The Age of the Services Contractor

Thursday, July 31st, 2014
liked this article
Engineering Education Australia – 300 x 250 (expire Nov 30 2016)
mechanical services contractor
FavoriteLoadingsave article

Creating certainty in the construction process is now directly impacting on the roles of the contractor and sub-contractor within a build.

Technology is focusing the minds of those in the trades and services from doing something efficiently to creating greater productivity and thus positioning themselves to be involved in the design process much earlier. As a result, we appear to be on the cusp of a shift in the status of who drives the design – should it be the services contractor?

Path to prefabrication

The initial formal signs of change in the services sector of construction in the US date back to early 2002 and are defined by the research conducted by the Mechanical Contracting Education and Research Foundation. Their industry analysis of the opportunities and threats to members culminated in the publication of the report entitled Five Key Trends for the Future of the Mechanical Contracting Industry, published in March 2005.

It was within this research that the question was asked of the mechanical contractors industry “why does it seem like I am doing the work of the General Contractor without the pay?” The research focused clearly on emerging technologies and the opportunities they presented to those in the trades in relation to developing closer relationships with those in the design process in order to improve productivity and reduce costs.

The report establishes a timeline of industry change where mechanical and electrical contractors have a real opportunity to lead project design by 2020. It may, however, be much earlier than predicted given the current pace of prefabrication and the development of the ‘frame’ of services that are built off site, something which is changing the entire nature of subcontracting services.

The report also clearly advocates a move toward reverse tendering, an innovative procurement technique and a direct outcome of setting the cost strategy at the concept and design phases. The result is an executable file that becomes the project’s living cost plan and provides all the elements to set a firm pricing schedule for the project.

In non-competitive markets, reverse tendering reduces risk, and expedites and simplifies the tender process by placing the focus on rates rather than the uncertainty that can manifest through tender or auction.

Future form – permanent modular construction

Much more recently, industry organisations are focusing attention on how quickly prefabrication is changing; we are already moving toward permanent modular construction as a viable build option in large scale commercial projects.

In the US, the Modular Building Institute, which represents more than 250 companies operating in 15 countries, is championing the development of permanent structures offsite in a safe environment – structures which are being delivered to site, integrated with less waste and greater quality control. Some industry commentators are citing that building lifespans of more than 50 years are achievable.

Whilst prefabrication is clearly not a new concept, product improvement and increased demand have brought it back into the spotlight. Currently the key saving is time, but improvements in technology and large scale manufacturing will also lead to cost reductions.

When McGraw Hill released its SmartMarket Report: Prefabrication and Modularization in 2011, it specifically recognised the re-emergence of prefabrication and modularised components and how BIM technology was enabling their greater integration. Of the 800 architecture, engineering and contracting (AEC) professionals surveyed, more than two thirds reported significant productivity gains, including:

  • 66 per cent reporting that project schedules are decreased – 35 per cent by four weeks or more
  • 65 per cent reporting that project budgets are decreased – 41 per cent by six per cent or more
  • 77 per cent reporting that construction site waste is decreased – 44 per cent by five per cent or more

Prefabrication not only has the ability to enable trends such as BIM, but it also becomes more prominent because of these technologies. By bringing multiple innovative technologies and processes together, it improves productivity in the industry by implementing different systems to achieve the desired outcomes rather than simply speeding up the same myopic process which will not achieve true productivity gains in the long term.

The highly acclaimed T30 Hotel in China is an example of this and continues to steal headlines for its success in modular construction. The building was erected in just 15 days with over 90 per cent of construction taking place in manufacturing sites, streamlining processes that removed impractical and tedious tasks and resulted in impressive eco-credentials.

Whilst it may be some time before Australia embraces this level of engineering in prefabrication, a number of the key players in the modular and prefabricated industry are working to develop new products.

Expanding the scope and blurring the boundaries for subcontracts

The trend toward prefabrication of building components has the potential to blur or change the traditional subcontract boundaries entirely in Australia. BIM is already enabling prefabrication of services racks in corridors and risers. These racks are being fabricated by the mechanical services subcontractor, who is allowing the space for electrical, hydraulic and fire services to be installed by those subcontractors in the mechanical subcontractor’s workshop. The other services subcontractors are then charged for the benefit that has been created for them.

In the US, it’s a slightly different experience where the mechanical subcontractor is using his own plumbing and electrical staff to complete the work that was traditionally done by other subcontractors. In effect US mechanical subcontractors have expanded their traditional scope to include multi-services within building trunk zones and this trend has reduced the scope of the electrical, fire and hydraulic packages.

It will be interesting to see if the US approach becomes the norm in Australia. At a time when our balance of trade figures are already heavily skewed by imported consumer goods in Australia, utilising local innovation and technology can produce a highly valued product that will be more cost-effective and adaptive to our needs than one mass produced off-shore and sent by ship.

FavoriteLoadingsave article


 characters available
*Please refer to our comment policy before submitting