The Future of the Industry – 10 Years Later
By Greg Offner
Way back in 2013 I penned an article for Correctional News about the future of the Design and Construction Industry. I wrote about my thoughts, opinions, and musings that I came away with after attending a Construction Management Association of America (CMAA) owners conference in Long Beach, CA. The conference was a one day, all day discussion where the theme was “Future Focus”. The CMAA Foundation invited a panel of industry leading executives from CM and Program Management service firms, along with prominent owners of capital construction programs, for a brain-storming discussion of the future of our industry. Their consensus was “A new business model for construction project delivery is emerging and it will become the norm over the next five years.”
Back in 2013, experts believed this ever-evolving business model would “respond to owners and agencies increasing focus on outcomes rather than output, on life cycle rather than first cost, and on the triple bottom line of business, environment and social responsibility.” Further, discussions led toward a belief that in order to meet owner expectations, construction industry leaders will have to help them move construction away from site-based, craft-dominated processes toward a manufacturing environment. Yes, pre-manufactured / pre-engineered components made somewhere else will be delivered and assembled like an erector set fashion at your project location was the next trend.
At the time, my opinion was moving construction away from a site-based, craft-dominated processes toward a manufacturing environment was a huge leap, maybe too huge to be the “norm” in the next five years (2018). I judged a paradigm shift like this would require strategic alignments between designers, contractors and vendors in capital programs as well as more reliance on modularization, prefabrication, and off-site manufacturing of key components and major elements, including fair and reasonable contracts that shared the risks of pre-manufactured delivery and installations. What disturbs my sleep today; we are still, in my opinion, as far from realizing nirvana the total modular delivery in 2023 as we were in 2013.
Risk Continues to Drive the Deal
So far, too few Owners have bought into the concept of a “manufactured delivery process.” My suspicion is contractors have been reluctant to sign a contract that transfers the risks inherent in these multi-manufacturers to their bottom line for something yet to be demonstrated has worked successfully on a major project. There is little doubt today’s business model is driven by faster delivery and the most cost-effective use of available funds. The best deal is when contracts that put the risks on the party best equipped to manage the exposure. Regardless, the unknown has added hidden contingencies in bid pricing and contractors will have to take the risk if they want to play in tomorrow’s marketplace.
In tomorrow’s business model outcomes will require more predictability. COVID variants aside, labor is still an issue as is material availability. Back in 2013, the cost of Designing and Constructing a typical County Courthouse was below $400 per square foot, and one could complete a 100KSF Courthouse in less than four years, both design and construction! In 2023, the cost for the same facility is 2 to 3 times higher depending on the region of our country, yet the construction timeline has not moved much, if at all. Why? It may be the demand resulting from the post COVID era. Housing demand, pressure on the banking industry, inflation economy and lack of manufacturing capability driving prices. As such, despite using every tool in the toolbox, like comprehensive programming and planning concepts, virtual design in 6D with constructability reviews, anti-clash coordination, performance simulations for whole buildings, risk mitigation studies, and rapid connect-ability for pre-manufactured components and assemblies, the cost to design and build has risen dramatically. However, despite the labor issues, the time to design and construct has not moved much, particularly when compared to the price increases.
What’s keeping me up at night is the “Industry” is now blabbing all about A.I., Artificial Intelligence as the next “savior” of the industry. To date, the ability to demonstrate how A.I. will lower the amount of non-productive field labor hours or describe how A.I. will eliminate high risk field labor services hasn’t been proven. Regardless of its unproven capabilities, the “marketplace” is once again brainwashing consumers into believing something they say is right around the corner but is yet to exist in practicality. When I think back to the late 60’s and early 70’s, the Automobile industry drove the economy. Looking back to those Big 3 auto manufacturers’ decisions to focus on shareholders rather than consumers, demonstrated a flawed business model will drive you to ruin. Back then, the big 3 seemed to have a profitability plan that gave the consumer less quality for more money. They were experts at gaslighting marketing and sales. When the foreign car producers like Datsun and Toyota began offering the marketplace a better product for a lower cost, the big 3 suffered. This was the first time I heard the term “Buy American.” Patriotically we purchased these inferior Big 3 autos, falling victim to the same gaslighting perceptions ours is better, or better is coming soon, even though we knew better would never happen. It is still happening today.
The Future Business Model Will Need a Dose Of “Realism”
Given history tends to repeat itself, my nightmare is the manufacturing business model, which requires an integrated supply chain, and an endless supply of money will again, fail to meet the promise to deliver better, cheaper. In my current nightmare, there is a fairytale component that promises tomorrow’s design and construction industry will be more a manufacturing environment than labor-intensive stick build design and construction model.
Also, there will also be an increased sharing of risk, including the risks that accompany process innovation. Think Electric Busses. Public Construction will give way to privatization and tax dollars will be thrown at developers selling offshore wind turbines and pre-evaporated black water treatment systems, none of which have proven they work, and may never deliver what they promise but will be funded by taxpayer dollars because it sounds good. And to pile onto my miserable dream, performance testing and simulations will be run continuously, and six sigma methods will be the metric by which the end user products are tested and measured by an outside firm, paid with tax dollars to someone who has no accountability to anyone. These sage advisors will tell you the truth in such a way it will be hard to recognize as the truth. My nightmare, not yours.
Anything is possible, not many things are probable. Is it possible a complete pre-manufactured Jail Facility, once that work is done off-site, the remainder of the effort will be transporting complete buildings to the site for erection via light rail systems yet to be designed or constructed and installed by a crew who have never constructed a Jail? Is it possible? Maybe. Probable? Not likely in my lifetime. I know the above is a result of believing anything is possible but please, politicians and Industry leaders, don’t mislead, don’t forecast something is on the horizon that hasn’t been Beta Tested. This keeps me up at night.
The Times They Are a Changing
I like to think of myself as a progressive but there have been many changes in our industry in the last 10 years, at times I toss and turn wondering if there are more changes to come as quickly? Yes, in the Corrections marketplace, I believe there will be more reliance on technologies like BIM 5D/6D modeling, GPS and RF tagging for staff and inmate tracking, more 5G mobile device applications, Bluetooth collaboration, and use of AV surveillance, biometrics and access to secure social media platforms for visitation and video arraignment. Skype in the courtroom is out, Virtual Reality will be in? Who knows?
Consider the changes in our industry in the last 5 years and then think about a look ahead to 2028. Since 2015 there has been more engineering and fabrication being accomplished off-site and even more use of smart technology and unwired protocols in 2022 than there were back in 2013. We need to consider that our future will have professional services such as architecture and engineering, construction management and other project delivery elements will become part of a “goods and services” supply chain, more akin to commodity-based service with the creativity and thought leadership already in the product.
Think of the commodity-based service evolving into something akin to the automobile industry; several large companies, and giant factories with engineers, designers, and builders all under one roof, preparing a facility to ship to projects almost anywhere in the world. It can be done. You’ll be able to purchase a pre-manufactured Power Plant, or a Medical Surgery Center from Amazon! Then consider there are still those dreamers (nightmare inventors) that are promising 100% carbon freedom by 2028 with zero idea of how to get there. These charlatans will cause many sleepless nights!
The Treatment and Rehabilitation Alliance
For the past twenty or so years the Criminal Justice market sector, mostly the corrections industry has been evolving into an integrated supply-chain. The cyclical dwindling number of new construction projects have fostered a business environment, or as I prefer to call it, a criminal justice industry coalition. While some in the industry may not believe this alliance exists, be assured it does. There are “realistic” industry experts, many who attended the annual Corrections Summit in North Carolina, now in its 25th year, would agree an informal coalition does exist.
The Corrections Summit is not a good old boys club, rather, it is a gathering of industry agencies and suppliers, architects, builders, fabricators, vendors and practitioners. This is an invitation only 3-day seminar hosted by Correctional News. Invitees share a passion for the built environment and the development of humane residences, creating a normalized, therapeutic treatment environment for those in custodial care. This annual event fills a golf resort in Southern Pines, N.C. with corrections industry competitors, architects, engineers, builders and vendors who spent their Sunday – Tuesday sharing case studies, lessons learned and industry trends with representatives from several Public Sector representatives with a little golf thrown in the agenda. The common thread of the discussions and presentations is focused on the trends, what operators see, and how evidence-based outcomes rather than the processes can be improved. There was not one sales pitch given, no “my company or product is better than your company” commercials allowed. It is one of the best training seminars I have ever attended and hope to receive an invite every year.
When we consider how far we have “technologically” traveled over the last 10 years one can only assume more change is coming. Change will cause some sleepless nights to some of our old-line industry experts if there is resistance to change. We as an industry have also come a long way working in partnerships, treating one another with mutual trust and respect. No other marketplace using design and construction services, Healthcare, Education or Government can match the association of professionals like the Criminal Justice market sector. As change comes, and it will come, I can’t think of a better group of people to experience change with than our partners. Hopefully, the future will bring each one of the Correctional News advertisers, subscribers and readership a good night’s sleep, every night.
Greg Offner is a Criminal Justice Consultant serving the Planning, Design and Construction Community, a valued member of the CN Editorial Advisory Board, and a regular contributor to Correctional News.
Editor’s Note: This article originally appeared in the Sep/Oct Issue of Correctional News.