Industrialised Building System: The Critical Success Factors

Kamar, K. A. M.1, Alshawi, M. 1 and Hamid, Z. 2

1 The
Research Institute for Built and Human Environment (BuHu), University of Salford,
Salford, Greater Manchester, M5 4WT, UK
2 Construction Research Institute of Malaysia (CREAM), Level 10, Grand Seasons Avenue,

72, Jalan Pahang, 50772, Kuala Lumpur, MALAYSIA

Email: k.a.mohamadkamar@pgr.salford.ac m.a.alshawi@salford.ac.uk

zuhairi@cidb.gov.my

Abstract:
Industrialized Building System (IBS) has been identified as a potential method to
improve overall construction performance in term of quality, cost effectiveness, safety
and health, waste reduction and productivity. Whereas the advantages are very
plausible, the idealism behind the industrialised construction is far from being practical
and beneficial to the majority of contractors. This scenario leaves the contractors with
noticeable difficulties in implementation while remain to be competitive and profitable.
The limited take up is also associated with readiness issues and lack of previous
experience in IBS. Thus, the paper reviews literatures conserving Critical Success
Factors (CSFs) for contractors in implementing IBS. The paper validates the CSFs using
qualitative interview with the practitioners from Manubuild Consortium. In general, the
CSFs highlighted from both literatures and interview session are training and education,
leadership and organisation structure, cost management, supply chain and procurement,
information technology, site management, change management, optimisation, design
integration, capital expenditure planning and risk assessment. The CSFs derived from
this paper will be used as Benchmarking criteria in a study between IBS and traditional
contractors to capture best practices and improve contractor’s general readiness. The
result is not aim to be conclusive but rather a call for debate and obtains more feedback
from the audience.

Keywords: contractor, construction, Critical Success Factors (CSFs, Industrialized

Building System (IBS)

1 Introduction
Industrialized Building System (IBS) has been introduced to cope with a growing
demand of affordable housing, solving issues associated with foreign labours and
improving image, quality and productivity of construction industry. The limited take up
on IBS have triggered many research initiatives attempting to scrutinized the barriers
and seek the way forward. For contractors, the call to use IBS is less attractive due to
cost and risk issues, lack of professional trained in IBS, limited IT adoption and lack of

485
guidance (Pan et al. 2008; Pan et al, 2007 and Blismas, 2007). The transformation
process from traditional practice to IBS has left the contractors with noticeable
difficulties in IBS implementation while remain to be competitive and profitable. To
date, there has been little discussion about the Critical Success Factors (CSFs) of
contractors which transformed from traditional contractor to IBS. Therefore, the paper
tends to investigate the CSFs on the perspective of contractors involve in IBS as
reported from the literatures. Then, the paper validates the CSFs trough a pilot interview
with representatives from the Manubuild Consortium. Manubuild Consortium is a
technical group established among key construction organisations across Europe to
promote the concept of Open Building Manufacturing (OBM). Manubuild’s
establishment is also a wake up call for radical paradigm shift from the current 'craft
resource based' construction towards 'open building manufacturing' that enable high
customised building using manufacturing in open market and assembling them
efficiently on site (Eichert and Kazi, 2007).

2 Research Methodology
This paper is a preliminary study to a PhD research on IBS implementation among the
contractors. This paper has been divided into four parts. The first part deals reviews and
analyse the current state of IBS implementation including the barriers, push and pull
factors and enabling factors which affected IBS implementation. The second part
investigates literatures conserving the CSFs for contractors to embrace into IBS
construction. The third part is report on pilot study to validate CSFs and the final part is
discussion and conclusion derives from evidence commencing both the literature
reviews and the pilot study. First, the paper use literature review to investigate existing
evidences conserving CSFs in IBS implementation. Then, the paper applies unstructured
interview and open discussion within the pre-determined context to validate the CSFs.
The qualitative method permits informal setting that natural reflects the reality of what
happen in the real setting. This approach also allows the researcher and the participants
to probe each argument in details and obtain rich and more complex data in term of tacit
knowledge, perception and human experience in which can not be measured in
quantitative approach. The authors imposed a careful selection process of the
participants which has need a compulsory high degree of knowledge and direct practice
in the area of IBS to construct some validity and robustness of the method. The authors
also appointed an experience moderator to lead the discussion and to avoid any ‘leading
question’ which can influence the data validity. In addition, the authors have ensured
that the participants are aware of the aims, objectives and methodology of the study.
Though the paper make some action to establish validity and reliability in
constructivism setting, caution must be applied as the findings might not be representing
the whole scenario construction industry thus more data collection need to done.
Therefore, the result is inconclusive but rather a call for debate and obtains more
feedback from the audience. Further data collection is required to determine exactly
how CSFs effect the transformation of IBS contractors.

3 Relation of this Paper to Overall PhD Research Study

The CSFs which have been identified in this paper are the criteria in Benchmarking
study in the later stage of the research. The main study involves a comparison analysis

486
between the conventional contractors and IBS contractors in order to identify process
and functionality gaps. Multiple case studies and analysis will be conducted between the
Manubuild Consortium’s members and Malaysia G7 contractors. The Benchmarking
process is divided into three different phases (planning, benchmarking and
implementation) and 12 steps of continues stages as depicted Figure 1. At the end of the
research, the study will has to propose recommendations to improve readiness among
traditional contractors and construct a framework for the transformation process. Hence,
the following discussions of this paper are dedicated to map the barriers, drivers and
enabling factors, identify the CSFs and validate the result trough a pilot interview.

PHASE 1: PHASE 2: PHASE 3:

PLANNING BENCHMARKING IMPLEMENTATION

START Design Data Share Finding &

Collection Method Recommendations

Literature Reviews
Selection of Design
Companies Implementation Plan

Identify CSFs
Implement &
Monitoring
Data
Pilot Survey Collection:
(Current Research Stage) Case Studies Conclusion

Determine Scope,
Measurement and Analysis & Report FINISH
Limitation

Figure 1: The Benchmarking Model

4 Scope of the Research

The contractor is the firm that is in prime contract with the owner for the construction
project, either in its entirety or for some designated portion thereof. Contractor
responsible to organize, plan, schedules and control the field of work and liable for
getting the project completed within the time and cost limitation. Although, IBS
implementation involves various parties along the supply chain for instance the
manufactures, clients and designers, the paper will only focus on the contractor’s
perspective and aim to identify CSFs for contractors to embrace in IBS. The contractor
or building contractor deals with project management activities and therefore they are
responsible for installation of components (assembler) at site. The term contractor is
used throughout this paper to represent building contractor or installer as a matter of
simplification.

487
5 IBS Definition
To date there has been no one commonly-accepted or agreed definition on IBS.
However, there are a few definitions by researchers who studied into this area
previously emphasizing on the concept on pre-fabrication, off-site production,
manufacturing and mass production of building components (Rahman & Omar, 2006;
Lessing et al. 2005; Thanoon et al, 2003 and Warszawski, 1999). The paper selects
definition of IBS as a construction technique in which components are manufactured in
a controlled environment (on or off site), transported, positioned and assembled into a
structure with minimal additional site works (IBS Roadmap, 2003).

6 The Critical Success Factors (CSFs) Definition

The CSFs first appeared in the literature in the 1980s when there was interest in why
some organizations seemed to be more successful than others and research was carried
out to investigate the success components and also those things that must be done if a
company is to be successful (Ingram et al., 2000). While a variety of definitions of the
term CSFs have been suggested, this paper will use the definition first suggested by
Bullen & Rockhart (1981) who saw it as the limited number of areas in which
satisfactory results will ensure successful competitive performance for the individual,
department, or organization. They added that, CSFs is the few key areas where things
must go right for the business to flourish and for the goal to be attained. The CSF
approach to identifying and measuring an organization’s performance was developed
and became well-established under the work of Bullen & Rockhart (1981) and Rockhart
& Crescenzi (1984). In the context of this paper, the CSFs is identified and will be used
as criteria for a Benchmarking study as proposed by Camp (1989) and other researchers.

7 Pull and Push Factor of IBS Implementation

Several studies investigating pull and push factors in IBS implantation (Pan et al, 2007;
Pan et al, 2008; Blismas et al, 2006; Thanoon et al, 2003 and Warszawski, 1999). The
pull factors that encouraged the use of IBS are quality improvement, reduce defect,
reduce site duration, housekeeping improvement, waste reduction, saving in the use of
manual labour, incentive from government and cost saving. On the other hand, the push
factors that encourage the adoption are reduce in safety & health risk, addressing skills
shortage, dealing with environment and sustainability issues, client influence and
government policy.

8 Barriers and Enabling Factors

Despite the plausible advantages, IBS implementation had to face shortcomings as
highlighted by recent literatures and reports (Hamid et al. 2008; Pan et al, 2008;
Hussein, 2007; IBS Review, 2007; Pan et al, 2007; Blismas et al, 2006 and CIMP,
2007). The barriers for the adoption are cost issues, poor knowledge, resistance from
customers and professionals, misunderstand of building regulations, increase in risk,
complex interfacing between systems, market monopoly, IT integration, few code and
standard, lack of integration in design stage, manufacturing capability, legal and cultural

488
issues. Nevertheless, several enabling factors has been identified to improve the
adoption mainly come from government initiatives. The enabling factors are the demand
and market share (Goodier & Gibb, 2006), Research and Development (R&D) (Hamid
et al, 2008), government promotion and incentives (Pan et al, 2007 and CIMP, 2007),
political lever (Pan et al, 2008) and standard plan, apprentice on-the job training
program, testing and verification program and vendor developing program (Hussein,
2007). Figure 2 depicted an overview of IBS implementation in the perspective of
contractors.

Barriers – cost, poor

knowledge,
resistance from
customers and
professionals,
building regulations,
increase in risk,

The Nature of Push Factors- reduce

Construction in safety & health
Industry – risk, skills shortage,
fragmented industry, dealing with
issues on foreign environment and
labour, demand in CRITICAL sustainability issues,
housing, image & SUCCESS client influence and
FACTORS
(CSFs)

Pull Factor- quality Enabling -demand

improvement, reduce and market share,
defect, reduce site Research and
duration, Development
housekeeping (R&D), government
improvement, waste incentives, political
reduction, saving in lever, standard plan,

Figure 2: An overview of IBS implementation of the perspective of contractors

9 The Critical Success Factor (CSFs)

In most of construction contract both using IBS or traditional, the contractor is given an
opportunity to set the price which is in tender or bidding phase. From that point, the
profits are determined from the contractor’s abilities trough the project management

489
team to save money from project sequences. As such, the only way a profit can be
generated is trough better planning and the skill to make good and prudent decision.
Putting this argument into perspective, the transformation from conventional to IBS
required tremendous focus to several critical areas which are important to achieve a
transformation goal and at the same time gain benefit and profit from it. While variety
of definitions of the term CSFs have been suggested, this paper will use the definition
first suggested by Bullen & Rockhart (1981) who defined it as the limited number of
areas in which satisfactory results will ensure successful competitive performance for
the individual, department, or organization and as the few key areas where things must
go right for the business to flourish and for the goal to be attained. The CSFs for
contractors to embrace in IBS construction are highlighted as follows:

a) Training and Education

Historically, the construction industry had a poor record at investing into training and
education (Ball, 1996). The large proportion of construction industry workforce are
general labourers with narrow skill based and limited training. Although IBS is used to
address the skill shortage in construction industry, some evidence suggests that a skilled
workforce in specific skill areas like integration, coordination and assembly are become
more important to IBS due to a different undertaken roles and project methods.
Therefore, a broader and comprehensive training program must be taken on board to
cater vast demand in these specialised skills (Clark, 2002; Palmer et al, 2003 and
Goodier and Gibb, 2004). (Pan et al, 2008) and (Housing Forum, 2001) claim that IBS
required a high level of technique and precision compared to traditional method.
Evidently, the high level of specialities is derived from high level of training and
professional education. By taking the above mention points and arguments, an
investment in training to master IBS skills is inevitable and critical to contractors to
succeed in IBS. According to Goodier and Gibb (2006), developed training program
should have focus in adopting the role as system integrator at site with a full amount of
responsibility in coordination and integration activities. Thus, the training equipped the
workers with a clear understanding on issues related to implementation, monitoring,
handling and installation of building components.

b) Leadership and Organisation Structure

A strong leadership in both institutional and management level are important in order to
convince the decision makers, customers, clients and own organisational hierarchy on
the lead to use innovative technology such as IBS. In strategic point of view, the
leadership with high level of technical competence will ensure prudent risk taking,
targeting specific target market (Bleyse and Manley, 2004) and therefore ensure the
contractor firm will sustain in a competitive market of construction industry. Good
leadership attribute is also important to deal with cultural issues, internal resistance
towards IBS and introducing collaborative work at site and design office. Previous
studies have reported that organizational rigidity is a barrier to innovation adoption in
construction organisation (Nam and Tatum, 1997). An organisation structure which is
more open and supportive to innovation will has more tendency to be successful in
adopting new construction method and more likely to be an organisation that are
favourable and supportive to IBS implementation

490
c) Information Technology

IT has proved to be an important key enabler in product design and much likely to be
implemented in the construction industry. In manufacturing, a large scale and complex
engineering projects as the development of the ‘Airbus A380’ aircraft are only feasible
by using simultaneous and concurrent engineering interwoven with suitable 3D design
toolkits (Jaeger, 2007). Similarity to an advance and more complex construction
technology for instance the modular houses and mass-customisation can only be
developed and produced using an extensive and interwoven IT tools. Eichert and Kazi
(2007) and Hervas and Ruiz (2007) point out that IT improve tendering, planning,
monitoring, distribution, logistic and cost comparison process by establishing
collaborative design integration, accurate data and effective dealing with project
documents. Verweij and Voorbij (2007) and Oostra and Jonson (2007) identifies the
role of IT tools which are to establish communication between project team and
suppliers and as a medium for quality control of overall project deliveries. The
communication channel and integration enable effective ‘feedback-respond’ activities
between design and production where errors are discovered early and problems in the
manufacturing and assembly phases can be avoided (Lessing et al. 2005). InPro system
is one of the IT tool developed to improve design integration. InPro system is an
advanced system of integrated design, analysis processes and decision-support
developed based on existing IT tool. The tool will radically improve collaboration and
integration between design, manufacturing and assembly process (Jaeger, 2007). One of
major the drawback to IT implementation is higher initial cost. Moreover, the
development and implementation of the system required highly skilled personnel which
eventually discouraged some contractors due to the cost issues (Abderrahim et al. 2008)

d) Cost Management

Evidently, cost impact is the major barrier to IBS implementation (Goodier & Gibb,
2004; Vanables et al, 2004 and Pan et al, 2007). In general, contractors are likely to
maintain tight control over the budget and schedule to guarantee profit margin.
Therefore, the use of IBS demands careful and detailed cost planning and management
at all stages (Sanderson, 2003). Good cost comparison analysis tools are critical to
support decision making in choosing IBS over the conventional method. The contractors
need a framework for comparing costing solution in more holistic manners (Blismas et
al, 2003). Pan et al. (2007) also draw attention to balance and transparent comparative
costing framework for IBS project. Tool such as IMMPREST (Interactive Model for
Measuring Preassembly and Standardisation Benefit in Construction) toolkit describing
details the measurement of risks and benefits of using prefabrication (Blismas et al,
2003). Better cost data lead the contractor in pursuit of systematic costing and
estimating tools for tendering phase.

e) Supply Chain & Procurement

Historically, the industry relationship between the main contractors and its suppliers is
comparable to 'master to servant' relationship where there are lacks of togetherness and
the information protectionism is widespread over the industry (Faizul, 2006). To worsen
this situation, current state of supply chain in the construction industry are fragmented
and underpinned by poor communication, adversely relationship and lack of trust,

491
commitment (Hong-Minh et al, 2001) and relationship between parties has been driven
by the cost agenda (Wood and Ellis, 2005). The suggestion to improve procurement
system and supply chain to enhance IBS adoption was proposed by Hong-Minh et al.
(2001), Vanebles et al. (2004) and Goodier and Gibb (2004). One of the plausible
recommendations is partnering and strategic alliance approaches to project delivery in
creating a shared project vision and developing complementary objectives between
project participants. In his analysis on Supply Chain Management (SCM) of IBS, Faizul
(2006) identifies good supply chain characteristics consist planning and management of
all activities including procurement, conversion, logistic and coordination between
contractor, suppliers, intermediaries and third party solution providers within and across
the company structure. Partnering with suppliers and component’s manufactures from
the early stages of project sequence is significant to ensure efficient and timely delivery
of supply and specialised work with high quality of products. Nevertheless, partnering
has not escaped criticism from observers. Although good partnering with suppliers and
subcontractors is important, the competitive tendering system mean, the contractors
must see price as overriding feature and frequently it mean inability to offer repeat
business (Gray and Flanagan, 1989). It make contractors tend to be independent and
choosing the lower tender bid to archive competitiveness.

f) Site Management & Process

In contras to the traditional method, the design, manufacture, assembly and other related
processes in IBS project requires more coherent structure of process planning and
control in order to reduce defects and errors (Gibb, 2001) (Warszawski, 1999). In
general, the contractor was responsible to organize, plan, schedules and control the field
of work and become the system integrator of whole construction process at site.
Therefore, contractors equipped with systematic planning to manage complexity in
transportation, logistic and interface between systems (Pan et al. 2008; Hamid et al.
2008 and Blissmas, 2007). One of the important aspects in planning and monitoring
internal process is standardisation. Standardization as observed by Voorbij (2007)
reduced project costs by process simplification, increase efficiency, simplifies
communication, reduced time to align business processes and systems and improved
utilisation of human resources. However, some of notable drawback to standardisation
is argument that it more concern about the process or way in which the organisation
goes about their work but not the end result. It contributes to a lack of focus on result
orientation process and it will not encourage innovation adoption (Ranns & Ranns,
2005).

10 Pilot Interview to Validate the CSFs

This paper aims to validate and cross-reference the CSFs with the practitioner’s
perspectives and point of view. Thus, the pilot interview was conducted with
representatives from the Manubuild Consortium using unstructured interview approach
and open ended discussion to the context related to IBS. After a lengthy deliberation,
the paper suggests the CSFs from the practitioner’s point of view are:

Risk assessment and risk mitigation to deal with ‘trail and error’ stages normally
at the early phase of the transformation process

492
 Strategic alliances and partnering in supply chain procurement including strong
connection and support from mother company in some cases

Design integration to deal with changes in design and improve construction

buildability

Change Management and ‘occupational physiologist’ approach to deal with

cultural issues and reluctant professional

Measuring productivity in both off-site and on-site project sequences

Institutional and management leadership to convince clients to use IBS

Prudent cost management and financial with detail calculation on cost and
investment projection

Optimization on design, process and project sequences by having a detail

program and understand the complex process

The need to have specialised skills in certain areas

Identify market prospect and capital expenditure (CAPEX) requirement

Long tem planning and realistic time frame

New procedure, business approach, investment planning

A comparison between data conserving CSFs in literatures and results from pilot
interview reveals the significant relation. Thus, the pilot interview validates findings
which highlight the importance of training and education, site management, IT, supply
chain and cost management. For the purpose of this paper, the CSFs identified in both
the literatures and pilot interview were classified into three categories which are process
and program, people and industry. An overview of CSFs for contractor to embrace in
IBS is depicted in Figure 3.

493
 Process and People Industry
Program

Site Management Cost Information Training and Leadership Change Supply Chain &
Management Technology Education Management Procurement

Optimization Risk Assessment Design CPD Partnering

Integration

Standardization CAPEX Analysis Communication Apprenticeship Individual Strategic

Alliance

Planning and Cost Database Co-ordination Labour Training Organization Supply Chain
Control Set-Up Management

Measuring Lean
Productivity Construction

Figure 3: The Critical Success Factors (CSFs) of Contractor to Embrace in IBS

11 Discussion and Conclusion

Industrialised Building System (IBS) has been identified as a potential method to
improve overall construction performance in term of quality, cost effectiveness, safety
and health, productivity and waste reduction. Nevertheless, the large numbers of
building contractors are reluctant to use IBS due to cost factor, lack of previous
experience, increase in project risk and lack of professional trained in IBS. The paper
investigates the CSFs which are limited numbers of areas that ensure successful
competitive performance and IBS adoption. First, the paper depicted an overview of
IBS implementation including the barriers, pull and push factors and enabling factors.
Second, the paper presents the literature review conserving the CSFs of IBS
implementation in perspective of contractors. The CSFs highlighted in this paper are
training and education, leadership and organisation structure, cost management, supply
chain and procurement, Information Technology, site management and cost
management. Third, the pilot interview was conducted to validate CSFs derived from
the literature reviews. In general, pilot study report reveals a significant relation
between factors highlighted from the literature and the data obtained from the interview
thus the paper concludes that the CSFs were accepted and validated at some point.
However, with only one interview conducted in the pilot study, caution must be applied
as the findings might not be representing the whole scenario construction industry.
Nevertheless, the authors have taken several actions to improve validity and reliability
according to methodology in constructive epistemology. The pilot interview also reveals
additional factors to be considered as CSFs which are risk management, business

494
planning, optimisation, measuring productivity and Capital Expenditure (CAPEX)
analysis. The respondents are even suggesting the appointment of ‘occupational
psychologist’ to deal with cultural issues involving professionals. Finally, the CSFs
were classified into three categories which are process and program, people and
industry. Apart from identifying and validating the CSFs, the paper also concludes two
things; first, the adoption of IBS required focus in both hard and soft issues. Second,
contractors play different roles in IBS which is more towards assembling or system
integrating role which requires careful attention to critical area both in process, people
and its relation to the industry. The CSFs will assists in our understanding of the role of
contractors in IBS project and therefore improve overall readiness among the traditional
contractors. The CSFs derived from this paper will be used as criteria to benchmark a
process gaps between IBS and traditional contractors, capture the success elements and
improve general readiness among the traditional contractors.

12 Acknowledgment
The author would like to acknowledge Manubuild Consortium, Taylor Woodrow
Limited, CORUS Living Solutions and the Research Institute for Human and Built
Environment (BuHu), University of Salford for their contribution to this paper.

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