NCC Group Embraces Lean Construction for Apartments
November 8th, 2006 by HalUsing standardized building system and standardized components NCC is creating customized apartments for the Sweden market. Their intent is to reduce the time to build, reduce the cost, and improve the quality of the finished product. NCC recognized that construction was costing more each year, while engineered products were falling in prices. Their delivery method takes advantage of the engineering approach. They currently have a production capacity of 1,000 apartments/year with 60 workers in their plant.
The industrial housing market draws on lean thinking, pre-assembly, direct purchase of raw materials, and short production cycles. They are also able to address ergonomic conditions for the workers. Construction time is reduced by 75%. Total labor is reduced by 50%.
NCC has been at this industrial leap for 4 years. Along the way they've encountered challenges:
- Suppliers and customers have a project mindset.
- Definition of building systems must be set before design.
- The range of variation impacts the ability to deliver standard components.
- Material supply is critical, otherwise it shuts down the factory.
- Close tolerances are required — millimeters not centimeters — are required for good finishes.
Participant Understood Key Points
- Decrease time, decrease cost, more variety
- Work flows year-round
- Tolerances matter
- Minimal waste on site
- Big changes in supply chain
- Planned order of assembly
- Just-in-time deliveries
- Replacing craft labor with mechanical skills
- Factory workers do the site installation
- Heavy reliance on computer technology
Questions
- How do you get permits for these individual structures? How does it work?
- Are the apartments pre-sold? How does the market work?
- What happens when the market crashes for housing?
- Are they exporting their product?
- How are the supplier factories supporting needs?
- What are the major challenges ahead?
- If on site construction time is reduced by 90%, why is the whole time only reduced by 50%?
- How far can you ship modules and still make a profit?
- How have the construction unions responded?
- How do the total completed costs compare between industrial and site built?
- How do you put finishes on concrete walls in 24 hours?
Presenter Responses
- Succeeding with an industrial process depends on establishing standard components and system in advance.
- They don't build apartments on their own account. They have a sister entity that acts as a developer, otherwise they work with other developers, governmental housing companies, and investors.
- They aren't interested now in exporting beyond Scandinavia. They've only been operating their factory since April 2006. They will supply houses to Denmark and Norway in addition to the lower 2/3 of Sweden.
- Their prices can beat every site constructed house. They won't reveal their cost structure.
- The building system isn't changing, but it gives significant variation in the finished product.
- They work to the Sweden building regulations. Their system conforms to those regulations. The structure is based on an 8-floor building. Fewer stories will be over dimensioned.
- Their focus is on a normal apartment. They are not focussed on "smart" housing or futuristic designs.
- Not concerned with a market downturn. NCC might be the only one in the market at that time because their costs are that much lower. Sweden needs 20,000 new housing units/year. NCC is only targeting 5% of that market. Also, with lower costs, demand for housing may increase.
- Suppliers do have to make adjustments to their logistics plans and their production approaches.
- The construction union has visited the factory. The industrial union is arguing with the construction union.
- After 10 hours of curing the concrete is ready for wallpaper. The wallpaper continues to let the moisture through. Paint would have sealed the concrete.
- NCC's main challenge is ramping up the factory. They're still installing machinery and information systems. They need to get everything working reliably to get the higher volumes.
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