Skanska's 'flying factories' take off in Slough

2nd October, 2015

Supply chain issues with offsite manufacture have often eroded the advantages for Tier 1 contractors. But now Skanska is trialling its own 'flying factories' - launched from a trading estate in slough. Tom Ravenscroft reports.

With my head full of scenes from sci-fi films – automated robots buzzing around a neon-lit levitating manufacturing plant – I set off to Skanska’s latest “modern flying factory”. Arriving at an anonymous trading estate in Slough in the rain, reality soon caught up with me. But although not the futuristic vision I was expecting, what I did find in this atypical warehouse was an innovation that could dramatically increase the use of offsite manufacturing in construction.

What sets apart the modern flying factory from existing permanent offsite facilities is that, in Skanska’s concept, manufacturing takes place in a temporary facility, rented for the duration of the offsite programme. Once the last prefabricated component has been shipped to site, the factory will close its doors, and Skanska will be ready to “fly” to the next location without carrying the ongoing costs of a permanent facility.

The pilot project in Slough, which will fabricate fully serviced “utility cupboards” for flats in Phase1 at Battersea Power Station, has been supported by a £750,000 grant from Innovate UK. Mark Wray, Innovate UK’s lead technologist of low impact building, said: “We believe that offsite manufacturing has a significant role to play in making the construction industry more efficient, but making it more affordable is crucial to increasing uptake. The biggest barrier at the moment is that offsite manufacture is established in a building, tied to a fixed location, with all the associated costs.”

The theoretical benefits of offsite pre-assembly and prefabrication have been well accepted by the industry, with reductions in time on site, improved quality and reduced total costs well documented. However, large-scale offsite manufacture still remains a rarity on UK construction projects – and where it has been implemented, the results have often been disappointing (see below). Asking why this remains the case set Skanska on the journey towards the modern flying factory.

It realised that three major barriers remain for widespread adoption of offsite manufacturing: the large amount of initial capital investment required; the high transport costs associated with delivery; and the financial instability of offsite manufacturers. Both Skanska and Innovate UK believe the temporary nature of the modern flying factory, along with the flexibility it affords, offers the solution to all three of these problems.

By taking a temporary lease on a unit in the Perth Trading Estate in Slough to establish its modern flying factory (above) Skanska can carry out high-tech prefabrication work (below) in a protected environment

The term “flying factory” was coined by straw-bale and offsite fabrication specialist ModCell, which is also a partner on this research project, to describe the near-site temporary manufacturing plants it previously established at farms to construct laminated timber and straw-bale panels for housing projects in rural locations. But in Slough, ModCell’s initial concept has been adapted for a much more complex prefabrication process.

Sam Stacey, head of innovation at Skanska UK, explains: “ModCell informed the concept. We saw what they were doing and thought we could make it much more high-tech.”

To set up its first modern flying factory Skanska has taken out a 12-month lease on a 400 sq m industrial unit on the Perth Trading Estate in Slough. Both the modules being created in this factory and the methodology used to organise the programme of manufacture have become much more advanced. At ModCell’s first flying factory 30 relatively simple timber and straw structural panels were constructed, while Skanska is fabricating 540 extremely complex utility cupboards.

These steel-frame units, typically around 2.4 m tall and 1.7 m wide, house the majority of the MEP components of an individual flat – including the ventilation and heating units, electrical distribution boards and washing machine fittings.
The pre-wired and pre-tested cupboards, complete with internal finishes, are then shrink-wrapped and transported down the A4 to Battersea. Here, as part of Skanska’s delivery of the M&E works for Carillion, they are being incorporated into the Circus West apartment blocks on the first phase of the power station redevelopment.

Creating these modular services units in a controlled environment has dramatically reduced the number of trades needed on site, and increased the efficiency of installing the apartments’ MEP systems.

Adam King, a carpenter working in the warehouse, is so enthusiastic about the flying factory I began to have suspicions that he was planted by the Skanska media team. Asked whether he preferred to work on site or in the factory, King was emphatic. “There’s no comparison to working on site. It’s dry, more comfortable and when I go home I can just put my tools down, and know they will be here in the morning. On site it takes a lot, lot longer. If you imagine tramping around each flat, finding fixtures and tools, you get the idea. Here everything is right where I need it.”

Like any manufacturing process, the repetitive nature of the tasks performed is perfect for continuous improvement. Through a process of evaluation and adjustments, combined with digital modelling of the spaces, the production process has been refined to further increase the benefits of working offsite.

King sounds empowered by the whole process. “We’ve got it to the point where it all runs seamlessly now,” he says. “One guy works on a unit, and when he’s done he moves on down the line and the next person comes in. Here we are all aiming for the same target. It’s the closest I’ve ever worked with sparkies – usually we are fighting for space, but here there is enough room for everyone.”

The target for the project was to combine the benefits of offsite with virtual-reality-enabled supply chain management and process improvement, to achieve a 28% reduction in cost compared to typical manufacture, and 30% shorter programmes, providing a higher-quality and more predictable build cost.

According to Stacey, this has been achieved: the factory is now creating 16 cupboards a week. Installing this amount of MEP onsite would take at least two weeks, meaning that Skanska expects to see a saving of 50% in labour costs along with an increase in speed of delivery by 50%. Quality has also been increased, with early reports indicating a reduction of first-round process defects by more than 50%.

Carpenter Adam King works in the warehouse to complete the utility cupboards (above right) which are then transported to the flats in Battersea

Although these savings are impressive, it is the flexibility in location and programme with low start-up costs that a flying factory offers that Innovate UK believes holds the key to increasing the use of offsite. Wray explains: “At present the high level of capital investment needed to establish an offsite manufacturing facility means that it is not feasible unless you have a large funding mechanism. These prohibitive set-up and operating costs are why we don’t see offsite more in the mainstream, and this [the modern flying factory] goes some way towards solving this problem.”

As well as lower start-up costs, the temporary factory is more financially stable as there is no possibility of down time or under-utilisation of space. In Slough the factory occupies an unused warehouse, and although the monthly rent is higher on a short-term let, the contract will only run for the length of the build. Having overhead costs directly linked to an individual project dramatically increases financial viability.

“At the moment there is a perceived risk in using offsite manufacturing,” says Stacey. “The primary issue if you go down the offsite route is the lack of financial stability. A project is reliant on the delivery of offsite manufacturers but fluctuating workloads means they are at greater financial risk, with these companies seeming to go bankrupt more regularly than other suppliers. Anecdotally I hear this a lot from project delivery teams.”

In the future Skanska envisions the temporary factory concept being adopted by third-party offsite manufacturing specialists, however, in Slough it has not only taken financial responsibility for the premises but is directly employing the electricians, carpenters and plumbers working in the factory. This is something that Stacey believes the industry may
see more of.

“Typically at Skanska we outsource all trades, but in this case we are directly employing,” he says. “In the future we may take a bit more in-house. In order to be competent working with new technologies we will need to develop these skills in-house. Then we can consider how to   export them.” He continues: “One major benefit that has emerged as the project has progressed is that we have absolute visibility and control.”

Perhaps the most obvious advantage of the flying factory model is the ability to locate the manufacturing process in the optimum location. ModCell’s factories are often set up near the building site, on a farm where the straw is produced. This dramatically reduces the transport costs.

Although Slough is just over 20 miles from Battersea, high prices and low availability of space in central London meant positioning the factory closer to the site would have been financially unviable. An optimal location for a modern flying factory will be based on a balance of logistics, where raw materials are coming from and where the components are needed, combined with availability of space, local workforce and rental values.

The culmination of this research project will be the creation of a guidance “toolkit” alongside a decision-making matrix that will allow Skanska to best assess the suitability of a project for offsite manufacture, which elements of a project can be produced offsite, where this can be done and how much space is required.

Along with developing the technologies and a toolkit, Stacey is aware that attitudes need to change. The company is involved in the establishment of the Offsite Management School, funded by the UK Commission for Employment & Skills. The school aims to educate the supply chain on what is needed to develop offsite capabilities.

“The challenge we face is getting people to adopt,” says Stacey. “There will always be people who want to do things the old way, so we have to make it as easy and as integrated as possible. Then we can really demonstrate the benefits and why they should change their behaviours.”

Although the next deployment of the modern flying factory has not been secured, Stacey is confident that the concept will become a integral part of Skanska’s offering. “This has been a big step up and we are already in discussions with project teams internally at Skanska to make an even larger step change,” he says.

Wray at Innovate UK shares his confidence in the concept, saying: “Based on the feedback we have received, this is a viable solution that will be well received by the industry. This is not just for the big players like Skanska and Laing O’Rourke, but also SMEs. We believe the lower start-up costs offered by flying factories will appeal to smaller players.” And if that’s the case, the future of offsite really would take off.

More than any other contractor, Laing O’Rourke has been driving the offsite manufacturing agenda in construction. It has invested heavily in its offsite facilities in Steetley, Nottinghamshire, and can now deliver an extensive range of modular solutions, from columns, beams and sleepers to smart walls and building systems. The “kit of parts” construction system called Design for Manufacture and Assembly (DfMA), has been deployed on prominent projects including RSHP’s Leadenhall Building (the Cheesegrater) and Cancer Centre at Guy’s Hospital and the £450m Francis Crick Institute (pictured).

Although offsite promises savings in time and cost, Laing O’Rourke’s early investment has seen the company run into financial difficulties. According to its 2014/2015 results, the company’s Europe Hub made a £57.5m pre-tax loss, which it attributed to reliance on DfMA on three loss-making UK projects.

In its annual report, group finance director Stewart Mcintyre said: “Exceptional operating costs of £61.2m were recognised in the year, which relate to three first-generation DfMA UK construction contracts which were adversely impacted by input cost inflation and delays in delivery using new construction methods.”

These projects were tendered during the price-driven recession market, and impacted by the rising cost of labour, materials and subcontractors. But it seems that shortened build programme combined with taking the supply chain in-house seems to have impacted DfMA projects more than others.

In the report, Europe Hub managing director Paul Sheffield, said: “The issue [of increased costs] was further compounded by the accelerated deployment of our DfMA approach which placed additional strain on our project delivery resources and critical path activities due to the shorter build programmes, as we brought new products and processes to market.”

Despite these losses Laing O’Rourke remains committed to offsite, stating: “The next generation of DfMA-led projects is showing early signs of success.” It will be building a new Advanced Manufacturing Facility (AMF) dedicated to modular housing and earlier this year was awarded £22m towards the £105m cost of this.

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