The Construction Industry is Changing. Are you ignoring the handwriting on the wall?

Both inside the industry and externally, there is an almost urgent message heralding the massive disruption already taking place in the world of design and construction.

The latest entrant in the race to proclaim the end of the construction industry as we know it is none other than McKinsey & Company. Historically a management consulting firm that uses both qualitative and quantitative methods for evaluating business performance, the firm has numerous clients in both the public and private sector after more than 90 years of existence.

Michael Marks, founder and CEO of Katerra, a company that aims to bring cutting edge manufacturing practices to the construction industry (certainly not the first, won’t be the last), recently wrote a piece for the McKinsey blog that starts out with a brilliant analogy contrasting the car-buying experience with that of buying a building:

Imagine you want to buy a new car. You find the make and model you want, select your interior and finish details, and place the order. The car company starts building the car to meet your specifications, and promises to deliver it in a few weeks.

But a few weeks turn into a few months and the car never arrives. It’s nearly impossible to get an answer as to why. When you ask you are referred to the person in charge of the chassis, who blames the engine guy, who in turn says the steel wasn’t delivered on time. You’re left trying to chase down multiple people over phone or email.

Finally, after nearly a year, you get your car. But it arrives with a bill for 30 percent higher than the original quoted price.

Nobody would dream of buying a car this way, yet this is how most construction projects are done in the modern world. Which begs the question: Why do we keep doing things the same way, expecting different results?

Marks’ solution, of course, is for the industry to follow business models similar to Katerra — basically a modern take on design-build, but with an integral supply chain management that emulates that of what perhaps Apple has. Essentially, it is moving the built environment from a project-specific approach to more of a product-based approach.

Is that the right answer for the entire industry? Maybe, but I don’t think that there is necessarily a one size fits all approach.

What’s the Point?

Once you see enterprise-oriented stalwarts like McKinsey, PricewaterhouseCoopers, Accenture, and publications like Wall Street Journal, Fortune, Fast Company, etc. banging the drum about disruption in a particular industry, you know something is happening. The same thing occurred in the tech industry starting in the late 1990s.

Since then, the largest and most profitable companies are no longer the petroleum behemoths, or the railroad and steel firms that preceded them, but are now tech companies like Apple, Alphabet, Amazon and Facebook. For the right companies that seize the opportunities currently in the marketplace, the next decade could be extremely profitable.

So the question is, where will you be as the construction industry continues to morph into something completely different? Will you be a leader and an agent of change spurring progress along? Will you be “doing things the way you’ve always done them” while actively discouraging progress?

Or will you be on the sidelines, simply watching the parade go by without you?


Image of handwriting on the wall courtesy Wikimedia