Out-Law Analysis 4 min. read

Speed, reliability and repeatability prompt shift to industrialised construction

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Industrialised construction has moved far beyond prefabricated classrooms in schools or modular accommodation on mine sites. It now incorporates modern methods of construction, building information modelling and integrated digital delivery.

Industrialised construction enabled the city of Wuhan, China to build a 1,000-bed hospital in 10 days in response to the Covid-19 pandemic. It enabled engineers at the Polytechnic University of Valencia in Spain to develop plastic beams with 3D printing that are more resilient than those of steel and concrete. These beams are made in small blocks that are easy to transport and assemble on-site.

But the move from the traditional on-site trades-based construction model to an industrialised, off-site, manufacturing-based construction model requires the construction process to be revised, digitised and streamlined. The industry must shift its focus from a construction mindset to a manufacturing one, while taking into account new challenges

Once this is achieved, industrialised construction can provide the benefits of volume while simultaneously offering products that can be individually adapted to each customer – and, beyond the mere standardisation strategy of traditional modular or prefabricated construction, additional productivity and flexibility.

Why industrialise?

The process of shifting traditional construction to a factory-based industry creates multiple opportunities for those working in the sector.

Unlimited application

Industrialised construction methods can be adapted to suit just about any project incorporating a repetitive series of components. Advances in design and manufacturing technology, such as AI and 3D printing, mean that even less commoditised products can still be industrialised. Techniques are now more customisable than ever before, so industrialisation does not mean that all buildings have to, or will, look the same. Structural components such as walls, floors, buildings and roofs can be standardised, allowing for customised design and finishes.

Of course, some measure of standardisation will be required to deliver the maximum benefits, with buy-in required from the industry, governments, regulators and standards-setting bodies. As an example, there is currently no one standard building information modelling (BIM) model in Australia, making universal application tricky.

Time savings

Local planning laws often limit construction work to daylight hours. However, shift-based factory work can be conducted 24 hours a day, subject to local laws and regulation. Preparatory work can be carried out at the site at the same time as component manufacturing, delivering further time savings.

Production time for similar components in a factory close to the site can be reduced, and factory work allows for more predictable schedules for workers. In a 2020 report on industralisation, EY found that almost four out of five contractors reported schedule compression when using offsite factories.

Cost reductions

Schedule compression also leads to lower costs, particularly those associated with the day-to-day operation and management of the site. Debt finance can be repaid more quickly, leading to lower interest costs..

Repetitive use of industrialised designs on similar projects will reduce design costs, which can be allocated proportionately across projects.

Industrialisation also provides labour cost savings, as much of the trade-based work is moved to the factory and can be conducted by manufacturing workers. On site, the primary task becomes assembling the prefabricated components. Contractors can make additional cost savings by integrating their supply chains and centralising procurement to the factory.

Some jurisdictions, including Australia, have historically outsourced manufacturing to lower-cost jurisdictions. Industrialisation offers the opportunity to reverse this trend, creating more jobs for local workers.


Moving much of the work from construction site to factory makes on-site management easier and improves efficiency.

IT and data can be used to track the location of components and other vital products in the supply chain – in the factory, in transit or storage, on site or already installed – and improve oversight of logistics.

Avoiding adverse weather

Industrialised construction helps to minimise the impact of environmental factors. Weather and seasonality can slow productivity or delay work on site. The controlled indoor environment of the factory allows work to continue regardless of external environmental conditions.


Industrialisation also delivers health and safety benefits. As factories operate in a controlled setting, industrialised projects have an estimated 80% lower accident rate than site-intensive construction, according to figures cited by EY in its 2020 report. At the same time, AI and other technology can be used to make sites safer for sub-contractor staff.

All major contractors target zero injuries and fatalities on site. Fewer people on site, and a change in the mix of on-site activities, assists in hitting this target.


Standardised factory processes can improve production quality, and advances in technology are expected to enhance quality even further. Production of components to standardised designs helps to ensure consistency and accuracy. Components can be tested at different build stages in the factory environment for resilience, durability and sustainability.


Industrialised construction can also have a positive impact on the environment and bring measurable sustainability benefits. As the prefabricated structures are built much more quickly, less energy is expended than in traditional construction. Less time on the construction site reduces environmental impacts caused directly by construction activities, noise pollution and public disturbance.

Modular buildings can also be recycled and some components can be disassembled, relocated, reused and refurbished.

There is a role for governments to play in incentivising the adoption of industrialised techniques, given the global drive towards net zero emissions and sustainability. Singapore, for example, allocated additional floor space to building owners and developers awarded the highest ranking under its ‘Green Mark’ certification programme.

Planning risks

Planning delays and planning risk are consistently mentioned as some of the biggest challenges faced by developers of new projects. Using pre-agreed design specifications could speed up decisions, streamline the rest of the construction process and reduce the risk that a particular project never reaches financial close.

Design, in the industrialised context, requires a higher level of detail and specification before breaking ground, as well as deeper engagement with stakeholders including local governments, planning authorities and environmental protection authorities. It is almost impossible to ‘reverse engineer’ design changes once assembly has begun.

Collaborative relationships

Under an industrialised model, business relationships will become increasingly long term and collaborative in contrast to the current transactional, more adversarial arrangements. Procurement decisions will be driven not by cheapness, but by whole-of-life value to clients and building users.

Devolving the management to a project board consisting of key stakeholders becomes a means of improving a project’s chances of success. The board is accountable for delivering the strategic and financial objectives of the project, and generally has to make decisions on a unanimous ‘best for project’ basis. This lends itself to iterative, long-term relationships that have the benefit of creating certainty of turnover and create an environment and culture of both innovation and continuous improvement. 

Industrialised Construction
Transforming infrastructure performance needs a new approach. Industrialised construction can improve productivity and deliver efficient and low carbon infrastructure through digital and modern methods of construction. We investigate the opportunities and challenges.
Industrialised Construction
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