Transcript: 40% Time Savings with Off-site Construction and Why you Should or Shouldn’t Do It - w/ Ryan E Smith

What is the value proposition? I think is the fundamental question. And a modular project, you can say 40% on time delivery. Who doesn't want to do that? Especially time restricted projects.

Back in school, one of the things that was hammered into me was don't touch means and methods of construction. That's not your domain. But that's exactly what this podcast is about. So I think this is a good time to move towards offsite when contracts are becoming more integrated and the responsibility is being shared among those project stakeholders. I do think in the future, this is a great area of added services that designers, architects, and engineers can offer to projects and create value by bringing those design for manufacturing and assembly skills to the table.

This has not traditionally been their forte, but I believe that the entire construction industry is going to move in the direction of much more integration, not only in the processes and delivery, but also in the products. That requires embracing production methods. Hello, I'm Brittany Campbell Turner, and this is the Constructor Podcast, episode number 37. Hello and welcome to the Constructor Podcast, the best way to build it. This podcast is dedicated to helping property owners have certainty in their decisions about their construction project.

We talk about fostering trusting relationships within your project teams, help you understand how to lower risk, be under budget and on schedule in your construction projects, and most importantly, exceed your end user's desires. My talk today is with Ryan Smith, author of Prefab Architecture, a Guide to Modular Design and Construction, and Offsite Architecture, Constructing the Future. He is also a professor at University of Utah in the College of Architecture and Planning. We talk about what offsite construction really is, and we talk about an implementation guide that addresses a plethora of concepts, but we only discuss a few.

We talk about procurement, design integration, contracts, and the skill gap between the trades, understanding how trades are actually utilized with Prefab Modular. And then we discuss the value proposition of doing offsite construction. Who's the best suited to embark on doing offsite, and what they need to be thinking about. Lastly, Ryan provides a lot of resources and a lot of links for you to learn more about offsite, but don't worry, they're all in the show notes. So there's so much value packed in this interview.

Without further ado, here is my interview with Ryan Smith. Hello, Ryan. Welcome to the Constructor Podcast. We're happy to have you on today. Thank you, thanks for having me.

Yeah. So just to give a sense to the audience, you specialize in offsite construction. You've recently been senior editor of two books, Leading Collaborative Architectural Practice and Offsite Architecture Construction, or Constructing the Future rather, and your research is largely focused on offsite construction implementation. And we're gonna dig into that a little bit later on, but could you give us a sense of what is offsite construction? That's a good question.

It's a term that comes from the UK primarily. In the US and North America, we probably would refer to it more as prefabrication, since it's been known since the 1920s. It's manufacturing components, elements in a factory, and then transporting them to the job site to be assembled in a rapid manner. And it can constitute a wide spectrum of products and processes. Ones that the listeners are more familiar with, precast has been done for decades, and it's very common.

But there's some that are emerging that are less common, but nonetheless hold great promise as well. Full volumetric modular is probably something that listeners have been seeing in the news or in articles, and that's building buildings through assembling volumetric modules that are 3D boxes built in a factory finished up to 90% with interior lining, exterior cladding, and then assembled on the job site. But other categories of offsite construction could include prefabricated mechanical racks for healthcare, could include bathroom pods for dormitories and hospitality. It can also include prefabricated enclosure panels for the exterior of the building where the window is preset in the wall in the factory and then assembled on site.

So it's kind of the broad spectrum, but more than a product, it's a process. So the players have to reassemble or realign themselves in a way to deliver on this new process that's different than traditional piecemeal stick-built construction on site. That's kind of an overview of what it is. Yeah, that's really helpful. I, and we can dig into this a little bit later, but we talk a lot about integrated project delivery, lean methodologies here, integrated design on this podcast, and you definitely have the expertise and have studied these particular items.

So I do want to dig into that a little bit more later, but I want to know why have you taken this path? Why have you decided to learn more about offsite construction and really dig into this and write about it and do research on that? That's a great question. I went to school at UC Berkeley for graduate school in architecture. And just after going to school there and learning from some incredible faculty, had the opportunity to work at Boland-Sciwinski Jackson, which is an architecture firm in the Bay Area that does really beautiful, designs really beautiful timber residences, mostly for wealthy people.

But in addition, they're otherwise known as being kind of lead on the flagship Apple stores that dot the globe. And at that time we were working with quite a few engineers and manufacturers and fabricators I'll point people's attention to the glass staircases right in the Apple stores. And those are quite a technical feat. So I always had a fancy for technical aspects of design and in particular how design translates to construction. And during those processes, during that time at BCJ and working through those processes with the stakeholders, realizing that architects were important, but they were very small and a small portion of what actually means to deliver on a building project.

And so how do all these players come together to collaborate and deliver on this? What I started finding when I got into academia and teaching and researching is that the topic of offsite construction or prefabrication was very much synonymous with what I would describe as integrated practice or integrated project delivery, collaborative practice, in that it requires a level of collaboration and early engagement of stakeholders in order to be successful. And its potential offsite construction to leverage the enabling power of building information modeling and integrated contracts is just huge.

You can imagine the translation of design to fabrication and leveraging that modeling capability. So I was doing research when I got into academia in 2003, 2004 on integrated project delivery. It was kind of the height of the theory. And now there are many projects that have implemented it and actually kind of stumbled across offsite construction, also from my experience from BCJ and put that together and started consulting and researching on the topic. And that was the first book, Prefab Architecture published in 2011.

That is really kind of a Bible that Kieran Timberlake, James Timberlake quoted as saying that it was the joy of cooking for architects and builders on the topic of prefabrication. And since then, we've come out with other texts that have tried to clarify that initial theory as it's being practiced. So I'm really excited about this topic. I think it integrates well with Lean in so much as Lean delivery is truly trying to leverage an integrated process. And what's ironic is that the factory environment, whether it's producing cars or in this case, producing full volume metric modules or other components for buildings, necessarily implements a Lean manufacturing strategy.

And what Lean construction has primarily focused on are job site productivity and efficiencies. And I think maybe a missing piece in the conversation is asking the question, what could actually be taken off the job site? And not just the Lean construction principles, but the full suite of Lean principles applied to the construction or production, I should say, of buildings. Because then you start thinking about buildings being constructed but being produced. And that's, I think, a much more sophisticated manufacturing approach to thinking about how buildings are completed.

So that's a little bit about how it's linked in to Lean construction. And of course, I think we're starting to see this happen in practice, but I don't think the Lean theorists have kind of connected Lean construction with the principle of Lean manufacturing vis-a-vis prefabrication. Yeah, just as you mentioned, in the UK, there is definitely the mindset because of the governance, right? There is the past 1192 where they're recommending that you utilize BIM, and I think that that's pushing. And BIM is not necessarily just 3D design, right?

In the UK world, right? It's one of those things where it's, how do you share information more efficiently and get everybody integrated, like you said, within the entire process? And I really like the fact that you talked about producing buildings, right? Producing instead of constructing. Because it kind of switches your mindset, right?

It gets you to start thinking, obviously, more lean. Like the Toyota Way, if you will. Or, and I say the Toyota Way, it was the name of a book, but obviously the manufacturing process that many things are produced within, right? So, it leans it up, it gets everybody coordinating, it gets everybody seeing all of the information in one place with the utilization of BIM. And it gets you to have that control level by taking things literally offsite and considering what items can be done, right, that way.

Right, you know, in lean construction theory, I think it was Glenn Ballard who wrote a paper on the peculiar, the question is what type of production is construction? There's a great paper out there on that. You might wanna link people to. Yeah, we'll do that. Which is a very different kind of production, say, in producing, say, an iPhone or any other manufactured product.

And he outlines three peculiarities in construction that make it different than producing, say, an iPhone, which is mentioned. Number one, the location, the location in which it's produced, the building, is different every single time, right? The scope, the program, the form is different every single time. And the labor that produces that product is mutable and inconsistent every single time. So, you know, to think that we could somehow gain productivity and control in producing buildings in some ways is laughable, given those three peculiarities working against us.

It goes against everything we know in the 20th century manufacturing mindset. It goes against everything the Toyota way would suggest. So prefabrication, fundamentally, if we're not even considering, say, core lean theory, just looking at prefabrication. Let's look at the first one, location. Well, certainly the buildings are gonna be set in a different location every single time, but the elements that go to produce that building certainly can be produced in a factory environment that is weather controlled.

The sun always shines in the factory, as Ted Benson says, he's a manufacturer up in New Hampshire. You know, workers come to the factory, they know every day they're gonna be working, and they're gonna be working a consistent shift, and they have a predictable scope of work. Second item, which is the scope or the program or the form is gonna be different in the building, that's true, but that doesn't mean that the elements that go into it have to be different. In fact, there's a great effort going on now that I'm part of to try and standardize some of the prefabricated elements that go into buildings, much like the automobile industry had to go through and other industries to ensure compatibility.

And then it becomes a game of connections, how things connect, which is how the IT industry has developed, right? It's all about how things join to one another, as simple as the outlet on your wall, for example. And then the third, which is labor, is it permutable and inconsistent? It's not in the factory. That labor can be very consistent in the factory.

And we're not talking about unskilled labor, we're talking about skilled labor, and there are great efforts to manage union factories now. So that issue has fairly gone away. So there's quite a bit of control that can be gained by these three peculiarities being overcome vis-a-vis offsite construction. I love that. So let's dig into a little bit, we talked about why you decided to start studying offsite.

You saw the gains. You saw the opportunity to dig into more than just design, to understand how you can, like you mentioned, and did a great explanation of produce buildings, right? From a manufacturing perspective, what's the business case for offsite construction? Why is it important from maybe like a property owner's perspective? Why would they consider even going that route in the first place?

Sure. So we've done quite a few studies. I run a research center that supports the offsite sector and folks like owners that are interested in learning more and trying to understand the value. What is the value proposition? I think is the fundamental question.

And when we evaluated both permanent modular construction, which is volumetric modular built to the standard IBC code, and we evaluated mass timber construction, which is CLT that's proliferating in North America now, what we found is that in both cases, the cost and schedule benefits were great. In addition, we saw a significant drop in change orders compared to average projects. Quality assurance goes up. And so, given the fact that, I'll just give a statistic, given the fact that on a permanent modular project, you can save 40% on time and delivery, who doesn't wanna do that?

Especially time restricted projects such as universities or other functions that need to get up and running by a certain date or they really lose a whole year. So these are some benefits that we have found. Schedule being absolutely, in any study that you read has been evidenced as being a gain. Cost, we saw improvement, but there's been other studies that have shown cost neutrality. There's been very few that have shown cost increase by using offsite construction.

When you have an area of convergence, like let's say a bathroom or a kitchen or a mechanical room, where there are many trades that are all coming in trying to work in a small space, and in many ways you have to schedule them in a linear fashion, all of a sudden in the factory, you can work on the outside of that bathroom, right? You can work on the outside wall. And while someone is say finishing tile on the inside, and then ship that to site, that alleviates a huge headache.

In addition, multiple bathrooms all being done at the same time, right? In a line and one guy's operation or one person's operation being repeated over and over again. There's just significant benefits to why one would do this. And we've seen even general contractors, this is a model using what's called multi-trade prefabrication. In that there's setting up warehouses or leasing warehouses near the job site.

Near site fabrication is also what it's called. And they're pre-manufacturing components that they would usually install inside the building, in situ, and now they're doing it in the factory because they can get the quality they want. They're not outsourcing that to say a manufacturer or a prefabricator, they're just pulling their trades inside the warehouse and finding great benefits, schedule benefits doing that. So I don't think offsite construction is restricted only to procurement of say a manufacturer producing and then you're purchasing. It's also including general contractors that are finding great benefits and using these methods.

Well, and you already mentioned that the union concerns are largely going away. So if we can dig into that a little bit more, I'd like to, but let's hop into the offsite construction implementation guide that you're developing. Could you give us an idea about that? And we'll circle back around to labor and unions and kind of dig more into that question. Sure, so I, in 2012, 2013, around that time, I was doing research in this area and talking to a lot of folks in industry who were working in this area or who were say general contractors trying to procure volumetric modules or mechanical racks.

And they were finding that there wasn't much information about how to do this. So the how question came up. And so we started a group at the National Institute of Building Sciences Offsite Construction Council, nibs.org front slash OSCC, the website landing page and started producing resources. There are about 150 members of that council that range from architects, engineers, contractors, owners, that all have an interest in offsite construction. And I was the first chair.

And at that time we quickly started coming up with reference materials for folks to go and learn more. Some of it can be found on the whole building design guide, WBDG.org. And then there's also case studies on the NIBs webpage. We produced a glossary and some other materials. And what we're finding is this is slowly building a quote unquote in implementation guide, where people can learn how to do this.

We have conducted four webinars to date. You can go, they're free. They're located on the NIBs website that talk about different types of offsite construction issues such as transportation or regulatory issues. And we're trying to build this up. And so anyone that's listening to the podcast that may have additional webinars that they could offer, we welcome guest speakers and want to get more people sharing their knowledge in this area.

So that's what the implementation guide is all about. That's wonderful. And I'll post all those links for you guys to be able to have easy access to the NIBs website and the WBDG. Also the webinar is on the NIBs website. So that I think will be hugely valuable.

Okay, that is amazing that there are 150 contributors ultimately to this developing guide. That means that it's certainly comprehensive and a lot of lessons learned are incorporated into that. I do want to dig into a couple areas of the implementation guide that are likely important to an owner who is considering, okay, how do I do this? If they want to just know about the first couple of things, how do I even hire someone to do this? My first question is around procurement.

And I know you guys address that. So could we talk a little bit about what's being recommended around procurement? Sure. So there are a few models that are being used in offsite construction. One is the manufacturer acts as a subcontractor and the general contractor hires them under their general contract.

That's even if the scope of the manufacturer producing offsite is 90% of the scope, right? That's still a model that is being used. And that has some advantages, of course, because then the general contractor doesn't have to manage as many sub-trades, but it also has disadvantages in that there is risk associated with having one manufacturer hold so much of that scope. And we have seen some failures in that particular area. However, that can be managed.

That can be managed through insurance and bonding and other ways. In addition, not all manufacturers are created equal and there needs to be a strong vetting process. It's not just lowest bid in this case is what I'm saying. And one needs to shop and interview and visit to ensure that that manufacturer can deliver. There's also a model of a manufacturer, larger manufacturers acting as the general contractor and taking on the entire contract.

They have that capability. There's another model which is something called a dealer, say especially modular, where they deal and they have multiple manufacturers that produce. And they're kind of an integrator of say the modules on a project if it's a hotel, for instance. And so that GC, sorry, that owner can go and hire the manufacturer as GC and they will kind of manage that project. So these are some models.

And then we have some new ones coming on where vertically integrated company can, from the top to the bottom, be developer as well as have all of the different stakeholders within their company or at least own them for the project in an integrated contract. And then I mentioned the large contractors, Turner, Whiting Turner taking on multi-trade prefabrication whereby they are actually having offsite units within their companies that three or four people just manage the offsite procurement methods, whether that's hiring manufacturers as subcontractors or having their own in-house trades, work in a warehouse near the job site, a myriad of models.

And you might have a large project like a large hospital that will have multiple deliveries being made from different procurement methods. So these are some of the things we've seen. As far as who's making decisions on whether they use offsite construction or the extent to which. We ran a survey with the NIBS council that I mentioned in 2014 that was published in 2015. We found that owners and general contractors are having the most influence on whether offsite construction is happening or not.

I was surprised coming from architecture. I thought, well, certainly my discipline is the most important and that's just not the case for this particular area. I hope that architects will take more ownership over recommending production methods to owners, but that hasn't been our traditional role in the past. It's really interesting. Just in my experience talking with the lean construction institute and I find that they're also getting more support if you will, or the owners and general contractors are choosing to adapt that model as well.

And I don't know what it is about the design community. I'd like to actually tap into that. So that piques some interest. I might scratch that itch a little bit, Ryan. Right, good.

So back to all the different ways that you just described from hiring the manufacturer direct all the way to having the integrated model where the developers and the contractor and everyone's involved to having the GC have an offsite location. I think it's good to know that it's happening in so many different ways. Is there a method that seems to show the best result? Is there anything or multiple or is it across the board pretty similar in the results? Right.

I think the wide majority, well, let me back up and say this. As with anything in construction, it's contextually contingent or contextually dependent. So what is the scope? Where's the site? And what's the budget?

And then that starts to frame how these projects come about, any project. But what we've seen, the wide majority, is manufacturer as subcontractor is probably the most common model. And then the second would be large contractors taking on multi-trade prefabrication. So those two models are probably the most common. And that's probably because, though specifically in the manufacturer as subcontractor, in larger multifamily dormitory and hospitality projects that have a great deal of repetition, the model of manufacturer subcontractor tends to work well because they're delivering boxes to a job site and the GC's assembling them.

And so that kind of model makes a lot of sense. Say you have a large hospital where there's quite a few more components and maybe the rooms cannot be boxed as much and you're maybe dealing with bathroom pods and mechanical racks and prefabricated mechanical rooms and the complexity of the project maybe is increased. In that hospital or healthcare project, we see the large contractors taking on multi-trade as a common method. So I think it really depends on the scope and the program of the project one's dealing with.

Yeah, actually that's really helpful to kind of segment what markets are adapting the different methodology. So that's really interesting. On the procurement question and how these models work, it really is, I guess what I wanna say is I'm not trying to sell offsite construction and I don't get anything for promoting it, right? I'm a professor. So by virtue of that, I don't think that offsite construction or certain types of offsite construction categories are appropriate for certain building types.

One has to find the appropriate solution or the appropriate technology for the condition. That makes sense. Absolutely and I think it takes an owner who really understands their business, right? Understands the repetition that's required in developing it, right? And it's understanding the different variables that are needed to ultimately execute the product, right?

The building and it's, you're right, it's not a one size fits all sort of a scenario at all. You really do have to do some critical thinking and strategic planning. And that's one of the reasons why I have you on my podcast. I'd like to be able to share sort of that high level approach so that if there's a need to dig in more and it seems like a great idea to adopt offsite construction and procure general contractors or the manufacturer general contract, however you wanna procure it.

I think it makes sense to just be exposed to it at this point and you've given us a really good sense as to what the opportunities are, yeah. So design integration is the next topic that I wanted to dig into in relation to the implementation guide. Let's talk about that, yeah. Yeah, it's an interesting one, design integration. It sounds really good, but it's not happening very much.

Design integration isn't happening with offsite construction as much as it should. And I think that's had some negative impacts. We found that when the decision to go offsite significantly, use offsite construction, is made from design development onwards in the phases of design and construction. From later than design development, it has negative cost and schedule implication. So it's not something you just come along and say, yeah, let's do this, but it's a conscious effort and an integrated effort from the beginning.

I just had a call with someone earlier today that I'm consulting with, and he's a developer, and said, we have a project that's been designed, we have a design team, and we're thinking to go modular on this. And I said, does your design team have any experience in doing that? He said, no. Do you know if the design isn't all amenable to modular? He says, I don't know.

And I said, I would strongly advise against doing that because it will inevitably have a negative impact, and when it does have that negative impact, then you're jaded by the method. You say, oh, it doesn't work, see? And you're not invested in it. And it gives negative press to this innovative method. It would do that with any design, and it would be a good idea to do that.

It would do that with any new method we might use in the construction sector. So we have to start early, and the other thing I often tell owners, we work with them, is that when you move to offsite construction, it's a commitment. It's a commitment like a marriage, right? You say, I'm going to do this, and it's gonna be hard, and we're gonna work through it, but I'm committed to the idea because I think it's gonna be better in the end than had I not engaged with it.

And I don't know what that means as far as projects, but we have seen a large portion of projects not perform to the desired outcomes on the first, second, and then usually on the third, they do really well. So that's not to say you can't win on the first project, but it's just to say that one has to be committed to this particular method. One of the ways I think to find more success in these projects and overcome these challenges is architects doing research and becoming deeply engaged in understanding design for manufacturing assembly.

It's actually a whole discipline, DFMA, design for manufacturing assembly, comes out of the manufacturing sector, which is when one is designing for how something is assembled and then how something is assembled and then how something is transported and then how something is put together on a job site. That's a very different design process than only considering spatial qualities and code restrictions and things like that. And at first, architects and engineers might say, I don't get paid to do that, right? That's not what I'm hired to do.

So the scope of services changes, but that's not any different than an integrated project delivery, which the scope of services is changing. So I think this is a good time to move towards offsite when contracts are becoming more integrated and the responsibility is being shared among those project stakeholders. And then you have the manufacturer who has great knowledge in design for manufacture at the table working with the design team. So much in the way that we use integrated project delivery and the stakeholders come together at the beginning in an offsite project, there's a great opportunity to have the modular manufacturer or whatever other element is being manufactured present at the table in order to aid with design for manufacture capability.

But I do think in the future, this is a great area of added services that designers, architects and engineers can offer to projects and create value by bringing those design for manufacture and assembly skills to the table. This has not traditionally been their forte, but I believe that the entire construction industry is going to move in the direction of much more integration, not only in the processes and delivery, but also in the products. That requires embracing production methods. Back in school, when I went to architecture school, one of the things that was hammered into me was, don't touch means and methods of construction.

That's not your domain. But that's exactly what this podcast is about, right? It's about embracing that. And if designers don't, then I think someone else will step in and take that role. And I hate to say that because it's my discipline, but I think architects and engineers need to embrace the way in which things are produced in order to deliver value to the building industry.

Yeah, and what it does, it combines your design with product management, ultimately. We look at, like what I do in my role in my day job, is project management, third-party project management. And I think a lot of that, yeah, again, you're not supposed to touch means and methods. It's up to the general contractor, but it's up to someone like me to kind of push the, questions and ask them. And sometimes, it's a challenge to get that conversation going in the first place because of that hesitancy from the design side, yeah?

Sure, sure. So, yeah, that's really, really intriguing. So if we could just talk a little bit about labor, utilization of trades and the general contracting setup, I'd like to dig into that a little bit more. Sure. Labor is interesting.

I mentioned it before earlier in the podcast about labor unions, and fortunately, much of that has been solved. When offsite was starting to make a headway again in the mid-2000s, we saw a lot of labor unions balking, of course, because they felt that challenged their work. And what we've seen is a lot of negotiating occur, and many of the factories are union shops now, and that has largely solved that problem. And I think we'll see that continue to happen. We have seen a large gap between coming out of the reception, the construction volume continues to increase, whereas while the labor that's available to meet that demand is just not there.

And that's from the top to the bottom. And in order to deal with that labor gap, I think more and more projects are going to offsite methods because it's a more efficient way to manage labor on projects. Because of the recent uptick, we've seen an offsite construction that can't help but think that there's a strong correlation between labor shortage and increased use of offsite methods. But the skills are significantly different. And so we're seeing people be much more versatile.

We see necessarily, even in non-integrated contracts, manufacturers and designers working together to try to solve problems as we use more offsite methods. So I think we'll see more and more of that happening. And the skills and knowledge needed to deliver on offsite projects being taken up, but not just by designers, as I mentioned previously, with design for manufacturing assembly, but by all the trades and GCs and owners to try to deliver on the promise of offsite. But there are some specific, there are some specific skills that are different and things that are different.

I don't know if you want to, you know, we want to talk about those. Yeah, let's talk about it. I do want to just mention, for those of you who haven't listened to my interview with Anirban Basu, economist, he specifically addresses skill and the labor shortage and the fact that there needs to be this level of, it's a different skill set, right? Just as you're, and I'm happy that you're going to give us a little bit more detail on that. It's still skilled labor, yeah?

But there is a different mindset towards approaching the work. So yeah, please dig into that. And I'll put the link for Anirban's interview so that we can provide a little context from the economist point of view. And I would just also mention that because the UK is some 10 years ahead of us in this particular area of offsite, they have a whole host of skills building resources that are available out there. And I think we will see that start to occur in North America as well, as more and more people share.

But particular to what knowledge, additional knowledge is needed, you know, producing a building, as we mentioned before, is very different than constructing a building. And that includes thinking about the context in which one is building, but also all the different stakeholders and processes that are necessary in order to produce that efficiency. So putting in, say, a lot of effort upfront may not seem intuitively good, but if it's going to save a lot of labor at the back end, that whole process is much more efficient and the control is much greater.

So on offsite projects, the flow of capital tends to be different in that there's a lot of upfront and upfront investment that has to occur. So if owners are not familiar with financing offsite projects, they might be surprised in the capital required to get a factory up and started on your project. And the draws on that financing can be considerably different. And you may not see the benefits of that until later in the project, when those boxes or elements start becoming much more mass produced. So that's a very different kind of flow.

The other is skills are somewhat different. Manufacturers are also going to have to get up to speed, and owners and GCs need to demand that from the manufacturers that they be transparent with their pricing. Because right now, a lot of them are giving lump sum bids, and it's very difficult for a GC to manage budget that way. Without really knowing how it's broken down. So we're working with, we've been working with some companies on that.

And manufacturers of modules are starting to be in other elements, much more sophisticated in there and conversant in traditional construction language. And that will only help the adoption of these methods, I think. The other thing that's different is the regulatory process is different and the skills around that. And that can be a barrier because, you know, each project is subject to the local municipality or the authority having jurisdiction in that area. And say you have a project that does have a closed wall assembly or a complete module.

Well, and that factory is located in New Jersey, and the project is in Massachusetts. You now have an issue with the site inspector or the authority having jurisdiction, wanting a third party inspector to come to the factory and inspect that product before it goes to the job site. Specifically because your rough ends might be enclosed in a wall, right? And so the inspection process becomes a little different, a bit more involved, a lot more communication among the players and the stakeholders. And that barrier alone has dissuaded some from embracing these methods.

And we all know that sometimes the greatest barrier in a project can be the regulatory authorities. And that can be a real challenge, even though they're trying to protect the public interest. That's their goal. So that can be different, although we're seeing many more municipalities become facile in this particular area. Most have some kind of offsite program within their municipality, unless they're rural and don't have a lot of development, then it can become challenging.

But these are some different things. And then warranties aren't entirely different, except you're warrantying, say a factory is warrantying a lot more than you would get from a traditional manufacturer. Say if they're just producing a condenser unit or a boiler or something like that, which it has its own warranty. Now you're not only looking for the product warranties, but also the installation warranties. And being dependent on one manufacturer for all of that can be risky, but that risk can be managed, as I've said before, through working with the manufacturer and having contracts that can alleviate some of that risk and share it among project stakeholders.

I think that provides a lot of context around what the challenges are in adapting offsite construction, just the regulatory concern alone. Doing development of the modules outside of one specific jurisdiction, that's definitely a concern. And even from the owner-stakeholder perspective, how do they know that the production is on time? How can they see it? Because a lot of times they want to do walkthrough, understand how they're moving through the space.

And that's something that you just cannot do when you're building offsite. No, it's true. And so the manufacturing mindset not only translates to the project stakeholders, and hopefully does, but also stakeholders of the authority having jurisdiction, which is a significant mindset that needs to be adapted. But we've seen that with any technology. So if you're using any new product, even if it's not manufactured offsite, one should definitely look at the product and see if it's going to be a good product and definitely talk to the authority having jurisdiction and ensure that they understand what you're trying to accomplish and that there are no hiccups and that if there's testing that's needed, that's understood up front so that the project doesn't get unnecessarily delayed.

Yeah, it's certainly a different way of thinking. And I'm really glad that you've provided us with context on specifically procurement design integration, trade labor and the skill gap. Those are just a few topics that are included in the implementation guide. I'm definitely going to put the links in for the audience to dig more into different aspects of what's listed here. But I do want to ask the question around mindset.

We talk a lot about mindset on this podcast, and you've touched on it in a number of ways already. But how would you say the owner or the developer or even the general contractor at this point, and obviously the designer, you definitely come from the design side and we do want to speak to that. What is the mindset that someone should come to approach an offsite construction project with? Yeah, let's go over a few of them. I think that would be pertinent and easily implementable.

We've talked a lot on this podcast about integrated practice and integrated delivery. So one should engage ideally in some form of design build or integrated project delivery model in order to deliver on the promises. But outside of the actual legalese, one should think about how to collaborate with stakeholders in order to deliver on the project. So I think the mindset is much more collaborative in that way. And think about engagement in a design process that solves the problem, as opposed to design and throw it over the fence to the next person.

Another one is appropriate technology. We've learned this from Sweden actually. Clayton Christensen in business has this theory of disruptive technology or disruptive innovation. And with offsite, I don't think we're talking about that. I don't think we're talking about coming in and disrupting the construction industry full scope.

There's some companies who say they want to do that. You know, the Elon Musk-ing of the construction industry, right? But it's going to require significant capital for any one company to actually achieve that. And I just don't see it happening anytime soon. So I argue for using offsite products and processes that are appropriate to the situation you're in.

So that kind of mindset of one needs to be innovative, but one definitely doesn't need to think they have to disrupt the entire sector. The mindset can be focused on, okay, what's appropriate for the situation that will meet the needs? And is it an appropriate technology for the context? Is it appropriate for the time in which we're making this decision? And is it appropriate for the skill set of the stakeholders we have at the table?

So I go back to the very contextually contingent decisions around offsite. Another mindset is that as we're investing and moving towards offsite construction, implementing it, it's a long-term investment. I'm not here to just try it on one project. I'm here to try it long-term and implement it, and it's with that mindset. So any decision, oh, I'm going to build this BIM object, we're going to invest in parameters in a BIM model, I'm going to develop these relationships with these people, I'm going to figure out the procurement methods and the financing methods, and I'm going to learn how to deal with the regulatory context.

Those are all things that are seen as investments for future implementation. So you may not see the results in that project proper, but you will see it in the future. That's a different kind of mindset. And then I mentioned before design for manufacturing and assembly, the FMA, which is a very different kind of mindset that we've talked a lot about, production-type mindset. I think those are the major ones.

Yeah, I think that gives us a real clear amount of work that you kind of have to do ultimately with training or setting a mindset development expectation around those particular topics. It's quite involved, and I think you can focus your energies on, yes, absolutely learning, but it's also working with the right people who also have that similar mindset and making sure that you've identified who they are. Make sure that everybody's buying in, ultimately. That's what it sounds like. Well, I think that's truly helpful, and I always like to give the listeners an actionable item.

What do you think that they should do right now if they're interested in this model? What would you suggest that they do just to kind of start digging and who should they start speaking with and things of that nature? If you're interested in just putting your foot in the water and learning before you take action, I think there are some good resources available, I mentioned before, on the National Institute of Building Sciences Offsite Construction Council website, and the nibs.org, front slash OSCC. Also, there's an institute called the Modular Building Institute if you're interested in volumetric construction, and they are the trade association for that.

Modular.org is their website, easy to remember. There's a myriad of resources there, publications from myself and others on their resource page. Of course, I always put in a plug for my book, right, and books. Feel free. Prefab Architecture and Offsite Architecture.

Those are the two books available on Amazon. It will give you a good understanding. Further to that, if you're starting to think about who are some people doing this and what are they doing outside of resources but looking at case studies, there are some really interesting companies, I think, to pay attention to. One is Urban One Builders up in Vancouver. They're a general contractor, and they really get it.

Their projects are just a... I mean, they just finished a 17-story dormitory that had a combination of mass timber, prefabricated enclosure panels, and other...I mean, the entire thing was prefabricated and orchestrated through BIM and integrated project delivery in a really beautiful way. They have case studies available, but I would pay attention to them. The other is a developer, architect-developer, general contractor company called Glock Plus. Glock Plus is out of New York City.

Peter Glock is a partner. People know his name. He's done three or four projects using offsite construction from the advantage of the developer and the general contractor. They find great cost control and schedule control by using it. Some others, I think, to pay attention to is Marriott Hotels' effort right now.

They partner with Gurdon Modular out of Boise, Boise, Idaho. And this year, it's just announced, Marriott will take 15% of their mid-rise wood hotel product to this method of offsite modular. So it's quite significant. Citizen M Hotels is also developing now in the U.S. and those modules are coming from Poland.

So I think paying attention to that would be interesting. There's two companies that are claiming vertical integration, although I don't think it has borne out yet, primarily for the housing industry. And one is Katera out of Phoenix, and the other is Blueprint Robotics in Maryland. And they are claiming to disrupt the industry, although we'll see because there's been other companies that have claimed that as well. But they have significant investment, and I think it would be good to pay attention to what they're doing.

So those are some companies to pay attention to. And then lastly, I think if you're interested in doing this, if you're an owner or you're a GC or you're an architect trying to design for a project like this, I think something, you know, projects to cut your teeth on would be multifamily housing, dormitories, hospitality. If it's healthcare, you know, bathroom pods, mechanical racks. So start small, test it, and then go from there. Going full-fledged oftentimes can just be too much risk.

And we've seen greater success in dabbling in it, finding benefits, and then upscaling from there. I'm really excited about all the companies that you recommended, and I started looking up some. I couldn't hold myself back. So hopefully the audience is feeling similar. And I'm glad that you've given some clear examples of people that we can follow in addition to, you know, the right types of companies or markets that may be most capable of maybe starting to do this right now.

So that's hugely, hugely helpful. Ryan, I want to thank you for taking your time out and sharing with us today. I want to give you the opportunity to tell us where people can find out more about you. Tell us how people can contact you. Sure.

My website is ITAC.Utah.edu is the URL. You can also just Google my name, Ryan E. Smith. There's so many Ryan Smiths. E is my author name.

Ryan E. Smith, University of Utah. And you'll see a bio come up, and there's links to websites and publications. Wonderful. Well, thanks again.

I really appreciate the opportunity. I hope you guys enjoyed this interview as much as I did. So last week we talked about the value proposition of doing lean construction or integrated delivery. Ryan has bridged the gap for us in the U.S. at least as we start to look at offsite construction and how Modular integrates with the lean production model.

This path includes more and more collaborative delivery models. I'm also looking for ways you can start acting right now and implement what you've learned right away for the industry to be ultimately elevated. If you have any questions, please email me at britney at constructor.com. I want to know how this podcast has helped you. Even if you haven't implemented anything yet, I just want and you just want to learn more.

Just still email me. Again, that's britney, B-R-I-T-T-A-N-I-E at constructrr.com. Next week, we'll be talking with Jeff Saunders, director at Copenhagen Institute for Future Studies, and we'll be digging into the future of the workplace and what we should prepare for and how. We talk about how to integrate internal organization teams in order to make the best plan and decisions about how to approach next steps within business based upon megatrends that are coming, megatrends that we have no control over. So I look forward to sharing that episode with you guys next week.

Don't forget to subscribe at constructrr.com to get email updates from me. If you haven't already subscribed to the podcast, you can do so at iTunes and Stitcher. Please leave a review to show your support and let me know you're enjoying the podcast. I look forward to talking with you guys next week.