 45%, Japan produces the highest number of new modular homes. Each year, up to 180,000 new modular homes are manufactured in Japan, equivalent to 15-20% of all new housing. Ukraine can learn from other countries by examining the necessary steps taken and lessons learned.

The concept off off-site manufacturing has huge potential in the context of rebuilding Ukraine. One of constraints on Ukraine’s ability to rebuild quickly will be the state of its labour market post-conflict, with the rising death toll and the mass displacement of millions of its people likely to leave the country short of manpower and skills. In the longer-term, Ukraine’s demographics will not help it with resourcing large scale reconstruction. Therefore, a different approach is needed.

Embracing off-site manufacturing will enable Ukrainian projects to take advantage of the mass production of building components in neighbouring countries: Poland, and Germany, have powerhouse manufacturing industries, while Lithuania has been a source of modern manufacturing for housing.

Industrialised construction also puts data and digital technologies at the forefront of the design, construction and operation of infrastructure assets.

‘Digital twins’ of new infrastructure should be developed and utilised when rebuilding Ukraine, enabling parties collaborating on its development to simulate how those assets might work in practice. This offers scope not only to optimise how a building performs and the way it is used, but also ensure energy efficiency is built in by design – important in the context of Ukraine’s prospective EU membership and the EU bloc’s increasingly stringent requirements around decarbonisation.

In tandem with the use of sensors, operating digital twins further help identify issues with infrastructure assets before they materialise and thereby support pre-emptive maintenance works, thereby avoiding costly and disruptive corrective action needing to be taken should defects be identified at a later stage.

Digital twins will be live models that track and manage changes to design and construction, with a ‘golden thread’ of information being recorded in a way that promotes the establishment of and adherence to international best practices on building safety.

Senior executives in the construction industry need to drive changes in the method of construction, adoption of new technologies and processes, and the necessary retraining and upskilling of the workforce … [and] lead on a wider shift in the organisation’s culture and business model

Industrialised construction is not just about data and technology, or concepts like DfMA and off-site manufacturing. It is multi-faceted and about leadership as much as anything.

Good leadership, in the context of industrialised construction, is about recognising how improvements can be made to construction processes in a systematic and standardised way while setting an environment for creative freedom. Senior executives in the construction industry need to drive changes in the method of construction, adoption of new technologies and processes, and the necessary retraining and upskilling of the workforce. They also need to lead on a wider shift in the organisation’s culture and business model – something leaders of federations representing the breadth of Europe’s construction industry have recognised by uniting behind a ‘manifesto’ for change aimed at shifting towards a circular business model.

Creative freedom to deliver projects innovatively using industrialised processes can only come by moving away from the traditional linear approach to construction contracting. Simply passing risk down the supply chain will only encourage an adversarial approach between parties and will not incentivise the level of collaboration needed to support new ways of working. Inappropriate risk being pushed down a supply chain will mean disputes rising through the supply chain.

The procurement process needs to be configured to support the types of collaborative contracting needed to industrialise construction. The Ukraine State Agency for Restoration and Infrastructure Development will need to set out clear framework agreements which promote continuous improvement over the longer-term. This will lead to the creation of a common supply chain with groups of professional services organisations with credentials in industrialised construction, as well as contractors and manufacturers and data and technology businesses.

Having a confirmed lengthy pipeline of work is the key to obtaining competitive prices and securing favourable manufacturing slots in the factories producing the components.

The underlying contracts awarded will need to reward good performance and set out stringent continuous improvement terms. They need to be able to handle innovation up and down the supply chain whilst rewarding speed of asset delivery and quality – a zero defect outcome should be in reach where an industrialised approach to construction is deployed.

Enterprise models are likely to be appropriate in the context of rebuilding Ukraine, where state bodies form part of the delivery team. These contracts enable risk- and benefit-sharing between the various parties. It will be fundamental for the state to have a significant role in the redevelopment, to set the desired outcomes for the various phases and regions and to create teams who are involved in the rebuilding from the outset to create an integrated team delivering to agreed outcomes.

Beyond contracts governing industrialised construction processes like manufacturing and assembly, data agreements are also needed. They need to facilitate data sharing via digital twins and other technology platforms and subsequent use of that data, while ensuring intellectual property rights belonging to the collaborating parties are protected.

Thought also needs to be given to the right governance structures for delivering projects. Project boards, drawing together representatives of different parties, can help provide flexibility over the approach, by helping parties to focus on working through problems and finding solutions on a best-for-project basis.

Graham Robinson

Graham Robinson

Global Business Consultant

Shipment into Ukraine and final assembly on prepared sites will massively reduce risks for investors and private capital

There is, however, a natural tension between the benefits of building flexibility into the contractual agreements and the desire of would-be funders for cost certainty. Funders like fixed lump-sum contracts because they feel it helps them better understand project risk and price loans.

There is potential for the World Bank to provide guidance and a playbook for the procurement and financing of industrialised construction solutions which help reduce financing risk and attract a much larger pool of private capital into rebuilding Ukraine. If, for example, factories and production manufacturing are in Poland or Germany, or northern Italy, then financing and investment can be channelled to support the manufacturing of a wide range of building components that could be used as a part of a platform approach to use in housing, schools, hospitals, and other buildings. Shipment into Ukraine and final assembly on prepared sites will massively reduce risks for investors and private capital. Speed of construction and reliability and reduction in building defects can be significantly improved too.

Industrialisation of construction also offers significant environmental benefits that offers scope for those embracing it to attract a new wave of environmentally conscious investors. A study carried out by academics found that the delivery of two residential tower block developments in Croydon, London, through volumetric modular systems helped lower embodied carbon – the emissions associated with the use of building materials over a building’s lifecycle – by as much as 45%.

A recent article published by Harvard Business Review highlighted that while the concept of industrialised construction has been around for almost a century, it has not led to widespread overhaul in the way construction projects are delivered.

There are some good examples of modern methods of construction being deployed, like at Liverpool Street station and the tower blocks in Croydon, but one of the main barriers to adoption is because a pipeline of projects is needed to attract the significant capital investment required to set up, for example, new manufacturing factories and invest in new systems and technologies.

The work entailed in rebuilding Ukraine offers industry the type of pipeline it has long desired to embrace industrialised construction at scale. There is a unique opportunity to deliver fast, defect-free, and high-quality construction solutions and to reduce risk – and at the same time rebuild Ukraine’s industrial supply chain capacity and leave a lasting legacy of social value.

Rebuilding Ukraine
The prospect of Ukraine’s re-emergence as a modern country with a thriving economy when the war ends offers the chance to build something better, from physical and digital infrastructure to greater social value and a greener economy.
Rebuilding Ukraine
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