2005:65

LICENTIATE T H E S I S

Timber Volume Element Prefabrication Production and market aspects

Matilda Höök

Luleå University of Technology Department of Civil and Environmental Engineering Division of Structural Engineering - Timber Structures 2005:65|: -1757|: -lic -- 05⁄65 -- 

Luleå University of Technology LTU-LT 2005:65

Dissertations from Wood Works, the cooperation between Luleå University of Technology and Linköping University, Institute of Technology No. 8, Licentiate thesis

Timber Volume Element Prefabrication Production and market aspects

Matilda Höök Luleå University of Technology Department of Civil and Environmental Engineering Division of Structural Engineering – Timber Structures Luleå, November 2005

I. ACKNOWLEDGEMENT This thesis is the result of a process. A process of irresolution and doubt and a process of increased knowledge and insights. During this process I have met persons of whom I would like to mention some that have influenced my journey: Lars Stehn, head of the Division of Structural Engineering – Timber Structures, for your encouragement and guidance and for your engagement. Without you and your ability to inspire, this process would never have started, and this thesis would never have seen daylight. Persons at my case companies that have been the major sources of information in this research project. I would like to thank you for letting me take part in your knowledge and for the inspiration you have given me. I will especially acknowledge Clas Sjöberg, Erling Lind, Georg Svensson and Stefan Lindbäck. Thanks to all my colleagues at Timber Structures in Luleå, for the joy you have given me and your helpfulness. To my family and Mikael, for always having supported me when the process of life come between. My two four-legged best friends, for all our fruitful discussions about life and research, and Christofer, who makes me laugh even when work is trying. Finally, I would like to acknowledge the financial support from Kempe research foundation that has enabled this research project.

Luleå, November 2005 Matilda Höök

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II. ABSTRACT Improvements to cope with problems as lack of competition, quality and increased costs within the Swedish housing construction industry are emerging. However, these efforts have shown to be slower and less successful (thus far) compared to manufacturing. Explanations are argued to be industry specific differences, the peculiarities and the culture of construction and an implication is the need for development of innovations that can manage this. Timber in housing is suggested as a catalyst for increased competition and potential development and possibilities are connected to a progress towards industrialization and process orientated innovations. Swedish timber volume element (TVE) manufacturing shows possibilities within these areas and the comprehensive aim of this research is thus to develop the understanding of hindrances and possibilities for innovation in Swedish housing based on TVE prefabrication from an integrated production and market perspective. This research embrace a multiple case study including the total population of Swedish TVE manufacturers for commercial, multi-family and multi-storey housing and three focus group surveys of the TVE companies that were performed to understand the properties of the TVE production system. A survey of 57 possible customers was executed to increase the understanding of the limited adoption (the acceptance and continued use) of TVE prefabrication. Widened lessons to TVE prefabrication were also attained through a comparative case study with five building component suppliers in timber, steel and concrete where different business and market strategies were investigated. To support and develop the understanding of hindrances and possibilities for TVE prefabrication in Swedish housing, literature studies were executed within complexity and complex system theory, innovation diffusion and adoption theory, and lean and agile production. This research shows that TVE prefabrication is an innovation that has the possibility to enable improvements in Swedish housing through production process similarities with manufacturing. However, the TVE prefabrication market is still construction and the culture and peculiarities of construction demand flexibility and customisation and this has shown to be the main hindrance for TVE prefabrication. This research yet indicate that if structure, i.e. a reduction of actors in the production process is reached, learning from an integrated lean and agile production philosophy can assist possible developments in the interface between construction and manufacturing. Except production related hindrances, findings also demonstrate that customer adoption of TVE prefabrication is prevented by distrust, based on historical prejudices of TVE manufacturers and TVE prefabrication as a building system for multi-storey houses. Hence, to enable adoption of innovations in housing construction that is deep-rooted in historical knowledge and attitudes, this study indicates that innovation diffusion and adoption have to be supported by visual and personal experienced knowledge and personal customer contact, e.g. via demonstration objects, customer activities and strategic alliances.

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III. SAMMANFATTNING Förbättringar för att hantera problem som brist på konkurrens, kvalitet och höga kostnader har lyfts fram inom svenskt husbyggande. Däremot har utvecklingen hittills visats sig vara långsammare och mindre framgångsrik jämfört med tillverkningsindustrin. Förklaringen sägs vara industrispecifika skillnader samt egenheter och kulturen inom byggande och innovationer som kan hantera detta har därför efterfrågats. Trä i husbyggande har föreslagits som en katalysator för ökad konkurrens och utveckling och potentiella möjligheter är kopplade till industrialisering och processorientering. Svenskt trävolymbyggande visar på möjligheter inom dessa områden och det övergripande syftet med denna studie är därmed att utveckla förståelsen för hinder och möjligheter för innovation inom svenskt husbyggande baserat på trävolymbyggande från ett integrerat produktions- och marknadsperspektiv. Studien omfattar en multipel fallstudie med den totala populationen av svenskt trävolymbyggande för kommersiella byggnader samt flerfamiljs- och flervåningshus och tre fokusgruppintervjuer, vilka utfördes för att förstå produktionssystemet för trävolymbyggande. En intervjustudie med 54 potentiella kunder genomfördes för att öka förståelsen för den begränsade acceptansen och införandet av trävolymbyggande. Vidgade erfarenheter till trävolymbyggande uppnåddes också genom en komparativ fallstudie med fem byggkomponentleverantörer inom trä, stål och betong, inom vilken framgångsrika affärs- och marknadsstrategier undersöktes. För att stödja och utveckla förståelsen av hinder och möjligheter för trävolymbyggande inom svenskt husbyggande, utfördes litteraturstudier inom komplexitet och komplexa system, innovationsspridning samt inom lean och agile production. Studien visar på att byggande kan uppnå liknande förbättringar som tillverkningsindustrin genom en ökad struktur, d.v.s. genom en reduktion av aktörer i produktionsprocessen. Studien visar att trävolymbyggande är en innovation som kan möjliggöra förbättringar genom en produktionsprocess som uppvisar likheter med tillverkningsindustrin. Däremot är trävolymbyggandets marknad fortfarande byggande och kulturen och egenheterna i byggindustrin medför krav på flexibilitet och kundanpassning, vilket visat sig vara det huvudsakliga hindret för trävolymbyggande. Denna forskning tyder däremot på att lärande från en integrerad lean och agile produktionsfilosofi kan bistå en möjlig utveckling i länken mellan byggande och tillverkning. Förutom produktionsrelaterade hinder, visar resultaten också på att införandet av trävolymbyggande förhindras av brist på tillit, baserat på historiska fördomar, när det gäller trävolymbyggare och trävolymbyggande som ett byggsystem i flervåningshus. Studien tyder på att innovationsspridning och införande av innovationer i ett husbyggande som är djupt rotat i historiska kunskaper och attityder, måste stödjas av synlig och personlig upplevd kunskap och personliga kundkontakter, t.ex. genom demonstrationsobjekt, kundaktiviteter och strategiska allianser.

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IV. TABLE OF CONTENTS I. Acknowledgement_________________________________________i II. Abstract ________________________________________________iii III. Sammanfattning ________________________________________ v IV. Table of contents ______________________________________ vii V. Description of expressions ________________________________xi 1 Introduction _____________________________________________ 1 1.1 Background _________________________________________________ 1 1.2 Timber volume element prefabrication ____________________________ 1 1.3 Research motives _____________________________________________ 2 1.4 Aim and research questions _____________________________________ 3 1.5 Demarcations ________________________________________________ 4 1.6 Disposition of the thesis and reading instructions_____________________ 5 1.6.1 Chapter descriptions and disposition______________________________ 5

2 Industry context __________________________________________ 9 2.1 Historical development of Swedish housing ________________________ 9 2.2 Timber development in Swedish housing __________________________ 9 2.3 Timber prefabrication strategies _________________________________ 10

3 Research process and method _____________________________ 13 3.1 The researcher’s background ___________________________________ 13 3.2 Research process ____________________________________________ 13 3.3 Research strategy ____________________________________________ 15 3.4 Research design _____________________________________________ 16 3.4.1 Case studies _____________________________________________ 17 3.4.2 Focus group surveys ________________________________________ 19 3.4.3 Customer survey __________________________________________ 20 3.5 Selection of theoretical concepts ________________________________ 22 vii

3.6 Validity and generalization _____________________________________ 23

4 Theoretical framework ___________________________________ 25 4.1 Complex systems and innovation________________________________ 25 4.1.1 Levels of complexity in construction _____________________________ 25 4.1.2 Innovation – evolution in a complex system _______________________ 26 4.2 Hindrances to innovation in construction _________________________ 28 4.2.1 Construction peculiarities ____________________________________ 28 4.2.2 Structure ________________________________________________ 29 4.2.3 Construction culture ________________________________________ 29 4.2.4 The shift from construction to manufacturing _______________________ 30 4.3 Managing the interface of construction and manufacturing ____________ 32 4.3.1 Differences between manufacturing and construction __________________ 32 4.3.2 Lean and agile production ____________________________________ 33 4.4 Implications and model of analysis _______________________________ 35

5 Results _________________________________________________ 39 5.1 TVE prefabrication description _________________________________ 39 5.1.1 Historical perspectives _______________________________________ 39 5.1.2 System description _________________________________________ 39 5.1.3 Construction process ________________________________________ 40 5.2 TVE prefabrication problems and development areas ________________ 42 5.2.1 Production_______________________________________________ 43 5.2.2 Market _________________________________________________ 43 5.3 Business and market aspects in complete building system delivery ______ 44

6 Analysis and discussion ___________________________________ 45 6.1 Company - industry interface __________________________________ 45 6.2 Supplier - market/product - production interface ___________________ 48 6.3 Customer - market/product - production interface__________________ 49 6.4 Concluding discussion ________________________________________ 50 6.4.1 Method and theory discussion _________________________________ 52

7 Hindrances and possibilities for TVE prefabrication__________ 53 7.1 Housing improvement possibilities ______________________________ 53 viii

7.2 Practical contributions ________________________________________ 55 7.2.1 Production and market hindrances ______________________________ 55 7.2.2 Production and market possibilities______________________________ 55 7.3 Scientific contributions________________________________________ 57 7.4 Future research ______________________________________________ 58

8 References ______________________________________________ 61 Appended Papers Paper I:

Connecting Lean Construction to Prefabrication Complexity

Paper II:

Trust - the Missing Link between Innovation Diffusion and Adoption in Timber Volume Element Housing

Paper III:

Innovative and Lean Construction Success Factors for Component Suppliers

Appendices Appendix 1: A presentation of the studied companies Appendix 2: Interview guides

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V. DESCRIPTION OF EXPRESSIONS This section describes expressions used by the author throughout in the thesis.

Actor An actor is in this thesis related to actors in the Swedish construction sector, such as e.g. commissioners of building projects, contractors, material manufacturers and suppliers, architects etc.

Assembly The work performed when joining structural sub-systems, element or volumes together into a finished structure or sub-system.

Building system A building system contains components and necessary information for the complete design and build-up of a structure, often divided into technical and administrative sub-systems such as; structural system, heating, transportation etc., and

Complete building system undertaking Complete building system undertaking is related to a supplier or producer that manufacture (or have out-sourced manufacturing) building components that are offered together with other sub-components than the in-house manufactured, and also offer e.g. design, assembly and overarching responsibility for the building system.

Complexity Complexity is related to variation and unpredictability due to interaction between parts, e.g. actors or components.

Complex system A complex system is a system where things are connected and can flow throughout a system and change the system properties. Complex system theory is related to evolutionary change and long-term organizational learning.

Construction Construction is used as a global term representing every activity, company, actor, resource etc. used or participating in the design and production of a structure, though in this research limited to housing construction and demarcating buildings as e.g., factory and industry premises.

Construction physics Construction physics is herein related to project based production, several different actors that work together to form the project, on-site production with variability in environment and production. xi

Construction process The construction process refers to all activities in construction from the early stages of bidding and schematic design to design development and finally production.

Culture Culture is the values the members of a given group hold, the norms they follow and the material goods they create.

Customer Customer is related to an actor within the construction industry that is a primary purchaser of products offered by material and component suppliers and manufacturers, such as contractors, real estate trustees, municipalities etc., and do not include final customers, such as private tenants.

Design Design is referred to the process of giving structures, structural elements and volumes their physical properties and architectural expression.

Element prefabrication Element prefabrication is part-wise prefabrication, where an element is manufactured in a factory environment with controlled manufacturing processes. The element is transported to the construction site where it is assembled together with other elements and subassemblies.

Factory physics Factory physics is defined as a systematic description of the underlying behaviour of manufacturing systems. The term is in this thesis further related to process based manufacturing where one actor owns the entire production process, with production in a factory environment through a controlled process

Industrialization Industrialization is seen as a means for efficiency in construction by eliminating or reducing on-site non value adding activities in construction.

Innovation An innovation is defined as an idea, practice, or object that is perceived as new by an individual or another unit of adoption.

Innovation adoption Innovation adoption is defined as the acceptance and continued use of a product, service or idea. The adoption process refers to a series of mental and behavioural states that a person passes through leading to the adoption or rejection of an innovation. xii

Innovation diffusion Diffusion of an innovation is defined as the spread of an innovation throughout a social system.

Manufacturer A manufacturer is herein related to an actor that creates material goods in a factory environment.

Modularization Modularity is a system attribute related to product structure and functionality. A set of volumes connected to each other by interfaces define the product modularity and is viewed as the use of standard building elements or volumetric pre-assemblies where the standard components are balanced with flexibility in assembly.

On-site construction On-site construction is the assembly of components, sub-assemblies and elements that form a project on the construction site, i.e. an objects final position.

Prefabrication Prefabrication is defined as the fabrication (providing desired properties such as dimensions etc., by means of mixing cutting etc.) of all parts of an object in some place other than its final position.

Production Production is the material conversion process that starts with construction documentation and ends with a fully assembled structure.

Standardisation Standardisation is viewed as a systematic ordering and rule-induction aiming for the best possible technological and economical solutions in recurring problems.

Structure (adjective) Structure (adjective) is defined as exchanges patterns between parties. Low structure is herein related to unpredictability in the exchange patterns.

Structure (substantive) Structure (substantive) is the frame, components and sub-assemblies, creating an object.

Sub-assemblies Sub-assemblies are the functional components of a structural system, such as e.g. windows, doors etc.

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Supplier Actor or manufacturer that supplies either another manufacturer or the construction site with material, sub-assemblies or prefabricated components for production.

ROA – Return On Assets ROA is calculated as net income divided by total assets and indicates financial performance.

Supply chain The supply chain is defined as a system whose constituent parts include material suppliers, production facilities, distribution services and customers, linked together via a feedforward flow of materials, and a feedback flow of information.

TVE - Timber Volume Element A timber volume element is defined as a closed three-dimensional structure, built up by a load bearing timber frame elements, such as floor, roof and wall elements, completed in a factory.

TVE prefabrication – Timber Volume Element prefabrication Timber volume element prefabrication is related to manufactured “ready-to-use” volumes, integrating elements and sub-assemblies completed with electrical installations, flooring, cabinets, wardrobes and finishing etc. The volumes are transported to the construction site where they are assembled into a complete structure.

Waste Any activity not contributing to the creation of value.

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1 INTRODUCTION Timber frames in multi-storey housing were not allowed until 1994 in Swedish housing, and the production of multi-storey timber frame houses is still small compared to the total production of multistorey houses built in Sweden. A holistic understanding of production and market hindrances and possibilities for a development of timber frame constructions are the rationale for this research.

1.1 Background Problems discussed in Swedish housing construction are a lack of competition, quality and costs (DS, 2004) and a lack of continuous process improvements has been shown to gradually raise the price levels for new housing (VA, 2004). The underlying problems in the construction industry are project orientation and the fragmentation of actors in the value chain: hence, the fragmentation of the construction industry itself (Thompson and Sanders, 1998; Conley and Gregory, 1999). This restrains the process and the actors in the supply chain (construction process) to cooperate in delivering the right product at the right price. Mentioned solutions in Swedish housing are developments towards increased industrialization, customer orientation and a more efficient construction process. Industrialized housing raises the possibilities to control both the processes within the whole product supply chain and the results (SOU, 2000), thus showing incentives for significant efficiency profits compared to traditional on-site production. The lack of competition and the need for improvements and innovation in Swedish housing have resulted in a national strategy suggesting the use of timber in housing as a catalyst for increased competition and development (Ds, 2004). Swedish detached house manufacturing is a timber building system that has shown to be competitive and successful for a long time on the Swedish market (roughly 80 % market share between 1990 and 2004). The rationale for this competitiveness can be the integrated manufacturing and contracting, a higher degree of prefabrication, and optimized logistics compared to traditional on-site construction (Bergström, 2004). An analysis of Swedish timber frame house manufacturing also suggest industrialized timber frame housing systems to have the potential to reduce costs in housing construction in general. Swedish investigations (e.g. VA, 2004) indicate 25 to 30 % reductions of the total construction costs, with similar types of reductions also indicated in the research (e.g. Stone and Stone, 2000). However, the possibilities for improvements are not connected to minimizing material costs, but developing towards industrialization where the housing industry move from construction related project orientation to manufacturing related process orientation.

1.2 Timber volume element prefabrication Timber frames in multi-storey housing were not allowed until 1994, when the introduction of the performance based Swedish 1994 building code changed this. As a consequence, some Swedish timber house manufacturing companies changed strategy from manufacturing detached houses to commercial, multi-family and multi-storey (>2 1

storeys) housing. These companies make use of timber volume element prefabrication, where a timber volume element (TVE) is a closed three dimensional structure built up by floor-, roof- and wall elements, and completed with electrical installations, flooring, cabinets, wardrobes, finishing etc., in a factory. The volumes are transported to the construction site and assembled by the company’s personnel into a complete house. The TVE building system indicates the same possibilities as manufacturing of detached timber frame housing, but for a broader market, including commercial, multi-family and multistorey housing. However, the production of multi-storey timber frame houses is still small compared to the total production of multi-storey houses built in Sweden (roughly 7 % of multi-family houses in Sweden are built with timber frames with most being two-storey houses). Investigations conducted on behalf of the Swedish government indicate timber frame multi-family and multi-storey housing to be a future area of expansion in Sweden (Ds, 2004; VA, 2004). Different Swedish studies have also recognized the potential of the TVE building system for the multi-family and multi-storey market. Research from Luleå University of Technology, mainly conducted at one TVE company (Bergström, 2004), show the improvements and possibilities for industrialized housing and focuses on supplier relations, information technology strategies (ITS) and ERP (Enterprise Resource Planning) use in TVE prefabrication. The study indicates decreased production costs and lead times from the process development of the TVE factory production flow to be a focus of the manufacturers. Recent research discusses TVE prefabrication from an architectural perspective (Falk, 2005), focusing on the relation between the building system and the architectural possibilities and hindrances. An inquiry issued by the national Board of Housing, Building and Planning has investigated the strengths and weaknesses for volume element housing with timber-, concrete- and steel frames (Boverket, 2005). This study, also influenced by an architectural view, argues two main factors of primary importance for a progressed development of volume element housing, namely managing purchase and project processes and the volume element systems flexibility and qualitative properties. The conducted studies have investigated production and market aspects for TVE prefabrication from different perspectives. Not specifically analyzed is a holistic and integrated production and market perspective showing the links between the TVE production process and market demands and between the TVE company and the industry (Swedish housing construction) context.

1.3 Research motives TVE prefabrication seems to raise the possibilities for a shift of focus from traditional project orientation to process orientation through industrialized integration with a complete process undertaking containing both manufacturing and contracting. The building system should thus have the possibilities to increase efficiency in Swedish housing through a production process that hypothetically is more related to manufacturing than traditional construction. Hence, learning from manufacturing is a possible way towards improving TVE prefabrication and the Swedish housing industry. However, despite the assumed similarities between TVE prefabrication and manufacturing, the TVE 2

prefabrication market is the housing construction industry, where industrialized housing implicates both possibilities and limitations in the potential transfer of concepts and learning from manufacturing to construction (Gann, 1996; Gibb, 2001). Previous research also suggests flexibility demands on the product to convey production problems (Bergström, 2004; Boverket, 2005), as well as market problems that seem to exist due to the small amount of TVE prefabrication. The need for a holistic understanding comprising both internal and external (i.e., production and market) hindrances and possibilities is indicated. Moreover, connections between company and industry contexts of the TVE prefabrication offer (including finished products and services) in commercial, multi-family and multi-storey housing are central. If the TVE prefabrication company context is understood in relation to the industry context, it should also be possible to learn from other kindred building systems on the Swedish housing market and thus assess TVE production and its market possibilities.

1.4 Aim and research questions The comprehensive aim of this research is to develop an understanding of the obstacles and feasible improvements in Swedish housing based on TVE prefabrication in commercial, multi-family and multi-storey housing. Obstacles and feasible improvements are connected to both the possibilities for increased market shares of the building system and more general possibilities to improve the Swedish housing industry. The aim is met by investigating Swedish TVE prefabrication housing from a holistic context, comprising integrated production and market possibilities and hindrances. Building system possibilities are further developed through an investigation of a kindred building system area, i.e. component suppliers with a complete timber, concrete or steel system undertaking. The focused and condensed aim of the thesis is articulated as: Evaluate possibilities and hindrances for timber volume element prefabrication from an integrated production and market perspective. The thesis is based on three appended Papers and this cover Paper. Each Paper contributes to the overall aim, but from different theoretical and empirical perspectives. Each appended Paper presents a separate aim specifically directed to slightly different theoretical research approaches and perspectives. The combination of these Papers broadens the understanding of the context and contributes the thesis aim. The purpose of this study is not to give an in-depth study within a specific theoretical area, but rather its own holistic answers to the purpose. Paper I contributes to the aim by examining the TVE prefabrication production process compared to on-site construction and part-wise element prefabrication. Comprising a study of potential TVE prefabrication customers, Paper II investigates the reasons for the low adoption rate, and thus hindrances of the building system, and searches for possible market improvements. Paper III widens the understanding of successful business and marketing strategies for a complete building system undertaking comprising both production and marketing, with a focus on supplier and customer relations. Steel and concrete are mature and developed building materials 3

compared to timber; therefore the study investigates the differences in business and market strategies for timber, steel and concrete component suppliers. Based on the overall aim, the research questions considered, but not explicitly expressed in appended Papers, are articulated as: ƒ

What are the properties of the TVE prefabrication production system? (Paper I)

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What are the reasons (from a market perspective), and how to deal with customer attitudes and the low adoption rate of the TVE product offer? (Paper II)

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What are the successful business and market strategies for concrete, steel and timber component suppliers? (Paper III)

The appended Papers contribute to the aim from a company-focused perspective, but as an industry perspective influence the hindrances and possibilities for TVE prefabrication, the relation between the company and the industry context have to be considered to reach the aim. The cover Paper thus widens the company perspective within the appended Papers to also include the relationship to an industry perspective.

1.5 Demarcations This research comprises the total population of TVE producers that manufacture and offer commercial, multi-family and multi-storey houses on the Swedish market but does not herein include detached housing for private consumers. Hence, this research can be generalized to the Swedish TVE prefabrication of commercial, multi-family and multistorey housing. Potential and present customers are demarcated in the study to primary purchasers of the TVE product offer, such as real estate trustees, municipalities, etc., and do not include final customers as private tenants. The attitudes of final customers influence the demands of TVE prefabrication, though in this research this effect is considered articulated through primary customers and purchasers. When studying connections to customers in this research, a TVE manufacturer is regarded as one company where the connection to the customer is linear. However, information paths and connections are in reality more networks-based and influenced by connections other than the relation between the manufacturer and the customer. A volume element is here defined as a three-dimensional structure, built up by elements and completed in a factory. Timber volume element housing is related to the whole process included in the product offer, i.e., from design to a complete house or project. However, structural engineering and technical solution developments for the TVEs are not explicitly considered in this thesis. The studied production and market aspects from a company perspective are demarcated to only comprise certain selected areas of interest within the business context of TVE manufacturers, and the focus is turned towards connections between the companies’ production process, market aspects, customers and suppliers. The chosen areas within the business context do not include in-depth economical issues, but focus on a holistic view of comparable profits. Other areas that may influence the possibilities and hindrances for 4

TVE prefabrication are, e.g., organizational structures, proprietor structures and national trade unions, etc., though these aspects have not been included in the study. From an industry perspective, governmental strategies and economical aspects are mentioned, but not further developed in this research. Hindrances and possibilities for TVE prefabrication are only related to Swedish housing construction, and construction is in this thesis only related to housing construction and do not comprise industry and factory premises. To support and develop the understanding of the aim, three main theoretical concepts are used, viz. complexity and complex system theory, innovation diffusion and adoption theory, and lean and agile production. Other theoretical concepts within construction and manufacturing management could have been chosen to understand the hindrances and possibilities for TVE prefabrication. However, this study focuses on the links and interfaces between the TVE production process and market at a company level and the widened interface to an industry level, for which the three chosen theoretical approaches have the ability to increase the understanding of. Not considered in this research are detailed studies of the specific activities (production process, market, suppliers and customers) where alternative management theories could have obtained an increased understanding. Moreover, lean and agile production theories are not used to develop the companies’ production and market strategies and processes, but to understand possibilities based on these approaches.

1.6 Disposition of the thesis and reading instructions This thesis is structured in two parts. The first cover Paper contain chapters 1 to 8 where the overall aim of the thesis is laid out together with an industry context description, method descriptions, a theoretical framework, empirical results and overall analysis and conclusions. The second part of the thesis comprises the appended Papers presenting the empirical results, specific literature and analyses. The theoretical framework in chapter 4 links and develops the theoretical approaches considered in the appended Papers, though most of the theoretical considerations still differ between appended Papers and the theoretical framework in this cover Paper. The appended Papers and conclusions can be read and understood independently from each other. However, for the reader to obtain a proper understanding of empirical results, cross Paper findings, overall analysis and conclusions, the reader is recommended to first read chapters 1 to 4 in this cover Paper, followed by the three appended Papers and conclude with chapters 5 to 7 that present results from the appended Papers and additional findings, analysis and systems conclusions.

1.6.1 Chapter descriptions and disposition Chapter 1:

Introduces the reader to the research area, presents the research motives, aim and research questions and guides the reader through the disposition of the thesis.

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Chapter 2:

To facilitate the reader’s comprehension of the industry context, chapter 2 outlines a synthesized picture of the development and use of timber and TVE prefabrication in Swedish housing compared to the historical use and development of steel and concrete.

Chapter 3:

Presents the research process and the researchers’ background together with a description and discussion of the chosen methods. The background to the chosen theory in the appended Papers and theoretical framework is also here explained.

Chapter 4:

Contains the theoretical framework with the purpose to link the appended Papers and to serve as a basis for analysis of empirical results and cross Paper findings presented in chapter 5.

Chapter 5:

Shows the empirical results presented in appended Papers together with additional findings from the research project.

Chapter 6:

This part of the thesis analyzes the empirical results and cross Paper findings presented in chapter 5 within the theoretical framework outlined in chapter 4. Chosen theoretical approaches, research strategies and methods are also discussed.

Chapter 7:

Summarizes the findings and conclusions in the thesis, and presents scientific and practical contributions, as well as proposals for further research.

Chapter 8

Presents references referred to in chapters 1 to 7.

Appended Papers Paper I:

Connecting Lean Construction to Prefabrication Complexity in Swedish Volume Element Housing. The Paper is written by Matilda Höök and Lars Stehn and was published in proceedings of the 13th Annual Conference on Lean Construction (IGLC13), Sydney, Australia, 2005. Matilda Höök’s contribution to the Paper was planning, performing and evaluating the multiple case study. Both authors contributed to fundamental ideas for the Paper. The first manuscript was outlined by Matilda Höök, examined by Lars Stehn, and finally finished by Matilda Höök.

Paper II:

Trust - the missing link between Innovation Diffusion and Adoption in Timber Volume Element Housing The Paper is written by Matilda Höök and Lars Stehn and was submitted for publication in Construction Management and Economics (Spon Press) in November 2005. Matilda Höök’s contribution to the Paper was the fundamental ideas, planning, performing and evaluating the multiple case study, planning and evaluating of the three focus group surveys, and 6

planning, designing, performing and evaluating the customer survey. The first manuscript was outlined by Matilda Höök, examined by Lars Stehn, and finally finished by Matilda Höök. Paper III:

Innovative and Lean Construction Success Factors for Component Suppliers The Paper is written by Lars Stehn and Matilda Höök and was published in the Proceedings of the 12th Annual Conference on Lean Construction (IGLC12), Elsinore, Denmark, 2004. Matilda Höök’s contribution to the Paper was planning, performing and evaluating the comparative case study. Lars Stehn raised the fundamental ideas and both authors contributed to the manuscript of the Paper.

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2 INDUSTRY CONTEXT This chapter describes the industry context of the thesis – the use of timber and TVE prefabrication development in the Swedish housing industry from a historical perspective. The historical description of timber in Swedish housing is related to the development and use of the traditional building materials concrete and steel and gives an industry perspective, since the use of timber has generally influenced the development of TVE prefabrication in Swedish housing.

2.1 Historical development of Swedish housing Until the beginning of the 1990s, Swedish construction activities were governed by political considerations, both directly (by the strictly formulated codes) and indirectly by, for example, financing. The use of timber in Swedish housing has a long history and is greatly influenced by these governmental strategies. After a number of Swedish cities burned down in the late 19th century, timber frames were forbidden in houses with more than two storeys. Through the years, this restriction has limited the development of an advanced use of timber as a building material in commercial, multi-family and multi-storey houses, and has instead promoted the engineering of concrete and steel in housing. The Swedish housing construction market experienced a boom during the mass housing program period of 1965 – 1975 thanks to political decisions that carried population movements to towns. Due to the prohibition of using timber, the knowledge and competence of how to effectively use concrete and steel in housing increased, consequently leading the large Swedish building contractors to have been, and to some extent, still are connected to and influenced by the concrete materials industry. Within today’s multi-storey housing on-site caste concrete and prefabricated concrete products dominate house frame materials together with lightweight concrete and steel structures. All of these products have been extensively developed to fulfil the demands related to strength, stability, heat insulation, fire, and sound etc. Concrete and steel manufacturers are mature companies that are long established actors in the construction process, where almost all needed technical and production knowledge can be found within the companies.

2.2 Timber development in Swedish housing Single-family housing production was driven ahead during the 1970s. The timber framed housing (TFH) industry developed this production process, i.e. manufacturing of plane timber elements in permanent factories, and has since then dominated the single-family housing market. Single-family TFH has since the 70s been more cost-efficient than similar houses produced of concrete or steel. Starting from a local market, many TFH companies became regional as well as national following the increased demand for single-family houses. The concept of developing standardised houses, Figure 2.1, using prefabricated components and modules resulted in a stronger grip on the single-family housing market in Sweden. 9

Figure 2.1: Standardised detached houses

Some of the TFH manufacturers decided on a strategy aiming for even better control of the construction process by developing TVE prefabrication. Compared to the construction industry in general, single-family housing companies are much smaller in terms of turnover. The downturn in construction activities during the 1990s and a general discussion of cost efficient production in the society resulted in an increased focus on production cost within the Swedish housing industry. Additionally, the demands on further prefabricated products, such as a modular approach offering complete building volumes, increased as a means to improve quality of the finished product. Also, with the introduction of the performance based Swedish 1994 building code, the building of multi-storey timber frame houses was again permitted. New possibilities opened for the development of multi-storey building systems using timber frames. Hence, several different TVE manufacturers and contractors developed their buildings systems to reach the multi-storey housing market. The initial period after the change of the building regulations was dominated by technology developments to cope with functionality demands, e.g., fire and sound limitations. Today, fewer large-scale structural and functional innovations (e.g. technical development of systems of joists) occur, and technical developments are no longer in focus.

2.3 Timber prefabrication strategies Development of timber in Swedish housing during recent years has mainly focused on different prefabrication strategies, with actors within timber frame housing in Sweden having taken different strategies in the supply chain. The supply chain is here defined as a network supported by processes, organisational structures and technologies, consisting of suppliers, manufacturers, distributors, retailers and customers, supporting material, information and financial flows (Akkermans et al., 2003). The three main actor roles within timber frame housing in the Swedish construction supply chain are: ƒ

Large contractors that buy timber sub-components to be used in on-site construction with other sub-assemblies, but still focus on management of the total production process. 10

ƒ

Timber component suppliers offering prefabricated components to e.g. contractors.

ƒ

Timber frame housing contractors that manufacture components and act as contractors.

The two main types of prefabricated timber products are volume element prefabrication and element prefabrication. Part-wise, element prefabrication is the dominant building system of the two first actors of the supply chain described above, whereas volume elements and complete system undertaking with element prefabrication are the dominant building system of the third actor. Within element and volume element prefabrication today, two existing building systems exist, namely solid-wood elements and lightweight timber element prefabrication. Solid-wood is a relatively new material, used primary as element prefabrication in building systems for dwellings and multi-storey houses. Element prefabrication is part-wise prefabrication, where an element is manufactured in a factory environment with controlled manufacturing processes. The element is transported to the construction site where it is either further processed in a field factory or directly assembled together with other elements and sub-assemblies and later completed, Figure 2.2.

Figure 2.2 Assembly on-site of prefabricated elements

As stated earlier, volume element prefabrication is closed three-dimensional structures built up by floor-, roof- and wall elements related to manufactured “ready-to-use” volumes, integrating elements and sub-assemblies and completed with electrical installations, flooring, cabinets, wardrobes and finishing etc. in a factory. The volumes are transported to the construction site where they are assembled into a complete house. The primary differences of volume element prefabrication compared to element prefabrication are the special prerequisites to managing purchasing, building techniques, quality- and ecological issues and architecture due to the closed volume design, as well as the complete manufacturing and contractor undertaking. In volume element prefabrication, manufacturing, contractor activities and purchasing are performed within the company and the building technique comprises the factory production. From an architectural perspective, the exteriors and façades in TVE houses are often shaped after 11

the volume joints where exteriors, in some cases, clearly show the joints (Falk, 2005), Figure 2.3. However, there are also examples where the joints are skilfully concealed, or where the volume element technique is used as an architectural way of expression. The latter use of such distinctive character of the volume elements is common in e.g., Denmark and Holland.

Figure 2.3: Visible volume joints, plastered façade that conceals volume element joints, and volume element technique that characterize the architectural expression

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3 RESEARCH PROCESS AND METHOD The first part of this chapter presents the researchers background and the research process through a plain description of data sources and the development of increased understanding during the research project, followed by a discussion of the hosen methods and research strategies.

3.1 The researcher’s background It is not possible to conduct and analyse data in research without considering and being aware of the biases due to the researcher’s background and the subjectivity of the researcher (Merredith, 1998). My background is an MSc in Civil Engineering, and thus I have my general research understanding in technological science and in particular, structural engineering. However, I am a participant in the research school of Innovative Technology and Enterprise (ITE) and the research group WoodWorks. A purpose of the research school is to gather PhD students from social and technological science to obtain a wider understanding of each other’s projects from technology and business standpoints. WoodWorks is cooperation between two research groups, representing two different but applied research directions; structural/construction engineering development and industrial business development. The main purpose of WoodWorks is to integrate technology and business development to obtain a more holistic perspective and understanding of the timber construction supply chain. Both WoodWorks and the ITE research school therefore have participants from technological science and social science, from where I have been influenced and have had the possibility to obtain both technological and social science perspectives in my research. My understanding of the interaction between business and technological development in TVE prefabrication, and the use of qualitative research strategies, has thus been facilitated. As the focus of this study has been neither purely structural engineering development nor business development, the thesis is demarcated from deeper studies in either of the two. Rather, the multi disciplinary usage and linkage between subjects and issues coming from technological and social sciences have been centred. Throughout the research project, this connection between engineering and human beings has also shown to be one of the main sources of problems and development areas for Swedish TVE prefabrication.

3.2 Research process Paper I:

The purpose of this study was to obtain a holistic view of TVE prefabrication and to understand the TVE prefabrication production system. To answer the first research question a multiple case study was performed with the total population of TVE manufacturers offering commercial, multi family and multi-storey houses on the Swedish market.

Paper II:

Data collection from the main case study revealed several common problems for TVE manufacturers, and an idea to discuss common development areas arose. The data collection to answer research question 13

two was thus performed via three focus group surveys, with representatives from four of the five TVE manufacturers. The collected data found common production and market problems and development areas. An area of main interest for all TVE manufacturers was the desire to increase market share, where the manufacturers experienced a lack of knowledge of potential customers as a main hindrance. The next part of the research project followed the purpose to understand reasons to the low adoption rate of TVE prefabrication based on the connection between the TVE product offer and the attitude and willingness of potential customers to adopt the building system. A survey with potential customers was performed and also comprised a reference group with customers who had already chosen and used TVE prefabrication in commercial, multi-family or multi-storey housing. The survey results were analyzed together with the results from the focus group surveys and the main case study. Paper III:

To understand the hindrances and possibilities for TVE prefabrication, the research area was widened to include component suppliers that make use of a production and market strategy similar to the TVE manufacturers through a complete building system undertaking. The aim was to evaluate successful business and market strategies of component suppliers and to categorize and compare the timber component suppliers with those of steel and concrete from a business and market strategy perspective. The data collection method used was a comparative case study.

During the research process, the empirical data collection was accompanied by literature studies comprising three main theoretical concepts: lean and agile production, innovation diffusion and adoption, and complexity and complex system theory. The literature studies have to some extent guided the main question areas (Appendix 2) in the case studies and surveys and have also helped to find answers and connections in empirical data. The lean and agile approach was used in Papers I and III. Innovation diffusion and adoption theory is thoroughly discussed in Paper II, but is more all encompassing in Paper III. Complexity theory is used extensively in Paper I, basically on a product complexity level, as well as from a system view, since the connecting link between the lean and agile approach and innovation theory in the theoretical framework are outlined in chapter 4. The contribution to the aim of the selected theoretical approaches is further described in chapter 3.4. The theoretical framework has formed the analysis model used to analyse the results and cross-Paper findings from the appended Papers (presented in chapter 5), and finally draw conclusions. A schematic diagram of the research process undertaken within this thesis is shown in Figure 3.1.

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Figure 3.1: Research process

3.3 Research strategy Based on the research questions and the aim, this research is (mainly) based on qualitative methods, as the aim is to understand the hindrances and possibilities for TVE prefabrication from a holistic perspective. This ambition is supported by the ability of qualitative methods to see the whole context in an apparent phenomenon (Bjereld et al., 2002; Cronbach, 1975), and to understand the underlying or ambiguous elements when rich descriptions of the phenomena can be obtained (Miles and Huberman, 1994). Different research strategies, e.g. experiment, survey, history and case study, are found within the quantitative and the qualitative approaches (Yin, 1994). Each strategy differs in its way of collecting and analysing empirical evidence, along with following its own logic. By that, the different strategies also have advantages and disadvantages, depending on a study’s research questions. The type of research question, the extent of control the researcher has over actual events and the degree of focus on contemporary as opposed to historical events determines the most appropriate strategy in the individual case. However, 15

the various strategies are not mutually exclusive, but some situations can be identified in which a specific strategy has a distinct advantage (Yin, 1994). To decide which research strategy was preferable in this study, the research questions and the aim had to be identified in relation to the main focus of the different research strategies. Based on the above mentioned strategies some particular fundamental features could be discerned. The link to which strategy to choose is a categorization scheme where the type of research question is classified depending on if the research question is of the type ”who”, ”what”, ”where”, ”how”, or ”why” (Yin, 1994). The main focuses of the mentioned strategies are explained below, Yin (1994). History:

The investigator has to rely on primary or secondary documents as main source for collecting data

Experiment:

Events where the investigator can influence behaviour directly and in a systematic manner.

Case Study:

Contemporary events, where the relevant behaviour cannot be manipulated. A case study has the same contents as history but also include direct observation and systematic interviewing. The strength of the case study is that the investigator can deal with a full variety of evidence, such as documents, artefacts, interviews and observations.

Survey:

Strategy that is advantageous when the research goal is to describe the incidence or prevalence of a phenomenon.

The research questions in this project were of the type “what”, meaning this research, according to the categorization scheme in Yin (1994), pointed to the research strategy survey. However, the first and third “what” questions were of a descriptive nature of the kind “how does it work”, and therefore the case study strategy seemed to be more advantageous. The second research question was an integrated “what” and “how” question. For the “what”- part of the question, a survey as research strategy was preferable because of the intention to investigate the attitudes of potential customers within a clearly defined area and to find normative answers. The “how”- part of the question was considered through the descriptive nature of case studies and focus group surveys that were used to understand common problems and development areas for the TVE manufacturers.

3.4 Research design The research design is the logical sequence that connects the empirical data to a study’s initial research questions and its conclusions, and therefore guides the investigator in the process of collecting, analyzing and interpreting the observations.

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3.4.1 Case studies Design of case studies The main case study and the comparative case study comprise a purpose to understand production and business processes, and product offers. The case study strategy seemed to be the most appropriate method in both cases as the aim was to examine a phenomenon within its context, while no distinct boundary between the phenomenon and the context it appeared in existed. The advantage with the case study is, therefore, that the researcher can take part of the holistic and meaningful characteristics of real events, and understand a complex phenomenon (Meredith, 1998). The disadvantage of the case study method is the possible difficulty to make distinct demarcations that can convey large and nonmanageable data quantities. Case studies can be designed as either single or multiple case studies. The single case study is appropriate when it represents a critical case, an extreme case or a unique case, or when the single case study is a relevant case. The multiple case study is appropriate when the researcher wants a more compelling and robust study (Yin, 1994). In this research the total population of TVE manufacturers of commercial, multi-family and multi-storey housing could have been studied as a single case study, but a multiple case study design seemed to be more appropriate and robust in both the comparative and the main case study, because of the replication logic when multiple cases are chosen. Each case must be selected so that it either i) predict similar results, or ii) produces contrasting results but for predictable reasons (Yin 1994). In this study the multiple case study design was considered due to the replication logic to predict similar results in the main case study, since it was assumed that the TVE manufacturers would display similar production and market strategies. The comparative case study was chosen because of the replication logic to produce contrasting results for predictable reasons, as the studied companies represent different building materials with different degree of maturity on the housing market. Unit of analysis The cases in this thesis are defined as companies - TVE manufacturers and component suppliers - within the context of the supply chain. The definition of the supply chain is viewed as a network consisting of suppliers, customers and manufacturers, supporting material, information and financial flows. However, the research in this study focuses on the interfaces between the parts in the supply chain. The units of analysis, i.e. the interfaces marked with arrows, are depicted in Figure 3.2. The units of analysis are almost the same in both studies. The main case study focuses on the interface between the market/product and the internal production process. The comparative case study focuses more towards supplier and customers than the internal production process and product design.

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Figure 3.2: Units of analysis in main case study and in comparative case study

Data collection and instrumentation Data sampling involves not only deciding about who to observe or interview, but also about settings, events and social processes. Multiple case studies also demand clear choices about which types of cases to include (Miles and Huberman, 1994). One way to know what to do initially is to find out what sampling parameters must be dealt with. Miles and Huberman (1994) suggest a set of sampling parameters consisting of settings, actors, events and processes. The chosen sampling parameters for the main case study and the comparative study are depicted in Figure 3.3.

Figure 3.3: Sampling parameters for main and comparative case studies

The chosen sampling parameters revealed a complex and extensive situation to study, though this was not a problem because the number of possible companies within the population of interest was limited in both case studies. The main case study comprises the total population of interest, i.e. the five Swedish TVE manufacturers that offer commercial houses, multi-family and multi-storey dwellings. The comparative case study comprise five of six component suppliers on the Swedish market that act with a clear complete building systems undertaking, i.e. the companies manufacture (or have outsourced manufacturing) components sold to customers as a complete building system. One steel company refused 18

to participate in the study; hence, data was collected from one steel-, two concrete and two timber component suppliers. To enable a high construct validity of the study, multiple sources of evidence were used in the case studies through personal interviews with different persons in the organisations, and observations and examinations of documents and design drawings. The case studies were mainly based on personal interviews with respondents possessing a comprehensive responsibility and understanding of the case companies’ product and process designs (one person within each case company was properly interviewed, except for company A and E in the comparative case study where two persons were interviewed). The personal interviews were standardized to some broader areas of interest (Appendix 2) and were low structured so that respondents had the possibility to answer questions within the areas of interest relatively free. All interviews were tape recorded to allow for direct follow up questions from the researcher. Analysing the results To obtain results from case studies and address the initial propositions of the study, the investigator has to examine, categorize, tabulate or in some other way recombine the collected data (Yin, 1994). To generate meaning in these case studies, recorded interviews were transcribed. The printed interviews were first pattern-coded into themes through keywords and underlining of sentences or words. The questions in the interviews were clustered according to the themes. Together with other documents, results from the interviews were then used as the basis to describe and understand the case companies and their production and product offers and their connections between these, together with problem areas. The cases were initially analysed individually and thereafter between cases.

3.4.2 Focus group surveys Design of focus group surveys Three low-structured focus group surveys were performed with one representatives from four of the five TVE manufacturers that participated in the main case study. The focus group as a data source was chosen because of its ability to generate information obtained by interactions among the group members (Wibeck, 2000). The main case study obtained an understanding of the companies individual problem areas and possibilities, while the focus group surveys provided an understanding, and validation of the common problem areas for TVE manufacturing. Furthermore, the focus group surveys gave the researcher a considerable understanding of the main development areas and possibilities common to the manufacturers, and thus a general understanding of Swedish TVE prefabrication. Unit of analysis The unit of analysis in the focus group surveys were as in the main case study, i.e. interfaces between the companies’ internal production process and market/product and interfaces between suppliers’ respective customers and the internal focus areas.

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Data collection and instrumentation The focus group surveys where planned by the researcher who also proposed the main discussion areas for the group participants. The first survey had an open dialogue around the companies’ main problem areas. The second focus group survey was structured from results obtained from the first meeting, and the discussion comprised three main areas; problems and development areas connected to internal production, marketing and technological development. The third focus group survey continued along the same theme as focus group survey two, but general areas were condensed to some problems and possibilities considered common and important to all participating companies. The researcher observed the focus group discussions and meeting notes were written down. Analysing the results The focus group surveys were mainly used to gain an understanding of the TVE manufacturers’ common problems and possibilities, and their view of potential customers, but they were also compared and analysed towards the main case study.

3.4.3 Customer survey Design of survey The purpose of the second research question in this research was to understand the low rate of adoption of TVE prefabrication. The first section in this research question was investigated within the main case study and the focus group surveys, with a survey being chosen as a research strategy for investigation of the second section, i.e. the attitudes of potential customers towards a general building system and TVE prefabrication. The survey was chosen as a research strategy partly due to its advantage of enabling a fast data collection and partly due to the restricted influence of the researcher on the respondent behaviour. In this case, it was also evident and clearly defined what was important to study to serve the purpose of explaining why a survey was possible to use. The purpose was to find the prevalence and incidence of the phenomenon, i.e. needs and attitudes of potential customers were important. The design of a survey has to consider two aspects, i.e., the degree of standardisation and the degree of structure. Standardisation considers how much responsibility that is given to the interviewer when questions are formulated and when the order of the questions is outlined. The degree of structuring considers to what extent the respondent is free to interpret, depending on the respondents’ attitudes and prior experiences (Patel and Davidson, 1994). The aim of the survey in this research project was to understand the attitudes towards TVE prefabrication and general building systems. The research questions were thus standardized to obtain comparable results from the interviews. The degree of structure was low because of the importance to collect the different views of potential customers of TVE prefabrication and a general building system, without the researchers’ involvement in answer alternatives.

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Unit of analysis Although actors in traditional construction are organized within projects, and individuals are organized within different companies, the unit of analysis in the survey was interfaces to customers as individual persons. The aim of the survey was to find attitudes formed within a social setting or culture, but within an individuals mind. The unit of analysis in the survey was thus the interface between individuals acting as potential customers and the TVE production process and market/product, Figure 3.4.

Figure 3.4: Units of analysis in customer survey

Data collection and instrumentation To understand the attitudes towards TVE prefabrication of potential customers, the population of interest was thus potential customers. As the TVE prefabrication product offer spans from commercial buildings, such as office buildings, hotels and schools, to multi-family and multi-storey dwellings, the population of interest was relatively extensive. However, Swedish governmental statistics showed that the actors with the highest rate of new-built dwellings were the Swedish public housing sector and real estate companies. Thus statistical data did not comprise commercial buildings, but as there is often a connection between the need for new dwellings and new commercial buildings and the size of municipalities regarding the number of inhabitants, the population of interest was chosen from the largest municipalities. A total of 25 Swedish municipalities with the highest estimated numbers for newly built dwellings during 2005 and 2006 were initially selected. Municipalities with too low estimated building rates could not contribute to the investigation because of their limited past experience. The public housing sector in every selected municipality was chosen with the two largest Swedish real estate companies that have sub-divisions in all municipalities. The number of contacted respondents thus totalled 54 and the achieved response rate was 87%. A selection of ten real estate companies with previous experience in timber volume element prefabrication also participated in the study to understand the differences between the attitudes of potential and prior customers. The total number of participants in the survey was thus 57 persons. The customer survey was performed as personally structured telephone interviews that were tape recorded. An understanding of both the general building system needs and attitudes of customers towards TVE prefabrication was obtained through a survey with 21

structured questions divided into two parts. This first part only dealt with questions of a general building system without the respondents’ awareness of TVE prefabrication. In the second part, the respondents were informed about TVE prefabrication, and questions about the specific building system were asked. The interview guides were slightly different for potential customers compared to the one used for prior customers. The interview guides are enclosed in Appendix 2. Analysing the results The survey interviews were analysed as for the case studies, i.e. with pattern-coding and clustering into themes. Although the purpose was not to calculate the mean or distribution, but to describe the attitudes to TVE prefabrication of potential customers, and be able to compare the customers’ perception with the manufacturers’ perception, the rate of answers of each item and each alternative were counted on a rating scale. The areas were compared and analysed towards the findings in the main cases study and the focus group surveys. Responses from potential customers were also compared to those from prior customers. The survey was not analyzed statistically because of its comprehensive and qualitative results.

3.5 Selection of theoretical concepts This research has focused on the connections and interfaces between parts of the TVE supply chain. Three main theoretical concepts; complexity and complex system theory, innovation adoption and diffusion, and lean and agile production, were chosen to reach the aim in the thesis. Complexity and complex system theory has the possibility to increase the understanding of the connections (Lucas, 2000). Moreover, the purpose of the cover Paper is to broaden the understanding of the interface between the company and the industry context, and complex system theory will thus contribute to both to the understanding of the interface and to the system view. Innovation theories explain behavioural actions and effects in the spread of an innovation (Frambach, 1993) from an inventor perspective and in attitude building and acceptance from an adopter perspective (Pereira, 2002; Anderson and Ortinau, 1988). TVE prefabrication is not a new building system regarding the technical aspects, but the offered product can influence actor connections and working methods, and hence TVE prefabrication is a hypothetical innovation in Swedish construction for building types other than detached houses for private consumers. It is therefore interesting to study TVE prefabrication from an innovation perspective to analyse and understand phenomena connected with the introduction of TVE prefabrication in Swedish commercial, multifamily and multi-storey housing. Innovation theory thus increases the understanding of the connection and the interface between customers and the companies’ production process, market strategies and product design. Considered as management approaches, lean and agile production is developed in manufacturing where they have shown to be advantageous (Shah and Ward, 2003; Crowley, 1998). One way to increase efficiency and productivity in construction, as well 22

as increase customisation would be if these integrated approaches could be used in construction. The approach of lean construction, adapted from lean production to better fit project oriented on-site construction, does not have in this context the same possibilities for analysis and reflection as lean production because of the process and factory manufacturing orientation in TVE prefabrication. Thus this study is not about learning from construction management principles, but from manufacturing management principles. Management approaches other than lean and agile production, e.g. supply chain management (SCM) (e.g. Lummus and Vokurka, 1999), could have been used in this context, but since factory production is the focus, SCM does not have the same possibility to contribute to learning in TVE prefabrication. Theory of Constraints (TOC) (e.g. Mabin and Balderstone, 2003) is another type of approach that considers factory production, but since lean and agile production embraces many different management innovations in manufacturing, these approaches are thought to contribute to learning in TVE prefabrication. Furthermore, integrated lean and agile production can be seen as a management approach with the ability to manage the interface between the company and the industry context. However, this study is not about making companies or construction lean or agile, but to learn in areas where the manufacturing approaches can be used as sources to increase knowledge and understanding of settings in construction.

3.6 Validity and generalization Validity in research is connected to empirical evidence that the researcher has made a reasonable interpretation of and whose results are useful in some context (Yin, 1994; Denzin, 1989; Maxwell, 1992). Validity relies on research design, data collection techniques, analysis of data and the result. The results of a case study depend on multiple sources of evidence with data needing to converge in a triangulation fashion (Yin, 1994). Every situation in research is unique, and the validity has to be judged in relation to the context and the situation where each interview or observation is made. Denzin (1989) argues that triangulation is important in research if the researcher is to find evidence for, explain, predict or understand certain empirical phenomena. Triangulation is also a common technique to eliminate validity threats in a case study (Yin, 1994; Denzin, 1989; Bryman, 1997). The key word in Yin’s discussion about triangulation is multiple. Multiple case studies, multiple sources of evidence, and multiple data collection techniques are suggested. To increase the validity of the case studies, this research contained multiple case companies within the same line of business, as well as multiple sources of evidence collected by multiple data collection techniques. Validity in research can also comprise attempts to obtain a high data collection and analysis objectivity. Validity through objectivity in case studies and the customer survey were gained, as all interviews were tape recorded and literal transcribed. The focus group surveys were performed with two persons from the researchers’ division present. The meeting notes were printed out by the researcher and then discussed and validated together with the accompanying person. The ability to obtain generalization of results of case studies is dependent on chosen cases and the relation to an imagined population (Patel and Davidson, 1994). The main case study in this research contains the total population within the considered setting, i.e. TVE 23

manufacturers of commercial, multi-family and multi-storey housing, and thus conveys generalization. However, the criterions for generalization in case studies are reasonableness and reliability, not statistical significance. The ambition in this research is thus to argue for probability through rich descriptions, argumentation and triangulation, and not to show obvious necessity.

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4 THEORETICAL FRAMEWORK This chapter presents the theoretical framework of the thesis and outlines the model of analysis. The framework describing innovation in construction is based on the theory of complex systems, depicts peculiarities and culture in construction, and how this may be managed with lean and agile management approaches to obtain innovation and improvement.

4.1 Complex systems and innovation 4.1.1 Levels of complexity in construction The expression and definition of complexity can be three-fold. The expression “complex” is in generally connected to the difficulty or complicatedness of products (e.g. Hobday, 1998; Kotteaku, 1995), though complexity from a system theory view has a slightly different approach. Complexity system studies are the study of what happens when things are connected, when information can flow throughout a system and change the system properties. Complexity system studies are therefore viewed as theories of evolutionary processes of learning. In this context, parts in a system, e.g. peoples and products, are not the main interest, but rather the connections between the parts that formulate the complex system (Lucas, 2000). Complexity in construction research has considered the complexity of product and production, which comprises technical complexity, as edified by several components in a product or activities in a production process (e.g. Baccarini, 1996; Gidado, 1996; Trinh and Sharif, 1996). Complexity in construction has also been connected to the unpredictable and dynamic nature of the construction process where several different actors interact (e.g. Koskela, 2003; Bertelsen, 2002; Radosavljevic and Horner, 2002). Research of complexity in the construction process generally considers individual projects, and does not seem to focus on long-term industry and organizational learning (Kenley, 2005). Complexity research in construction is thus more associated to the variation and unpredictability of connections rather than complexity systems thinking that is related to evolutionary learning systems where system patterns change. From this point of view complexity in construction can be divided into three levels where the first two levels is considered in construction research. The third level is not generally considered, though it is the only one that is connected to the foundation of complexity systems thinking. The three levels of complexity are categorized below. Level 1:

Complexity as a static view, related to the complexity of a product (product level)

Level 2:

Complexity as a dynamic unpredictable system related to a process building up the product (process level)

Level 3:

Complexity as evolution, related to long-term system change (industry level) 25

Level 1 - complexity, i.e. product complexity, can be seen as a static view of complexity, since the connections between parts in different products are basically one-way (Carlsson et al., 2002). Product complexity is related to the complexity of the process that forms the product. Hence, the complexity of the product is in fact a static view and is not actually complex due to the lack of dynamics, but rather due to the dynamics in the production process building up the product. The dynamic view of complexity, level 2 - process complexity, refers to the interaction between parts, e.g. actors in an organizational system (e.g. a firm) in a process or a project, sending information and receiving feedback (Carlsson et al., 2002). Complex evolutionary system, level 3, refers to long-term organizational learning, e.g. on an industry level (Kenley, 2005) and thus Levels 1 and 2 can be connected to a company view, and level 3 is connected to an industry view, Figure 4.1.

Figure 4.1: Three levels of complexity on a company and industry level

This type of system division is also found in literature determining other systems, e.g. population ecology (Hannan and Freeman, 1977), industrial economics (Porter, 1980) and technological change (Schumpter, 1945). This research has focused on two types of complexity, where levels 1 and level 2 represent variability and unpredictability in company processes and level 3 refers to a system view of evolution in an industry. Level 1 and level 2 complexity were used in Paper I to understand the connections between product design and production processes in a company context, with the evolutionary system view being used in this cover Paper to understand the hindrances and possibilities of TVE prefabrication for improvement and change in Swedish housing.

4.1.2 Innovation – evolution in a complex system Complex systems theory is the study of what happens when information flows inside limited systems and between different systems (Lucas, 2000). Thus, one delimited system does not change sharply marked off from its surroundings as it is influenced by other, larger systems that together form the whole. An evolutionary complex system refers to a changing system; complexity describes the evolution to be expected in real systems that survive in a changing environment (RoseAndersen et al., 2005). Complex evolutionary systems strive towards order; a complex system is a system where future structure is created through evolution (Rose-Andersen et 26

al., 2005). In a complex system new structures of systems come into being and old ones are replaced, creating innovation (Lucas, 2000). Innovations that occur in a system can change linkage patterns between parts and thus, change system properties and evolution paths, Figure 4.2. Innovation is thus neatly connected to change in a complex system.

Figure 4.2: A complex system where innovations change evolution paths to create future structure. Developed after Rose-Andersen et al. (2005)

An innovation is defined as an idea, practice or object perceived as new by an individual or another unit of adoption (Rogers, 2003). A thorough understanding of the innovation process in an industry requires insights into both the adoption decision of an individual or an organization, and the overall rate of diffusion within an industrial sector. ƒ

Adoption of an innovation is defined as the acceptance and continued use of a product, service or idea. The adoption process refers to a series of mental and behavioural states that a person passes through leading to the adoption or rejection of an innovation (Howard and Moore, 1988).

ƒ

Diffusion of an innovation is defined as the spread of an innovation throughout a social system (Howard and Moore, 1988).

In literature, innovation is principally modelled as either the diffusion process or the adoption process (Frambach, 1993). Diffusion models focus the overall rate of an innovation within a specific industry sector (e.g. Geroski, 2000), and adoption models focus the characteristics of the person or organization adopting an innovation (e.g. Pereira, 2002) and the attitude to an innovation (e.g. Rogers, 2003; Anderson and Ortinau, 1988). The level of change when adopting an innovation is connected to the radicalism of the technical or organizational change, is classified into incremental and radical change, and modular, architectural and system innovations (Slaughter, 1998; Henderson and Clark, 1990), outlined in Figure 4.3.

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Figure 4.3: Classification of innovations according to technical and organizational level of change

Innovations arising in construction are often connected to modular product innovations by material and component producers where diffusion is easier if no changes in the surroundings are needed. However, theoretical problems related to construction are especially related to system and radical innovations on an industry wide level (Koskela and Vrijhoef, 2001).

4.2 Hindrances to innovation in construction 4.2.1 Construction peculiarities Construction is a specific type of industry with certain peculiarities that influence the characteristics of constructed products, ways of production, and the industry itself (Vrijhoef and Koskela, 2005). Peculiarities found in construction are the one-of-a-kind production, site production, the temporary organization (Koskela, 2003; Riley and ClareBrown, 2001) and governmental control via plan and building regulations. One-of-a-kind production is argued to be caused by different customer needs and priorities, differing sites and surroundings, and different views of designers on the best design solution (Koskela, 2003). One-of-a-kind activities can thus be seen as experiments that lead to improvisation and ad hoc solutions of problems on site. Site production conveys temporary production facilities and the project is, e.g. exposed to the uncertainty and unpredictability in clerk of the weather. The temporary organization is designed and assembled for the purpose of the particular project and is composed of different companies and design practices that have not necessarily worked together before (Dubois and Gadde, 2002) and are tied to the project by means of varying contractual agreements (Koskela, 2003). The three discussed peculiarities of on-site construction are all connected to the project based production nature of the system (Cox and Thompson, 1997). A construction project comprises a great number of different participants with differing goals and interests, and none has control over the entire project (Kadefors, 1995), entailing fragmentation (Bertelsen, 2003). Moreover, each project is one-of-a-kind due to governmental plan and building regulations and each project has to pass through construction permissions issued by local authorities (sometimes with local interpretations). These peculiarities found in construction contribute to the typical division of the construction process into separate phases.

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4.2.2 Structure A variety of innovation in construction models has been presented with the goal of increasing efficiency and quality (Koskela and Vrijhoef, 2001). Within the manufacturing industry the same type of problems have been tackled through different process “controlling” approaches such as: ƒ

Lean manufacturing focuses on reduced costs by minimizing waste (Yusuf and Adeleye, 2002) through a customized production pull philosophy by efficient management of design and production (Crowley, 1998).

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Mass customisation through agile production (Christopher, 2000) emphasizing efficiency in processes and flexibility to respond to planned changes (Sahin, 2000).

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Supply chain management where effective integration of customers, manufacturing and suppliers are core values to an organisations long-term success (Tan et al., 1999).

Improvements in construction have been few compared to manufacturing (Winch, 1998), and the application of manufacturing approaches has been applied in construction (Ballard, 2000), e.g. through the lean construction approach. However, there is an ongoing debate on the usefulness and potential of a lean adoption to construction (Green, 1999), and a number of authors have argued that construction has failed to adopt techniques developed in other industries (e.g. Low and Mok, 1999; Cox, 1996). The major reason for the low rate of innovation in construction, compared to manufacturing, is argued to be the industry specific differences where construction is dynamic, unpredictable and fragmented (Bertelsen, 2003) whereas manufacturing is argued to be the world of order and structure (Bertelsen and Koskela, 2005). Bucklin (1966) defines structure as the number of different types of institutions performing activities that produce and move a good to its point of consumption. A broader, more current definition of structure is how exchanges between parties are patterned (Mohr and Nevin, 1990). According to these definitions the project focus and the peculiarities of construction does convey a low degree of structure. The process focus in manufacturing thus obtain a higher degree of structure as the number of different actors cooperating is reduced, and the exchange between different parties is recurrent and controlled. One possible way to obtain structure in construction is thus a reduction of different types of actors in the production process and a change in patterns between parties in construction.

4.2.3 Construction culture Industry specifics in construction are neatly connected to the culture of construction, and the failure of innovation in construction cannot therefore be exclusively blamed on the unpredictability and lack of structure in production of the product and process level (levels 1 and 2). The culture of construction, i.e. the values held by the members of a given group, the norms they follow and the material goods they create (Barthorpe et al., 2000), has also been argued as an explanation (Dubois and Gadde, 2002). The construction industry is regarded as a mature and slow to change sector (Gann, 1994; Crowley, 1998) 29

and the implementation of innovations in construction is thus expected to encounter several constraints. Construction lacks a systematic and strategic approach to change because its culture remains essentially adversarial, e.g. with continuing reliance on price competition and firm contractual arrangements (Saad et al., 2002). The “problem-solving” culture of construction does not allow any evaluation of current problems because on-site problems and problem solving are a natural part of the construction culture (Winch, 1998). The construction industry thus has difficulties to emphasize essential needs, as many problems are either not seen or ignored, and are rated among “normal features of the business” (Vrijhoef and Koskela, 2000). Bröchner et al. (2002) have investigated the Swedish construction sector with an emphasis on the implications of the local culture and have found that even though interest in developing more innovative organisational relations has increased in recent years, actors in construction nevertheless seem reluctant to change the traditional allocation of responsibilities and the traditional way of working. The peculiarities of construction thus convey a social and technical knowledge based context that is difficult to modify. The construction actors are used to a social and technical surrounding that e.g. enable flexible products, with several different actors cooperating in projects. The building sector consists of many actor groups with different specializations, e.g. architectural and structural design, production management, and material or component supply, working together to create the building product. As every project proceeds individually, knowledge and experience diffusion from one project to another is limited (Dubois and Gadde, 2002). Moreover, a consequent breakdown of openness and trust are found among the construction actors (Latham, 1994). It is argued that competition in construction is mainly based on cost, not value, and a strong incentive for each party in a project to optimize the utilization of their own resources therefore exists, leading to uncertainty and increased costs and lead times (Bertelsen, 2003). However, Crowley (1998) argues that the peculiarities and culture of construction not either are the only causes to the low innovation adoption in construction. Construction professionals will also not adopt new technologies and innovations until they are seen to be beneficial. This connects to arguments found in innovation diffusion theory where the level of innovation adoption is argued to be based on the possibility of an adopter to see advantages of the innovation (Rogers, 2003). However, the apprehension of an innovation is connected to a potential adopter’s norms and environmental culture, i.e. previous knowledge, practical experience (Roehm and Sternthal, 2001; Pereira, 2002) and social environment (Rogers, 2003). To manage the culture and thus, the apprehension of change and different innovations, new knowledge of specific innovations is needed (Saaksjarvi, 2003) as the assumption of risk taking by potential adopters decreases with increased knowledge (Frambach, 1993; Meyers et al., 1999).

4.2.4 The shift from construction to manufacturing The above discussions of innovation in construction implicate a shift of construction towards manufacturing. However, a large part of the lean construction movement has 30

claimed that construction improvements have to be managed within construction itself, i.e. within the context of the existing production situation, to cope with the dynamics of construction, through e.g. planning systems of on-site activities, as the last-planner system (Ballard, 2003). However, neither of the two approaches mentioned above seems to consider the needs and the nature of construction that can assist innovation in construction. Traditional construction has been shown to convey difficulties for innovation when improvements are made within on-site construction, though a likewise shift from construction to manufacturing also seems to be a hindrance to innovation in construction. It is shown that eliminating of construction peculiarities does not necessarily solve problems by itself, but a wider approach is needed (Koskela, 2003). The basic argument is that construction peculiarities causing production problems and waste, i.e. any activity not contributing to the creation of value (Shingo, 1988), are needed to be solved or reduced. But peculiarities do not necessarily have to result in production problems leading to waste, and peculiarities are thus not equal to problems or waste. Sometimes achieving value (economic, environmental, social, cultural and historic) is more important than reducing waste (Vrijhoef and Koskela, 2005). Therefore, the relation between waste and value generation has to be noticed in the context where improvements in construction are considered. Peculiarities that lead to waste and not value need to be better managed, though in some cases the peculiarities of construction must be accepted if the value is greater than the loss caused by waste, e.g. from an economic view. Large and complex building projects may contribute to waste in terms of production, but still produce great value for the social and cultural environment (Vrijhoef and Koskela (2005) mention the Sydney Opera House as an example). Thus, there is not always a need or a solution to reduce or resolve the peculiarities and the culture of construction to achieve improvements. Waste reduction is often connected to an increased amount of repetitiveness in products or in processes, a view related to manufacturing. As a result, design has been related to making and one-of-a-kindness, while value generation has been related to waste reduction. The degree of customisation of a product is therefore often considered only in terms of repetitiveness, without considering the process of design and its relation to value generation (Ballard, 2005). The concept of repetitiveness and findings of developments and methods that increase the level of repetitiveness are, however, argued to be the path to follow for further development of production management in construction. Still, the challenge is to understand design and customisation as a process of value generation and to learn how to integrate design and repetitiveness without sacrificing the essential nature of either (Ballard, 2005). From the above discussion, improvements in construction need both a process nature that reduces waste through repetitiveness and structure and a project nature enabling customisation and flexibility that correspond to the culture of construction. Thus, the project nature of construction has to be considered and lessons have to be learnt from attempts to industrialize construction and from manufacturing derived approaches such as 31

integrated lean and agile production with its ability to manage the interface between structure and culture and thus repetitiveness and customisation.

4.3 Managing the interface of construction and manufacturing 4.3.1 Differences between manufacturing and construction The low innovation rate in construction compared to manufacturing is argued to be due to industry differences, which together with the differences between construction and manufacturing, and the difference related to the definition of structure, can be addressed through the concepts of factory physics and construction physics. The term factory physics is defined by Hopp and Spearman (1996) as “a systematic description of the underlying behaviour of manufacturing systems”. This philosophy improves existing systems and design of effective new systems with control and continual improvements. ƒ

Factory physics is herein further related to process-based manufacturing where one actor owns the entire production process, with production in a factory environment through a controlled process.

The concept of construction physics is a relative new term, coined by Bertelsen (2004), that have not yet been completely defined. ƒ

Construction physics is herein related to project based production, several different actors working together to form the project, on-site production and with variability in environment and production.

The industry specifics of construction and manufacturing described by construction and factory physics can be related and divided into the three levels of a complex system. Differences at the industry level are the process nature of manufacturing versus the project nature of construction. The process nature of manufacturing means continual improvements whereas the project nature of construction physics means an on-site problem solving culture where improvements are limited within the specific project and thus convey limited knowledge diffusion. The main differences on the company process level is that manufacturing or factory physics is based on a process where one single process owner is responsible for the resulting product, whereas in construction physics, a temporary organisation and several different actors are responsible for one or some parts of the finished product. The production process is argued to be controlled in factory physics and uncertain in construction physics due to the site production, but at the product level, products in construction physics are more flexible compared to factory physics, since no standardized production process exists. A schematic of the differences and the industry specifics of factory physics and construction physics are depicted in Figure 4.4. Culture related specifics in construction are also depicted and shaded grey in the figure. However, a shift from construction physics to factory physics is presumed to encounter constraints due to branch connected cultural problems and cultural collisions, e.g. when construction workers become industry workers. However, the assumed culture of manufacturing is not 32

considered in this thesis, though a transfer from construction physics to factory physics is presumed to meet difficulties based on a manufacturing type of culture.

Figure 4.4: Industry specifics related to level of complexity (culture related specifics shaded grey)

4.3.2 Lean and agile production Several attempts to reach the principles of factory physics, and thus structure, have been made throughout the years in industrialize construction. However, lessons from 1960s industrialized high-rise housing programmes show design, layout, choice of materials and construction to result in products that were often disapproved, and the functional design of many prefabricated components did not satisfy consumer desires (Gann, 1996). In beginning of the 1990s Japanese lean production housing systems, inspired by the lean production system of the car producer Toyota, opened possibilities for products with wider degrees of consumer choices. Lean production is a multi-dimensional approach embracing many manufacturing innovations (particularly materials resource planning, just-in-time, total quality management, flexible manufacturing systems and supplier management) (Shah and Ward, 2003) and combines the advantages of craft and mass production, while avoiding high costs of the former and rigidity of the latter (Crowley, 1998). By studying a number of Japanese house manufacturers, Gann (1996) argues the success of lean production in housing to possibly be attributed to many improvements across the whole value chain, some of them of crucial importance: ƒ

Keys to high productivity and reduced costs are knowledge and control of the manufacturing and assembly processes. A higher degree of customisation and control can be delivered through managing the whole production system (Gray and Fowler, 1997). 33

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The use of standard components has to be balanced with flexibility in assembly, related to modularity, an approach that frequently has been viewed as the use of simple building blocks (Rampersad, 1996) or volumetric pre-assemblies (Murtaza et al., 1993). An important aspect in applying a modular approach to construction is the potential for efficiency and effectiveness, i.e. flexibility and agility (Marshall and Leaney, 1999). By performing product modularity in the construction process, overall benefits such as variety, development, production and after-sale will be realized (Marshall et al. 1999)

Modularity is also argued by others to contribute in the reduction of peculiarities in construction. Practical examples of resolving peculiarities of production in construction show that prefabricated modularized houses reduce the three main peculiarities of construction, namely one-of-a-kindness, site construction and the temporary organization (Vrijhoef and Koskela, 2005). Relationships between internal company processes and project processes are the major challenge both in practice and in theory of construction (Gann and Salter, 2000), but lean production is not considered to be enough customer and project focused by some (e.g. Christopher, 2000; Sharp et al., 1999). The lean process is argued to be efficiency orientated – minimizing resource requirements through the elimination of waste, but ensuring acceptable levels of service. With costs minimized, it is possible for a lean producer to offer many features to the customer as standard and give the customer value for many. However, lean, low waste principles are well established in high volume, relative low variety situations (Jina et al., 1997). Therefore, in more customized manufacturing processes, the production also has to be agile. An agile process is argued to focus maximized customer service, and in particular flexibility, while attaining acceptable costs (Naim and Barlow, 2003). The agile process thus focuses on the ability to give customers exactly what they want, when they want it. In both the lean and the agile paradigms the total supply chain may be geared up to meet customer needs, and place the need for time compression strategies as a central theme. However, agility also includes the company to develop the ability to measure the manufacturing system so that it always is geared to suit the prevailing requirements (Jina et al., 1996). Agility is thus to capture requirements and obtain responsive production systems to provide a customized product (Naim and Barlow, 2003). The two paradigms differentiate when value to customers is considered, where the market winner for a lean process is price, and that for an agile process is service (Naylor et al., 1999). Figure 4.5 shows the lean and agile specifics analyzed within the three levels of complexity.

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Figure 4.5: Lean and agile specifics related to level of complexity

Key business processes required for adoption of an approach that consider leanness and agility are the minimization of resource requirements through elimination of waste in the supply chain and maximization of customer service, especially flexibility, at an acceptable cost. Naim and Barlow (2003) argue for the lean paradigm to manage the upstream supply chain, with a focus on planning and reduced costs and lead times where the demand is smooth and standard products flow through a number of value streams (Naylor et al., 1999). The agile paradigm shall be used to manage downstream customer integration and satisfaction where a number of products flow through one value stream and demand is variable. The decoupling point between the two paradigms separates the part of the supply chain that responds directly to the customer from the part of the supply chain that uses forward planning and a strategic stock to buffer against the variability in the demand of a supply chain (Naylor et al., 1999). The positioning of the decoupling point thus depends upon the longest lead time a customer is prepared to tolerate (Hoekstra and Romme, 1992). To overcome problems of variability in demand, the decoupling point can be postponed as late as possible and ensure that the product differentiation occur at that point (Naylor et al., 1999).

4.4 Implications and model of analysis The theoretical framework in this chapter shows the differences between manufacturing and construction at three complexity levels (product, process and industry). The framework indicates that the low rate of innovation in construction is due to the peculiarities and the culture of construction, and that the lack of improvements influenced by competitive management approaches in manufacturing is caused by industry differences. It is suggested that innovation in construction, influenced by manufacturing principles, can be obtained if structure is created in construction and if the construction culture is managed. However, possible improvements and innovations from a structure and culture perspective also have to be considered from a wider approach. It is insufficient 35

to shift focus from construction physics to factory physics and treat construction as manufacturing. The basic argument for improvements and characteristics for innovation in construction is that waste and peculiarities have to be reduced, but sometimes achieving value is more important. Thus, the peculiarities and culture of construction cannot solely be seen as problems that obstruct improvements and innovation. The construction culture and the peculiarities of construction are neatly connected and set the norms for the social environment; hence, value for customers is also generated through peculiarities within the system culture. Therefore it is even more important to consider the interface between structure (reduction of some peculiarities) and culture to obtain innovation and improvement in construction. Obviously, the management of structure and culture can be related to the levels of complexity where structure shall be obtained at the company level, and the culture of construction is managed on the industry level. The theoretical framework suggests modularization and process orientation to render possibilities for increased structure and thus learning from manufacturing, though the company related process orientation has to manage the interface to the industry related project orientation in construction. Figure 4.6 shows the model of analysis in this study, comprising the units of analysis, i.e. the interfaces derived in chapter 3, numbered 1 to 5 in the figure. The company level comprises the internal business environment, and the industry level comprises the social and cultural setting of construction. The supplier unit refers to suppliers in the construction industry that provide another manufacturer or supplier with material, sub-assemblies or sub-systems for production. The customer unit refers to a customer in the construction industry that purchases complete building systems or subassemblies from a manufacturer or a supplier. The production unit relates to the internal company production process that forms a product, and the market/product unit relates to the product offer design (including services) connected to the internal market strategy for the company.

Figure 4.6: Model of analysis

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The theories of complexity, innovation, and lean and agile production are used in this framework to interpret the interfaces between production and market strategies at the company level, and customers and supplier at the industry level, while the theory of complex systems has outlined the frame of the analysis. The main theoretical approaches, key references related to the approaches, and the connection to specific interfaces are outlined in Figure 4.7.

Figure 4.7: Theoretical approaches, related key references and interfaces

The theoretical framework proposes different strategies related to the interfaces in Figure 4.6 and 4.7. Company - industry interface (1) One possible solution to long-term organizational learning and innovation in construction at the industry level can be gained if management principles from manufacturing can be integrated into the construction process. To enable the transfer of principles from manufacturing to construction, an increased structure, i.e. a reduction of different types of institutions in the production process, has to be created. However, an increased structure is not enough to obtain innovation in construction, the culture of construction, i.e. the values held by members and the norms and needs they follow within the industry context also have to be managed within the company context. To handle this interface, structure has to be created at the company level through process orientation, whereas culture have 37

to be managed and considered through project orientation at the industry level. Managing this interface and the optimized relation between process and project orientation is thus the key to innovation in construction. Supplier - production (2) - market/product interface (3) Structure in construction can be reached by reducing institutions in the production process through an industrialized approach. However, industrialization is shown to rely on decreased costs and lead times together with flexibility and customisation. Waste reduction, smooth production and integrated supply chain processes are core values in lean production, a management principle shown to contribute in the supplier and production interface in manufacturing. Agile production is a management principle that has shown to contribute in the market/product and production interface where the production process has to be flexible enough to enable customized products. Customer - market/product interface (4) - production interface (5) The culture and peculiarities of construction convey norms and needs to potential adopters of an innovation. To obtain change and innovation adoption in construction, an innovation has to correspond to the demands and norms of potential adopters. Moreover, potential adopters have to obtain proper knowledge of the innovation via information transfer, thereby decreasing the perceived risk factors related to the adoption of the innovation. Thus, the inventor of the innovation has to consider what the customer needs are and enable products and services corresponding to these needs, together with a production system that is adapted to attain the highest customer value. The core value of agile production is flexibility and customisation in products and processes that match customers’ needs, and thus why agile production is an expedient towards innovation diffusion in construction.

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5 RESULTS This chapter presents empirical results shown in the appended Papers together with additional findings found in the research. First, a general description of TVE prefabrication from a historical perspective, the production process and the product offer is outlined. The description is based on the full case company descriptions in Appendix 1. Thereafter, findings from the appended Papers are presented.

5.1 TVE prefabrication description 5.1.1 Historical perspectives Generally, the history of Swedish TVE prefabrication started in the 1950s. The principal product was either detached housing or standardized booths and barracks produced in a repetitive production process. Through the years the latter product offer was developed to also embrace more permanent, though still movable, buildings as pre-schools, schools and office buildings. The exterior was characterized by the volume element technique and still had the same plain appearance as booths and barracks. To mainly have been based on concepts for movable houses, these volume element products then developed more towards permanent buildings with a higher amount of customisation and flexibility, even though a high degree of standardisation was maintained. Some manufacturers also made use of element prefabrication. In 1995, TVE manufacturers chose two different strategies. Some continued to focus on commercial buildings while others focused on the market of multi-storey housing. Today, the TVE manufacturers prefer either one of the two strategies, namely dwellings as student lodgings or multi-family houses in two or more storeys, or commercial buildings as schools and office buildings, mostly in one or two storeys, Figure 5.1.

Figure 5.1: Commercial building and multi-storey house

5.1.2 System description A timber volume element is a closed three-dimensional structure built up by timber based elements and completed in a factory. The timber volume element contains four load39

bearing walls (exterior walls or volume separating walls), a system of joists, interior roof and a number of partition walls, each representing an element. After the volumes have been finished in the factory they are transported to the construction site, assembled into a complete house and installations between the volumes are connected. As volumes are built up by four load-bearing walls, volume layouts are limited by these walls, which in turn are limited by factory layouts and transport. The size of a volume element is limited to an outer width of 4.15 meters, and an outer length of 13 meters. For element transported on roads the internal height of the volume element can be up to 2.60 meters, but for transportation by train, tunnels can limit the volume element height to 2.40 meters. To meet the requirements for airborne and impact sound insulations the timber floor structure dimension is relatively thick compared to a traditional concrete floor structure to obtain enough weight and stiffness. Thus a timber built house become totally higher than a comparable house (regarding interior wall heights) in concrete. At the same time the volume separating walls imply double interior walls, and the inner dimensions in a room are thus also reduced compared to a traditional single wall.

5.1.3 Construction process TVE manufacturers are able and prefer to take care of the whole construction process from design to a complete building. The most profitable for the total cost and lead time is if they have the opportunity to take care of and control the whole process. An advantage is increased control over the costs, as production is not disturbed, though the disadvantages for architects and customers are that unlimited design is restricted. In the design phase, the companies often have their own architects or hire architects with whom they have long term relationships with. When the architectural design is ready, the companies also have their own structural designers work out the frame and the building elements design. Generally, the TVE manufacturers traditionally purchase subcontractors and consultants, with practically always the same actors and individuals, familiar with the manufacturers’ routines and working methods, being selected. Of the total production time for a volume element house, 80% is located in a factory, which explains why time consumption for on-site activities is small compared to the volume element prefabrication. Assembly and finishing of a house on-site only takes a couple of days. Risks such as moisture damage are thus decreased compared to traditional on-site construction. Relatively simple distribution and short on-site assembly times also entail competitiveness of volume element prefabrication for distance markets. The production phase for a volume element is divided into five stages, outlined in Figure 5.2.

Figure 5.2: Volume element production process

Volume element production starts with element manufacturing, where the production process is depicted in Figure 5.3. 40

Figure 5.3: Element production process

The factories have static workstations where elements such as interior roofs, floor structures, partition and volume separating walls, are manufactured. The frame of the elements is finished first, Figure 5.4, and the elements are then insulated and installations are placed inside. Thereafter, boards are placed on the frame to seal out the elements and subassemblies as doors and windows are placed in the elements. When the elements for one volume are finished, the required elements are moved to a volume assembly station in the factory and the volume assembly starts. The wall elements are placed and fixed on to the floor structure element, Figure 5.4, and the roof element is then placed on the top.

Figure 5.4: Element manufacturing and volume element assembly

Finally, the volumes are completed with flooring, finishing, installations, wardrobes, cabinets and white goods. The completed volumes are then covered with moisture-proof tarpaulins before transportation to the construction site. The transportation is made with supplied trucks on roads or by train. At the construction site the volumes are assembled to the complete house either by the TVE manufacturers own employees or by companies the volume element manufacturers have relationships with, Figure 5.5.

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Figure 5.5: Transportation of volumes and final volume assembly on-site

5.2 TVE prefabrication problems and development areas A summary of results presented in the appended Papers is depicted in Figure 5.6 and further described in the following chapters.

Figure 5.6: Summarized main results from the appended Papers

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5.2.1 Production Generally, TVE manufacturers have certain problems with the design of their factory layout. Most layouts are not designed for flexible volume element production and ad hoc solutions originating from an element-manufacturing layout typically still exist. One typical problem encountered is thus the need of improved internal logistics, e.g. regarding the flow of material in production. High customisation demands increased information to customers for them to understand what decisions causes longer lead times and higher costs. The correct procurement of information from customers is also important for the case companies. The problems of individual TVE companies regarding the information flow are further discussed in Paper I. The design phase is a limitation for TVE manufacturers because it demands large efforts to be completed at early stages before the production phase starts. To decrease costs and lead times, it is also evident that an increased knowledge about building systems of volume element prefabrication for architects and customers is needed. Advantages would appear if the manufacturers did not have to adjust an already designed house to their building systems, entailing double design phases and not-optimal conditions for an efficient prefabrication strategy. Low loyalty to a settled product design in the late phases affects the process complexity and makes prefabricated products much less effective. Two interdependent sources cause this, specifically customers (e.g. contractors, real estate trustees etc.) who do not understand the product and the effect of late changes, and employees (e.g. designers, salesmen) of manufacturers who have to have loyalty to the system and not accept late changes. The kind and degree of in-built knowledge, i.e. product design of the delivered product, influences the flexibility demand of the production organisation. A project where the whole construction process is handled requires a flexible organisation with several different skills and varying knowledge involved in the process.

5.2.2 Market The collective apprehension of TVE manufacturers is the need for the market to expand, mainly to enable developments of the internal production process. However, the manufacturers experience hesitation towards TVE prefabrication of potential customers together with a weak knowledge base of the production process and the product offer. The collective apprehension of TVE manufacturers regarding potential customers is depicted in Table 5.1 (Table 2 in Paper II) together with the view of potential customers of the TVE product offer. The table also outlines requirements of potential customers for a general building system. A more complete description of these apprehensions in Table 5.1 is described in Paper II.

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Table 5.1: TVE manufacturers and potential customers view of TVE prefabrication

5.3 Business and market aspects in complete building system delivery The study presented in Paper III has investigated business and market strategies for suppliers of timber, steel and concrete that act with a clear complete building system undertaking. Results show that the mature and large steel and concrete suppliers have most of their production capacity and knowledge in-house. The studied timber component suppliers show opposite strategies. Outsourced component production has turned timber component suppliers into pure sales and marketing companies that focus on customers instead of manufacturing products. The results show that the more successful steel and concrete companies focus on activities and services besides their main product, and they have close relationships with both potential and present customers. The companies offer value-adding activities such as personal and technical support and software knowledge for structural design of components and calculations to the customer. They also have extensive customer programs where potential customers are invited to customer meetings. Customers influenced the companies’ organizational design, as sales networks are oriented after the main customers’ location. The steel company also has strong confidence in a well-known trademark that is extensively launched to potential customers. The less successful timber component suppliers do not focus on close and personal contact with potential customers. Instead, they focus on personal contacts in projects where customers already have adopted the building system. Though the timber companies claim a clear customer oriented strategy, the largest timber component supplier mainly offers information to potential customers via a handbook. 44

6 ANALYSIS AND DISCUSSION This chapter present the analysis and discussion of the results outlined in chapter 5. The findings are analyzed within the model of analysis presented in chapter 4 and discuss the comprehensive aim of this research, i.e. to develop the understanding of obstacles and feasible improvements in Swedish housing based on TVE prefabrication and finding hindrances and possibilities of TVE prefabrication from integrated production and market aspects.

6.1 Company - industry interface The industry context of construction and Swedish housing influence the company specific hindrances and possibilities for the TVE manufacturers, at the same time as TVE prefabrication can influence possible improvements in the industry context of Swedish housing. Findings in Paper I show that TVE prefabrication is more related to factory physics than construction physics, and the interface between the company context and the industry context is connected to the difference between factory and construction physics. TVE prefabrication can thus be seen as a link between construction and manufacturing, and an understanding of the interface between the industry context and the company context is therefore important if the purpose is to understand TVE prefabrication. The main difference between factory physics and construction physics on the industry level (level 3 in a complex system) is that the manufacturing industry is based on a process nature, whereas construction is based on a project nature (Cox and Thompson, 1997). The differences in structure between factory physics and construction physics have been argued to be the main reasons for the low innovation rate in construction compared to manufacturing and the low rate of innovations in construction inspired by management principles from manufacturing (Bertelsen, 2003). Transformation of management approaches from manufacturing and other industries to on-site construction, such as lean construction, have not shown to be entirely advantageous (Green, 1999; Low and Mok, 1999), and the only right way therefore seems to be to first change construction towards the structure that is found in manufacturing. TVE prefabrication differs both from traditional on-site construction and element prefabrication as uncertainty among actors in the supply chain is decreased because one single actor, the TVE manufacturer, owns the whole process from design to the complete house (Paper I). Hence, TVE prefabrication decreases some types of peculiarities shown in construction physics and brings construction one step closer the structure of factory physics. TVE prefabrication thus has potential to transfer manufacturing principles like lean and agile production to construction because the production system is more related to factory physics than construction physics. The interface between the industry context and the company context is also influenced by the culture in the industry (construction and Swedish housing). Therefore, an increased structure is not enough for innovation and change; the culture of construction has also to be managed. The culture of a social system or an industry (connected to the industry level) is built up by the values held by the members of the system, the norms they follow and the material goods they create (Barthorpe et al., 2000). Construction physics entail flexibility 45

in product and production processes, at the same time as this is the normal way of working, and thus is a culture in construction, despite the perceived high costs and long lead times. Furthermore, it is argued that waste reduction to obtain reduced costs and lead times not always is advantageous in preference to the value generation that can be gained by the culture of construction (Vrijhoef and Koskela, 2005). Reduced costs and lead times are asked for in construction, but as culture is built up by the values of the social system, it is close to believe that the customer value most likely is perceived to be higher (or at least equal) in flexibility and design, compared to cost and lead time reduction. This is not because flexibility and attractive design are more advantageous compared to cost and lead time reduction, but because flexibility and design are the norm and the natural state in construction, and thus determine value. This is confirmed by the low adoption of early attempts of industrialization of construction, where main goals were decreased costs and lead times, while flexibility in the product could not correspond to customer demands (Gann, 1996). An optimization between flexibility, costs and lead times towards the highest customer value is needed to obtain innovation and this is supported by this research. The results (Paper II) show that some of the main customer demands of a general building system are flexible and convincing design, but also time and cost efficiency. The TVE prefabrication strategy is based on facilitating decreased costs and lead times (Papers I & II), though as shown, both theoretically and empirically, flexibility is also needed. Flexibility is, however, one of the main internal problems (company process level – level 2) in TVE prefabrication if the goal is to offer lower costs and shorter lead times compared to traditional construction (Paper I & II). Lack of flexibility is also seen as a disadvantage of TVE prefabrication by potential customers (Paper II). Construction physics entail a flexible product where the design is not limited as in factory physics where repetitiveness is the objective (Ballard, 2005). This contributes to the findings in this research where potential customers perceive TVE prefabrication as lacking a convincing design. Hence, the low adoption of TVE prefabrication can be connected to a perceived low value of the product due to its limitation in flexibility and design. Additional results in this research interpret similar phenomenon. It is shown that TVE prefabrication is successful for student dwellings where the value for customers is more connected about decreased costs and lead times, and the demand for flexibility and special design do not have the same importance. On the contrary, results also imply that cost efficiency is one of the most significant improvements for TVE prefabrication, if a potential customer is to adopt the building system. However, costs are not articulated as a demand for low costs regarding a general building system, but as a need for control of design and quality that together form longterm administration costs. Likewise, there is an articulated customer need for building systems to fulfil functional demands, despite the fact that these demands are comprised of national building norms and standards. This can be connected to the lack of openness and trust in construction (Latham, 1994) partly due to the culture of price competition and firm contractual arrangements (Koskela, 2003; Saad et al., 2002; Bertelsen, 2003). In the specific case of TVE prefabrication the demand and apprehended uncertainty for fulfilment of functional demands, especially regarding multi-storey housing, can be closer connected 46

to the culture related to the products a traditional industry system creates. The apprehension of an innovation is connected to potential adopters norms and environmental culture in the form of previous knowledge and practical experience (Roehm and Sternthal, 2001; Pereira, 2002). In Sweden, concrete and steel are the traditional frame materials in commercial and multi-storey housing, and it is here where construction actors have their knowledge, both regarding building materials and the production process. Timber is long since accepted and prevalent in private dwellings, but has seen limited use in commercial and multi-storey housing, for instance due to government regulations. Compared to TVE prefabrication, traditional construction can also offer customers the opportunity to understand the production process because of previous knowledge, making the customer feel control over the process and the product. From an industry – company interface perspective, it is shown that innovations in construction are often modular and technical product developments that do not demand organizational change and thus only comprise the company level (levels 1 and 2). However, research derived development areas in construction are often related to system innovations and organizational change and thus comprise change at the industry level (Koskela and Vrijhoef, 2001). To obtain long-term change and organizational learning on the industry level, a system innovation is needed with the possibility to manage the construction culture and thus comprise organizational change. TVE prefabrication in commercial, multi-family and multi-storey housing is a product offer that displays characteristics for a system innovation and thus comprises both the company and the industry level of a complex system. For potential adopters, TVE prefabrication is a new building system in multi-storey housing that lacks all required information. Compared to traditional on-site construction, TVE prefabrication requires new co-operative patterns between the customer and the manufacturer, and the process knowledge of the traditional construction process is outmoded (Paper II). To manage the culture and thus the apprehension of TVE prefabrication in multi-storey housing, new knowledge of the production process and the product is needed (Saaksjarvi, 2003) as potential adopters’ assumption of risk taking decreases with increased knowledge (Frambach, 1993; Meyers et al., 1999). In summary, the hindrances and possibilities in the company – industry interface shows that: ƒ

TVE prefabrication has the possibility to decrease peculiarities in construction to obtain waste reduction and manufacturing related structure in the production of products to the housing construction industry.

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In general, customer values of housing construction are related to flexibility and convincing design, though cost efficiency and short lead times also obtain value, but not to the same extent as in, e.g. student dwellings.

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The norms of the housing construction industry limit the adoption of TVE prefabrication, since timber is not perceived to hold the same value as steel and concrete due to historical prejudices and lack of knowledge. 47

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TVE prefabrication is a system innovation in commercial, multi-family and multistorey housing, and new knowledge to potential customers is thus needed to show the advantages of the building system and to overcome cultural based hindrances and prejudices.

6.2 Supplier - market/product - production interface The keys to innovation in housing in the company-industry interface are to integrate a flexible product with optimized levels of costs and lead times towards the highest customer value. This integration has to be managed in the supplier-market/product-production interface. However, flexibility and customisation requires an increased information flow not only to and from customers, but also in the production process. This is a development area for the studied manufacturers as their internal logistics strategies and their factory layouts are not developed for high production flexibility (Paper I). However, learning from manufacturing principles like lean and agile production could assist improvements and it is argued that an integrated lean and agile process will help integrated production efficiency and customized products (Naim and Barlow, 2003). A practical example within lean and agile production approaches is modularity (the use of standard components balanced with flexibility in assembly) that has shown to contribute to the reduction of peculiarities in construction and improve the production process. Modularity is somewhat used in the TVE companies, with their strategies also being based on this philosophy (Paper I). However, the use of modularity seems to be an area that can gain further from adoption and improvement, together with improved material and resource planning (MRP). The TVE manufacturers thus have to standardize their production to obtain overall process orientation at the company level, though integrated agility also demands the product offer to be customized and thus somewhat project oriented. According to Naylor et al. (1999) a manufacturer of customized products also have to find the latest possible point in the supply chain where differentiation of standard products can be obtained. Furthermore, improved agility requires the adoption of business processes that integrate production and sales functions, and the introduction of customer centred performance measures to understand what the acceptable relation of costs, flexibility and lead times are and to enable an adaptable production process based on customer demands. Main hindrances and possibilities in the supplier - market/product - production interface found in this research are thus that: ƒ

Hindrances in TVE prefabrication that originate in the industry – company interface have to be managed in the supplier - market/product - production interface to obtain optimized integration of manufacturing and construction. As structure is reached, learning from integrated lean and agile production can be gained to improve this interface.

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Improvements in TVE prefabrication and in the interface of market and production can be gained if increased and developed modularity and material resource planning and integration between production and sales functions together with more responsive and measured production systems is adopted. 48

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It is important to understand at which latest possible point the decoupling point between standardized components and differentiation towards flexibility and customisation can be settled.

6.3 Customer - market/product - production interface The culture of construction contributes to the demands and needs of actors in the housing industry. To obtain innovation it is shown that innovations have to correspond to the needs of potential customers (Paper II) and that potential customers in construction are convinced about the possible benefits (Crowley, 1998). Results show that the claimed advantages of the TVE building system by the TVE manufacturers are the complete building system undertaking, the controlled factory environment, high quality and a stable price and short lead times (Paper II). However, potential customers needs of a general building system and their perception of TVE prefabrication do not match. This obtains a negative attitude to the building system, mostly regarding multi-storey housing. However, customers with their own practical experience of the building system have a positive attitude to TVE prefabrication in multi-storey housing, meaning that potential customers with a negative attitude lack actual knowledge of the building system. Information about TVE prefabrication to potential adopters is thus needed to change the apprehension of the building system as results imply that customers lack trust in both the TVE manufacturers as inventors and TVE prefabrication as an innovation in multi-storey housing. The lack of adoption of the innovation seems to be connected to trust that can be obtained with an improved information transfer. Information channels that have shown to contribute to increased customer knowledge are visible information that enable personal experience knowledge, e.g. via demonstration objects, and strategic alliances between inventor and customers (Paper II). Despite the difference between TVE prefabrication and Swedish component suppliers in concrete, steel and timber, there are also similarities as the complete system undertaking, indicting that learning between the building systems is possible. Results found in Paper III are thus analyzed and integrated as a source of learning for TVE prefabrication. However, it is important to remember that we are dealing with two different supply-chain strategies, and that direct learning and transfer of strategies may thus not be possible. Results show that mature concrete and steel component suppliers make use of a variety of value adding activities to transfer information to existing and potential customers (Paper III). These companies focus on daily and personal contact with potential customers via, e.g. technical support, customer programs and the sales division located after main customer locations. Successful steel and concrete companies have a clear strategy to market their trademark and this seems to be a successful strategy. The timber component suppliers that have shown a lower market performance have another strategy, namely to focus on existing customers and entice potential customers with a handbook, though this does not seem to be a successful strategy. Of the two timber component suppliers studied in Paper III, one does no longer exists (Nord, 2004), and the other one not has been able to grow and develop during the two years this research project has been performed. 49

The different strategies, i.e. personal contact, technical descriptions and their respective value adding for customers can be linked to trust of an innovation and an inventor. Moreover, findings in Paper III show that a supplier of components should prioritize the customer focus (activities and services beside the main product) and customer integration (close relationships with customers) before knowledge networks (ability to collect knowledge from others into the firm and to keep the obtained knowledge inside the organization) and supplier networks (strategic and long-term supplier relationships). This implies that for an introduction of a complete building system, e.g. TVE prefabrication, to the housing construction market, information channels and services to customers are by way of introduction likewise, or even more, important than the internal company business strategies. The same type of issue is supported by Saad and Jones (1999) which argue that downstream customer focus is the weaker link and needs to be improved in construction if more internal business strategies as supply chain management are to be realised. Without direct arguments for transfer of this result from component supplying to TVE prefabrication this result however, contributes to the understanding of hindrances and possibilities for TVE prefabrication, where focus today mainly is improvements in internal company processes. The customer - market/product - production process interface shows hindrances and possibilities as: ƒ

Information channels and services to customers are likewise important to focus on as internal business strategies for a complete building system manufacturer and supplier.

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Potential customers lack the knowledge and trust of TVE prefabrication manufacturers and the building system, and proper information to potential customers has to be improved. Trust and changed attitudes can be obtained through an information transfer via personal experienced knowledge in demonstration objects and strategic alliances.

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Activities that add value and trust to a product are information transfer through daily and personal customer contacts via e.g. technical support, customer programs, sales divisions located after potential customers and marketing of trademarks.

6.4 Concluding discussion A shift of construction towards manufacturing through the reduction of waste generated by peculiarities and a culture that detain structure in construction is discussed. Lean production in manufacturing is often subordinated to reduction of waste but this is not enough in construction. The reduction of waste still has to contribute to the value of the customer that responds to the culture in construction. Construction can therefore, from this point of view, not be seen or even be compared to manufacturing (Ballard, 2005). However, lessons can still be learned from manufacturing to construction. In parts of construction where products are modularized and where the product and process level 50

(levels 1 and 2) are performed in a factory environment and connected to factory physics, construction can be turned towards manufacturing through process orientation; here lessons can be learned from lean production. However, the industry level (level 3) has to cope with the culture of construction. In this case, the value generated by project orientation may be more advantageous than process orientation from a flexibility and customisation point of view in certain contexts (Vrijhoef and Koskela, 2005). This is supported by results from this research. Potential customers in TVE prefabrication seem to give more value (based on cultural norms) to flexibility than decreased costs and lead times, as they rather choose to stick to traditional construction where value is gained mainly from flexibility rather than cost reduction. However, reduced costs and lead times are still important issues, but from a limited perspective, since the effects of repetition that gain reduction in costs and time are not solely adding value to the customer. However, this is not the only reason for the low adoption rate of TVE prefabrication, but can most likely be one explanation. Thus one challenge of TVE prefabrication is to manage customisation and flexibility as a process of value generation in the interface between the company and the industry level, and learn how to integrate flexibility with waste reduction, as related to a manufacturing view, on the company level. This may be considered through integrated lean and agile production (Naim and Barlow, 2003). My belief is that prefabrication and complete systems undertaking, e.g. via TVE prefabrication, is one way towards improvement at the industry level, but only for a certain type of construction. There will always be projects or houses that require traditional on-site construction or part-wise prefabrication due to high flexibility demands and technological product complexity that cannot be satisfied even with high flexibility in factory manufacturing. Furthermore, some types of projects with high flexibility demands are not possible to manufacture at a lower price compared to on-site construction. Complete systems undertaking and volume element prefabrication is competitive in projects where repetition effects are gained, as e.g. student dwellings and large multifamily dwelling projects. From a lean and agile production perspective it would, however, be possible to also obtain competitiveness for this type of building system in more customized projects, e.g. tenant-owned dwellings and commercial buildings. This is the basis for my personal perceived possibilities for TVE prefabrication. TVE reduces the three main peculiarities of construction, but new ones are obtained due to the interface between the process nature of manufacturing and the project oriented construction nature. In general, developments in TVE prefabrication, and manufacturing related processes in construction, are mainly connected to the management of manufacturing related issues, such as internal logistics. However, the basis to these development areas is to enable smooth connections to the construction industry. Solutions to improvements in construction are thus, from this point of view, not to change the peculiarities of construction that convey and enable flexibility, since flexibility is necessary to obtain functional and socially accepted houses, but to obtain learning to areas in housing where improvements by manufacturing related construction can be gained.

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6.4.1 Method and theory discussion The chosen methods in this research can be discussed, since the choice of research strategy has most likely influenced the presented results. The choice to use multiple case studies and surveys has already been discussed in chapter 3, but some comments are still entitled. The data collection sources in the case studies were personal interviews with individuals who possessed a comprehensive responsibility and understanding of the case companies’ product and process designs. Some interviews were also performed with employees at the manufacturers. However, a more comprehensive understanding of the manufacturers’ internal problems at the company level would probably have been attained if an increased number of employees have been interviewed. Likewise more extensive observations of the factory production may have contributed to the understanding. The customer survey and the focus group survey have more or less focused on the connection and interfaces between the company and the industry level. However, as the total population of interest has participated in the main case study, results from this research can be generalized to Swedish TVE prefabrication. As well, the total population shows similarities in production and market hindrances, and generalization conclusions to Swedish TVE prefabrication in commercial, multi-family and multi-storey housing is thus possible. Findings in the main case study are also validated by the focus group surveys and thus appear to be reliable. The population of interest in the customer survey comprised all municipalities with enough housing construction knowledge to contribute to the result. As smaller municipalities did not seem to be the most probable potential customers in the future, the chosen population of interest ought to represent the vast majority of potential customers for TVE prefabrication and for commercial, multi-family and multi-storey housing in general. The chosen theoretical approaches are also discussed in chapter 4, but other theoretical analysis models, e.g. supply chain management or construction management perspectives could have gained other results to the study. As another example, a system innovation perspective, where actors other than a single inventor and an adopter influence the innovation behaviour, instead of linear innovation diffusion and adoption perspective may have obtained another picture of the innovation behaviour of TVE prefabrication in Swedish construction at an industry level. However, the in-depth study of the connection between manufacturers and potential customers at the company level would then most likely not have reached the same knowledge and importance as it did in this study. Furthermore, the choice to unite the results in this research in a licentiate thesis consisting of previously published articles with a cover Paper, has resulted in findings that may not have received the same importance as in a monographic thesis. The chosen strategy to make use of the appended Papers and a cover Paper has resulted in findings from the appended Papers focusing on different interfaces at a company level (levels 1 and 2) have been raised to also comprise possible improvements and hindrances at an industry level (level 3).

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7 HINDRANCES AND POSSIBILITIES FOR TVE PREFABRICATION This section report the overall conclusions of this research, based on the results in chapter 5, appended Papers, cross Paper findings and analysis presented in chapter 6. The conclusions are discussed within the comprehensive aim of the thesis. Scientific and practical contributions and suggestions for further research are also presented.

7.1 Housing improvement possibilities Problems discussed within the Swedish housing construction industry are a lack of competition, quality and increased costs. Improvements to cope with these problems are emerging; however, these efforts have shown to be slower and less successful (thus far), compared to manufacturing and other industries. Explanations are argued to be industry specific differences, peculiarities and the culture of construction. An implication is the need for development of innovations that can manage the peculiarities and culture of construction. The industry specific differences between manufacturing and construction also detain ad-hoc type transfer of competitive management principles from manufacturing to construction. To reach the same improvements as in manufacturing, enabling a transfer of management approaches to construction, this research has shown a need of increased structure, i.e. a reduction of different types of actors in the production process and a change in relational patterns between parties in construction. A modular and complete building system undertaking approach has shown an opportunity for such improvements, due to the reduction of the three main construction peculiarities (one-of-a-kindness, site production and temporary organization). However, the change from construction to manufacturing to obtain structure in the construction sector should not be overemphasized, as it is not always advantageous to treat construction as manufacturing and totally shift focus from project orientation to process orientation. The peculiarities and the culture, i.e. the norms the social system follow, of construction form industry values; values that can be lost if the shift is overestimated. This research indicates that improvements and innovation in housing construction can be gained if the characteristics of construction and manufacturing are emphasized at the level where they can convey the highest customer value. Thus, structure through factory physics should be obtained on a product and process level, while the culture of construction at the industry level should be managed from a construction physics perspective. If structure is reached, theoretically derived implications suggest that learning from management principles can be obtained in construction. The theoretical framework indicates that innovation in housing construction can be reached through two parallel innovation paths based on modularization and complete building system undertaking, as outlined in Figure 7.1. Modularization reduces the peculiarities of construction physics, transfers construction physics to factory physics, and entails structure and process orientation at a company level. This implies one process owner, controlled production and a standardized process. Also important is a transfer of construction physics to factory 53

physics by management of the construction culture through project orientation that entail customized and flexible products at an industry level. Lessons learned form industrialization attempts in construction show the possibility (when structure is reached) and advantages of using an integrated lean and agile production approach to handle the interface between process and project orientation, and thus manufacturing and construction at the company and industry level.

Figure 7.1: A platform for management of structure and culture in housing through modularized and complete building system undertaking assisted by integrated lean and agile production philosophies

However, projects that demand high flexibility and technological complexity may not be best managed with manufacturing influenced building systems, though the suggested solution for innovation in construction may, however, contribute to improvements in a certain part of the housing industry. This research shows that TVE prefabrication has the possibility to serve as a platform, related to Figure 7.1, for increased structure in commercial buildings, multi-family and multi-storey housing, due to similarities with factory physics and thus manufacturing. However, the culture of construction still brings demands such as flexibility and customisation, and this has shown to be the main hindrance for TVE prefabrication where the central product strategy is to offer cost and lead time reductions compared to traditional on-site construction. TVE prefabrication is successful for student dwellings and in this customer niche the building system satisfies customer demands for fast and cost efficient construction and thus attains high customer value. However, if the goal for TVE 54

prefabrication is to widen and increase the market towards more general housing, other values than cost and time efficiency have to be offered to customers. According to theoretical assumptions and empirical results, ways towards such improvements are flexibility and improved design of products, where the customer value level of flexibility is optimized towards the customer value gained from decreased costs and lead times.

7.2 Practical contributions 7.2.1 Production and market hindrances The TVE prefabrication building system has not yet gained confidence on the Swedish market. The same type of building system has for a long time shown to be competitive in detached housing, but this research demonstrates a missing link for customer adoption of TVE prefabrication in commercial buildings, multi-family and multi-storey housing. The TVE prefabrication product offer has not always the possibility to respond to customers’ need of flexibility and at the same time enable low costs and short lead times. The flexibility problem in TVE prefabrication is connected to internal production problems and external relationships to customers and suppliers. Increased flexibility and customization yields an increased need for improved internal logistics and information flow to and from customers and suppliers. However, these are not the only problems for the TVE manufacturers. Problems also occur in managing attitudes of potential customers, where attitudes and norms are based on the construction culture in the Swedish construction industry. Some explanations to the negative attitudes are found in the history of timber in Swedish housing. Up until 1995 timber frames were not allowed in higher houses, timber housing is often connected to moisture and sound level problems and the TVE prefabrication method has previously only been used in dwellings, barracks, booths and simple movable houses. This research shows that potential customer’ attitudes towards TVE prefabrication are often connected to this historical prejudice about poor performance and low quality. Potential customers perceive TVE prefabrication to be connected to unfulfilling of functional demands such as adequate fire and sound insulation levels and fire protection, and that the building system is associated to “low-cost”-design and movable barrack designs of houses. The negative attitudes are specifically connected to the use of TVE prefabrication in multi-storey housing. The norms of the housing culture thus limit the adoption of TVE prefabrication because timber is probably not perceived to obtain equivalent, or higher, value compared to concrete and steel, due to lack of knowledge and historical prejudices. Furthermore, it is shown that the potential customers not only distrust the buildings systems but also the capacity and intention of manufacturers to fulfill long-time quality and administration costs.

7.2.2 Production and market possibilities This research shows that the TVE prefabrication production and market aspects, and the interface between and to the construction industry, are the areas where TVE prefabrication possibilities can be gained. Compared to on-site construction and element prefabrication, the TVE prefabrication can obtain increased structure. Though there are 55

still possibilities for increased improvements if the TVE manufacturers can develop the internal production to cope with integrated flexibility market demands and decreased costs and lead times, and thus raise the customer value. As tentatively shown by the theoretical implications, and to some extent in all appended Papers, this interface can be improved by adoption and implementation of an integrated lean and agile philosophy. Lean production focus on price competitive products with acceptable levels of services whereas agile production focuses on flexibility and customization with acceptable levels of cost. TVE prefabrication thus has to optimize the relation between the two philosophies. Practical examples are to find the latest possible decoupling point in the supply chain where standard components can be differentiated to obtain the highest customer value, through improved use of standard components, balanced with flexibility in assembly, i.e. modularity. The TVE manufacturers also have to measure what in a product offer that obtain the highest present customer value, through, and together with improved and closer connections and cooperation between suppliers, customers and the internal production. Theoretical implications yields that improvements, with the ability to influence the construction culture and structure, have to be system innovations, i.e. innovations that comprises extensive organizational change. This research shows that TVE prefabrication in multi-storey housing can be considered as a system innovation as it demands new knowledge and actor integration patterns in the housing industry. However, to enable adoption of the TVE prefabrication system innovation to change structure and manage the construction culture, it is clear that there is a need for improved information transfer from the TVE manufacturers to potential customers. Improved information channels have to infuse potential customers of the potential and the advantages of TVE prefabrication, and enable trust both to the system and to the manufacturer. Potential customers themselves imply that visible information and personal experienced knowledge is a key to trust. To obtain trust to the product and the manufacturer, strategic alliances and demonstration objects is indicated to be possible solutions. A close customer relation has shown to be advantageous for complete building system component suppliers to render trust of new potential customers, and trust is also obtained through marketing of trademarks. Customer activities as technical support, customer programs and invitation to demonstration meetings raise the value and the confidence of the product offer. It is also apparent that a customer focus strategy, where product information via a handbook, i.e. technical descriptions, is used, not is sufficient. Moreover, suggestions for complete building systems suppliers are that information channels and services to potential customers on the industry level are likewise important as the internal business strategies on the company level. Lessons learnt for TVE prefabrication may thus be to improve the market interface to the industry and not only focus the production process interface to the industry. A summary of shown practical hindrances and possibilities for TVE prefabrication from a production and market perspective is outlined in Figure 7.2.

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Figure 7.2: TVE prefabrication production and market hindrances and possibilities

7.3 Scientific contributions Scientific contributions shown in this research is that TVE prefabrication can serve as a practical example of a building system that have to manage the interface between construction and manufacturing, and that corresponds to the theoretical derived platform for innovation in housing construction. The innovation platform is based on a modularization and complete building system undertaking that consists of characteristics derived from factory and construction physic. The platform can manage the interface between factory and construction physics on a company and industry level, through integrated process and project orientation supported by lean and agile production philosophies. This research thus shows the possibility to utilize the integration between construction and manufacturing to obtain innovation in housing construction, though the characteristics of the interface, such as e.g. culture and industry specifics, also have to be considered. Some of the findings in this thesis, based on TVE prefabrication, can be emphasized into more general scientific contributions. Trust is not a phenomenon that solely arises in the diffusion of TVE prefabrication as an innovation. This research implies that customers in construction have a low degree of trust also to general building systems and contractors, mainly regarding long-term durability and administration costs. Trust can therefore be 57

seen also as an important ingredient in innovation diffusion processes in construction in general. Culture of a social system implies norms that form what is perceived to be value in a system. If an innovation is to be perceived as better than the product it replaces the innovation has to correspond to values in the social system where it is diffused. Decreased costs and lead times are asked for in housing construction, though this is, however, not issues that seem to render the highest value in the housing industry. Flexibility and customization, that is tradition and a natural part of construction, is indicated to give the customer a higher or equally perceived value. Innovation adoption is influenced by attitudes of potential adopters, formed by prior practice and knowledge. Hence, to change possibly negative attitudes towards innovations, new knowledge to potential customers is required. To enable adoption of complex innovations in construction that is deep-rooted in historical knowledge and attitudes, this research has shown that the innovation diffusion and adoption process have to be united by visual and sensation connected information that able the individual to create own new knowledge. Besides the contribution of this research to the understanding of innovation in construction, additional insights in complexity, complexity systems theory and lean and agile production has also been gained. This research has shown that understanding of complexity and complex systems in construction can be based on three levels, namely product, process and industry, further divided into a company and industry perspective. This division has shown to contribute to the understanding of different connections and interfaces on the company and industry level. Furthermore, an increased understanding is obtained in how an integrated lean and agile approach can be utilized in the interface between manufacturing and construction.

7.4 Future research TVE prefabrication shows possibilities for increased structure in construction due to similarities to process orientated manufacturing production characteristics. However, this research suggests an optimization between issues such as costs, lead times, flexibility and design, to obtain maximized customer value of a product. Hence, a future research area is to investigate the optimized relation between total costs, lead times, flexibility and design to the most profitable customer value. The potential for improvement in TVE prefabrication through integrated lean and agile approaches is demonstrated. However, this study has not performed investigations to obtain any deeper understanding of the degree of “leanness” or “agility” coupled to the benefits of improved customization, flexibility and production flow in the studied TVE production systems. A future research area is thus to investigate the TVE prefabrication production from a lean and agile perspective, to obtain understanding of what practical improvements that can be obtained, and if the theory concepts of lean and agile production can be further developed or altered using this context. Another kindred 58

research area is to adopt alternative mechanisms or theories to increase the control and quality of internal and external logistics in TVE prefabrication. Innovation can be seen and diffused from a linear single actor perspective, the inventor, or from an innovation system, where the perspective is moved from the single actor to a network of private and official actors. In the latter view, the network consciously works together to form an innovation, whereas the previous innovation diffusion is influenced by the surroundings, but with its lack of awareness. It is herein shown that the total population of the Swedish TVE manufacturers encounter similar types of production and market hindrances and possibilities. Swedish governmental strategies shows incentives for development of timber in housing, and this research shows that scientific contributions can be gained through empirical investigations of TVE prefabrication. Thus a future research area is to study TVE prefabrication like an innovation in Swedish housing from a possible triple-helix (company-government-university)-perspective and investigate how this may influence the diffusion and adoption of TVE and timber prefabrication in general on the market. Moreover, a study of different actors (e.g. manufacturers, sub-suppliers, customers, universities research and development strategies, governmental and regional institutions such as Vinnova, and the county administrative board etc.) influence on the innovation and also what can be seen as best practice for innovation diffusion would increase the understanding of improvements in housing based on timber and TVE prefabrication. This research has not focused on TVE prefabrication from a business and industrial economic perspective, why investigations within such areas would further increase possible improvement issues related to business performance and strategies for TVE prefabrication. The main case study and focus group surveys showed common improvement areas within structural engineering and timber engineering solutions, such as timber staircases for multistorey housing, warm foundations and coordination of installations for the TVE building systems. However, this area was not considered in this thesis, though it is a possible area for further technology development research within TVE prefabrication.

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Paper I

CONNECTING LEAN CONSTRUCTION TO PREFABRICATION COMPLEXITY IN SWEDISH VOLUME ELEMENT HOUSING Matilda Höök, M.Sc., Div. of Structural Engineering - Timber Structures, Luleå University of Technology, 97187 Luleå Sweden, Phone +46 920 491028, FAX +46 920 491091, [email protected] Lars Stehn, Prof., Div. of Structural Engineering - Timber Structures, Luleå University of Technology, 97187 Luleå Sweden, Phone +46 920 491976, FAX +46 920 491091, [email protected] Published in proceedings of the 13th Annual Conference on Lean Construction (IGLC-13), Sydney, Australia, 2005. The paper has been edited to fit the format of this thesis, but the content remains the same.

CONNECTING LEAN CONSTRUCTION TO PREFABRICATION COMPLEXITY IN SWEDISH VOLUME ELEMENT HOUSING Matilda Höök 1 and Lars Stehn 2 ABSTRACT Lean is about waste elimination and value creation. The prefabrication of houses seems to be one way to create structure while decreasing complexity and waste generated by variation. However, prefabrication decreases some types of complexity and waste, but introduces others through new actor roles and a shift of focus to manufacturing. The aim of this paper is to develop an understanding of a prefabrication strategy and show the increased need for a novel comprehension in lean construction regarding different types of prefabrication deliveries and thus different types of complexity. Complexity as such, here used in a contingency context, cannot be generalized; hence this study explores the differences in peculiarities of on-site construction, element prefabrication and volume element prefabrication. Peculiarities in volume element prefabrication are found to consist of two connected parts; Product complexity including building element design and product design (built-in knowledge), and process complexity including internal logistics, breadth of required knowledge and integration between product and process design. The sources of complexity in volume element prefabrication are thus connected to the in-house production system, and differ from on-site construction and element prefabrication peculiarities connected to fragmentation and uncertainty among actors in the value chain. KEY WORDS Lean construction, Volume element prefabrication, building peculiarities, product complexity, process complexity, timber frame housing

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M.Sc., Div. of Structural Engineering - Timber Structures, Luleå University of Technology, 97187 Luleå Sweden, Phone +46 920 491028, FAX +46 920 491091, [email protected] 2

Prof., Div. of Structural Engineering - Timber Structures, Luleå University of Technology, 97187 Luleå Sweden, Phone +46 920 491976, FAX +46 920 491091, [email protected]

1

INTRODUCTION There seems to be two different strategies within lean construction where structuring of the dynamic and complex construction system is created through reducing complexity and waste generated by variation. The strategies are either to develop the on-site construction process and its product as proposed, such as Koskela et al. (2003), or develop the prefabricated product and its process, as proposed by e.g. Ballard and Arbulu (2004). We call the latter a prefabrication strategy where the lean ideal is to simplify site installation to final assembly involving every phase in the project delivery process. The prefabrication strategy in Sweden is a trend in progress that has shown to be competitive in housing through factory manufacturing and controlled process flows (Bergström and Westerberg 2004). Prefabrication along with standardisation of products and processes are also shown by others to contribute in construction process improvements (Gibb 2001, Roy et al 2003). However, lessons learned indicate the elimination of waste and complexity through prefabrication to cause new problems that have to be tackled to obtain the intended benefits (Koskela 2003). However, this argument should not hinder further developments of a prefabrication strategy, since prefabrication can be more than a complement to on-site construction, as volume element prefabrication has shown to be in Sweden, Figure 1. A volume element is here defined as a three-dimensional structure, built up by elements and completed in a factory.

Figure 1: Volume element prefabrication and assembly.

2

The aim of this study is to develop an understanding of a prefabrication strategy and to show the increased need for a novel view in lean construction regarding different types of prefabrication deliveries. Therefore, one intention is to chart differences and describe the relationship in peculiarities of on-site construction, element prefabrication and volume element prefabrication that cause waste generation and complexity in products and processes. Complexity as such, used here in a contingency context, is not the goal, but a theoretical approach to address differences between construction and prefabrication. DIFFERENT MODES OF COMPLEXITY IN CONSTRUCTION A COMPLEX SYSTEM

A complex system can in a wider context, as related to literature in general, be described as “any form of system that comprises many components interacting with each other” (Lucas 2000). Complexity studies are related to what happens when components within a certain system are connected and when stimuli to the system are received. Complex system literature (e.g. Rose-Anderssen et al. 2005) shows that evolution is to be expected in real systems that survive in a changing environment and that a complex system is one where successive future structure will be created. In construction the complex system has been studied as connections mainly consisting of relationships between actors and organisations (e.g. Bertelsen 2003) or as demands on physical connections between building components (Björnfot 2004). Complexity in construction has also been connected to uncertainty and interdependence that causes difficulty in implementing planned production workflows (Gidado 1996). Separate and diverse organisations, operations and activities, and characteristics of materials and knowledge are factors that make construction a process of varying choices from project to project (Baccarini 1996). In this study the whole complex construction system is considered from a general point of view, though the empirical part, and hence the system delimitation of the study, focus on the volume element prefabrication production process. The complexity of this process is therefore influenced by the complexity of the prefabricated product, an even more delimitated complex sub-system. ON-SITE CONSTRUCTION In a traditional construction process, a structure is built up by a number of components and sub-assemblies on-site, Figure 2. Peculiarities of construction are argued to be the one-of-a-kind nature of the construction project, site production and temporary organisation (Koskela 2003). The mentioned views of complexity in on-site construction are clearly related to the more holistic terms of uncertainty and fragmentation, also recognized in studies of the Swedish housing industry (e.g. Fredriksson 2003). Also evident is that the complexity related to construction falls within a system engineering description of complexity that seems to be generic; the connection or interdependence 3

between different elements in a system is far more important than the elements (number of tasks, specialists, components) (Lucas 2000, Baccarini 1996). PREFABRICATION It is argued that complexity as such cannot be generalized and generally defined, since it depends on the context where it is used (Edmonds 2000, Rodriguez-Toro et al. 2004). The complexity of on-site housing construction cannot be directly compared to that of prefabricated housing. Depending on how products are delivered, many conceivable sources of complexity in prefabricated housing arise. One type of product delivery is element prefabrication. The element is manufactured in a factory environment with controlled manufacturing processes – the so-called factory physics (Hopp and Spearman 1996) that is here associated to one single process owner. The element is transported to the construction site where it is assembled together with other elements and subassemblies, termed the construction physics by Bertelsen (2004) and associated in this paper with work on-site involving several different actors, Figure 2. Peculiarities within factory physics are managed with lean manufacturing principles, while peculiarities in construction physics are managed with lean construction principles (Bertelsen and Koskela 2004). In this study, the concepts of factory physics and construction physics are used only as terminology, describing two different environments, without any further use of the underlying theory.

Figure 2: On-site construction respective element prefabrication 4

In a case study of a multi-storey timber housing project a principal source of complexity for prefabricated elements assembled on-site was claimed to be the level of tolerances between different elements and sub-assemblies (Björnfot and Stehn 2005). The tolerance problems originated from an unsettled definition of the “decoupling point”, i.e. the separation between the factory manufacturing of elements and the physics of the construction site. The same types of peculiarities in prefabricated construction, namely the lack of an overall view where different actors have different focus, are identified (Warszawski 1990). Thus, element prefabrication assembled on-site is partly linked to the same type of complexity as traditional on-site construction, i.e. fragmentation. Longer flow causing higher requirements for cooperation and coordination, longer error correction cycles causing large correction costs, tolerance problems and a higher amount of required design early in the construction process are mentioned as sources of complexity in element prefabrication (Koskela 2003, Björnfot and Stehn 2005). PRODUCT AND PROCESS COMPLEXITY ORIGINATING IN CUSTOMISATION To handle complex products even more effectively, establishing empirical relationships between product and process complexity is central, especially because relationships differ depending on customer requirements (Hobday 1998). Product complexity is made up by the product design, i.e. the geometric shape and component interface geometry and inbuilt knowledge. Process complexity is the requirements that a process must meet if it is to convert conceptual design into a physical product. Hence, process complexity is heavily dependent on the design of the product. The complexity of the product tends to increase in proportion to the different strategies employed between standardisation and customisation, Figure 3, (Lampel and Mintzberg 1996) and the number of different products (Hobday 1998). The connection between customisation, increased cost and leadtime in housing is shown by Barlow et al. (2003).

Figure 3: Standardisation and customisation. After Lampel and Mintzberg (1996).

From Figure 3, it is obvious that increased complexity of a delivered product is connected to increased customisation. Customisation influences the number of diverse inputs or 5

outputs or both, the number of separate and different actions, and interactions between individuals or tasks to produce the end product. Likewise, a higher number of internal and external specialists involved in a project, i.e. going from left to the right in Figure 3, will lead to an increased process complexity (Hobday 1998, Kotteaku et al. 1998). EMPIRICAL RESEARCH METHOD The aim of this study is to develop an understanding of a prefabrication strategy. To obtain this, the complexity in prefabrication and the relationship between the degree of standardisation, customisation, product and process complexity in prefabricated Swedish housing were studied. A multiple case study of the five leading Swedish timber frame house manufacturers, that make use of volume element production, was performed. Personal in-depth interviews, site visits and complementary phone interviews with respondents possessing a comprehensive responsibility and understanding of the companies’ product and process designs were performed. Interviews were also conducted with employees in the factory production. Other source materials were documents such as construction drawings, process charts, and product and process descriptions. The case descriptions are relatively comprehensive to obtain a wide picture of volume element prefabrication in Sweden. RESULTS General and salient observations for all studied case companies are first outlined followed by the main results and characteristics for each studied company. Common to all studied manufacturers is that they: x

Manufacture “ready-to-use” volumes, integrating elements and subassemblies complete with electrical installations, flooring, cabinets, wardrobes and finishing etc. in a factory. The volumes are transported to the construction site where they are assembled into a complete house, Figure 1.

x

Have long-time relations with some selected suppliers of key components.

x

Purchase subcontractors and consultants traditionally, but practically always the same actors and individuals, familiar with the manufacturers’ routines and working methods, are selected.

x

Experience restriction in volume element design determined by transportation limitations.

x

Have certain problems with the design of their factory layout. Most layouts are not designed for volume element production; ad hoc solutions originating from an element manufacturing layout typically still exists.

To support these general observations Bergström and Westerberg (2004) show that Swedish timber frame house manufacturers using volume element production have a

6

developed logistics way of thinking, which has yielded methods to handle customer demands of short lead times and high flexibility compared to traditional construction. FLEXATOR AB The main products of Flexator are official and commercial buildings, e.g. schools, group dwellings, social service and office buildings. They offer standard concepts for some of the product types, but most of the buildings are still customized, and to some extent are therefore one-of-a kinds. Flexator prefers to work in projects where they take care of the whole construction process in design and build contracts where the planning and manufacturing of the complete house includes installations, wiring, house foundation and infrastructure. This demands a wide and flexible organisation, which in its turn demands projects where the complete organisation is utilized. Former, standardised concepts were a more distinct element in Flexator’s product offers, differing from today’s where the company works with customised products. The difference in production is principally the lost repetition effects and hence, the need for increased information. Material suppliers demand more information when components differ from object to object. Information from customers must be gathered early in the process, since the design phase has to be finished before start of the production. Problems frequently arise when information given to production from customers is misunderstood, as is often the case with construction documentation. Craftsmen also have to consult construction drawings more frequently, compared to earlier when they were totally familiar with the standard products. Loyalty to the process in the early stages seems to be low, as employees state that “the company is too good-natured towards customers, allowing late changes in design leading to deterioration of efficiency in production”. Problems are also connected to a need for improved internal logistics in the factory. Production is not optimal since wall and floor elements have to often be turned or moved back and forth. Elements are also stored disadvantageously due to the factory being so small. FINNDOMO GROUP Finndomo Group has concentrated their production towards dwellings, e.g. detached houses for private consumers, terrace houses and larger projects with multi-family dwellings. The multi-family dwellings projects have been executed in close cooperation with a large Swedish contractor. Since Finndomo often cooperates in projects with the same contractor, they participate in the early design phase and the development of the product. The main benefits here are that the company can develop products to fit directly into their building system, leading to good project economy and efficiency. Customer requirements sometimes differ, with a more customised product resulting in more required information to and from customers and suppliers. Early design phases are also longer in highly customised projects. Overall, customisation mainly influences lead time, mostly because customers are late in their decision making, but also depending on the non-standard component choices that can have longer delivery times than standard 7

components. The most critical point regarding information flow is that salespersons have to correctly understand the customers’ choices, and then be able to document the information so that other levels in the value chain understand the information. To develop the industrial process, material flows and internal logistics have to be developed further. A future vision is that the apprehension of customers to volume element prefabrication has to be turned from the mental picture of volumes as booths and barracks, to see the possibilities with flexible, high quality prefabricated houses. MOELVEN BYGGMODUL AB Moelven Byggmodul AB manufactures building products from simple booths to office buildings, schools and multi-family dwellings. This broad product offering is possible, since Moelven owns four different Swedish companies that manufacture the different product types. Some products are sold to municipalities while most multi-family dwellings are developed together with a large contractor. If a standard concept is compared to a customised project, the standard house is said to be far more rational to produce. A standardised concept demands less time for design, planning, purchasing of materials and sub contractors, and employees know how to make the product. The difference between standardised and customised houses is mostly based on the difference in required information throughout the value chain. The purchasing of materials is a highly exacting activity in a customised project and likewise for the information flow between the purchasing division and the design team. Customisation involving different volume sizes also renders long set up times in production and several material switches. Production today is highly customised, but the Moelven vision is to render a more effective production process to decrease costs. A possible solution mentioned is to work with standard concepts and offer customisation through options (extras) to obtain higher repetition effects in production. It is important for the company to participate early on in design phases to influence the house design so that it fits the building system. A future vision is therefore to spread knowledge about volume element prefabrication to customers and architects. LINDBÄCKS BYGG AB Products offered and manufactured by Lindbäcks are student lodgings, hotels, multifamily dwellings (mainly four storey houses) and senior dwellings. Although flexible, their only limitation is the physical dimensions set by transportation and the structural demands for the volume elements. Contrary to other studied manufacturers, the factory layout does not seem to be a major problem for Lindbäcks. Even though Lindäcks products are highly customised, the same type of system solution is used independent of product design. Every project is unique and suited after the customers’ demand, except for, e.g., student lodgings where the repetition effects are gained since house design is standardised within and between every project. The degree of customisation influences the efficiency of production and an increased information flow is said to be a key issue. Material that cannot be bought via annual agreements requires extra work and more 8

information to and from material suppliers. Another type of information is the increased need for customers to understand the effects of late decisions in the process, influencing the projects’ economy. One strategy is to train sales staff to reject late changes in design to obtain efficient production. An increased customisation and information flow also influences production employees, since many changes lead to decreased project learning. However, the company has observed a decreased efficiency due to employees getting into a rut when projects exceed 100 to 150 flats. The ambition and the future vision of the company is to control the information flow much better. To reduce waste occurring in production defects, it seems important that information about new projects is not handed over from the design phase to production before all information is absolutely complete and correct. NORVAG BYGGSYSTEM AB Norvag Byggsystem AB primary manufacture official and commercial building, e.g. schools, pre-schools and office buildings, though the company has tried to expand their market towards dwellings. Norvag has developed suggestions for multi-family dwellings, student lodgings modules and a module for electricity hypersensitive persons. Except for these standard modules, Norvag solely works with highly customised projects. All products are fundamentally unique, but the building system is always the same, e.g. the company has a standard design for walls. The most common procedure is when the company adjusts their system as per a customer’s design of an ordered house, though the most effective is if they can design the house themselves. It is emphasized that the production is managed with a focus on customer value and not on internal production efficiency, since flexibility and customisation are core values to retain customers. Nevertheless, the repetition effects and project learning are important due to customers also demanding short lead times and low costs. The design phase is critical because it has to be correct from the beginning to avoid mistakes in production. To develop the process, improved internal logistics are mentioned as important. Another important issue when manufacturing customised products seems to be the information flow from the design team to production plant employees. ANALYSIS AND DISCUSSION From systems engineering, the statement that the connection between elements is far more important than the elements themselves, (Lucas 2000, Baccarini 1996) has been analysed. On-site construction, element prefabrication and volume element prefabrication show different peculiarities, position and importance of the decoupling point between factory physics and construction physics, Figure 4. In traditional on-site construction, no distinct decoupling point between factory physics and construction physics exist (except for smaller sub-assemblies as e.g. windows and doors). Instead, the connection of importance and the connection where problems arise are those interactions in the temporary organisation of the one-of-a-kind project (Koskela 2003). 9

Figure 4: On-site construction, element prefabrication and volume element prefabrication

In element prefabrication, tolerance problems originating from e.g. poor communication, are shown by Björnfot and Stehn (2005). These problems point to the importance of handling the complexity in the connection, or the decoupling point, between factory physics and construction physics where the product from the element manufacturer is handed over to the contractor. Complexity is reduced when standardisation is obtained (Lampel and Mintzberg 1996). Hence, the only right way seems to be to standardise the connection, the communication, to reduce mistakes and to overcome the complexity. In building projects using element prefabrication, initial design decisions are important – changing a prefabrication decision on-site is often difficult due to long lead times (Koskela 2003). As in on-site construction, there is no decoupling point of distinct importance between factory physics and construction physics in volume element prefabrication, since the whole process, and thus the volume element manufacturers handles the information 10

flow. The process is located within factory physics, though volume elements are assembled on-site. Some of the studied companies often cooperate with a large contractor that, e.g. makes the foundation to the houses. This decoupling point does not however seem to be a problem causing complexity. Rather, other “connections between elements” are related to peculiarities and problems in volume element prefabrication. One typical problem encountered is the need of better internal logistics e.g. regarding the flow of material in production. High customisation demands increased information to customers so that they can understand what part of decisions causes longer lead times and higher costs. The correct procurement of information from customers is also important for the case companies. The multiple case study shows that the fragmentation is eliminated for volume element prefabrication and if, e.g. tolerances are still a problem for a volume element manufacturer, the problem originates from poor control of the in-house production system and not because of fragmentation. This discussion indicates that relevant sources of prefabrication complexity of houses using volume element production is related to the in-house production system, i.e. progress within factory physics. The case study results imply that lessons for volume element prefabrication can be principally learned from lean manufacturing, since the development areas are more related to factory physics managed with lean manufacturing principles rather than lean construction principles. The design phase is a limitation for volume element manufacturers because it demands large efforts to be completed in the early stages before the production phase starts. In a lean project delivery system the product and the process are designed together (Ballard and Howell 2003b). Thus, a development area, i.e. the area that most likely can decrease costs and lead-time, seems to be integration of product and process design. To decrease costs and lead times, it is also evident that an increased knowledge about building systems of volume element prefabrication for architects and customers is needed. Advantages would appear if the manufacturers did not have to adjust an already designed house to their building systems, entailing double design phases and not optimal conditions for an efficient prefabrication strategy. This study indicates a strong link between the degree of customisation and peculiarities, and thus complexity in volume element prefabrication as shown by Hobday (1998). x

The degree of customisation determines the element design, influencing the type of integration between elements and the number of different elements. With Figure 3, it is possible to understand the customisation/standardisation strategy of the studied companies as well as the obviousness of choosing an important strategy, since it influence the process complexity. The companies Flexator and Norvag act with a clear “Pure customisation” strategy in Figure 3, while Lindbäcks, Moelven and Finndomo have strategies more to the left of the figure.

x

The element design, i.e. the product complexity, influences both material and information flow and the breadth of required knowledge, i.e. the process complexity. Low loyalty to a settled product design in the late phases affects the 11

process complexity and makes prefabricated products much less effective. Two interdependent sources cause this, specifically customers (e.g. contractors, real estate trustees etc.) who do not understand the product and the effect of late changes and employees (e.g. designers, salesmen) at the manufacturers who have to have loyalty to the system and not accept late changes. An obvious input to a successful prefabrication strategy is thus not to accept late changes. x

The kind and degree of in-built knowledge, i.e. product design of the delivered product, influence the complexity. A high product complexity where the whole construction process is handled requires a flexible organisation with several different skills and varying knowledge involved in the process.

Summing up the different peculiarities leading to different types of complexity between the three different ways of delivering a product (on-site construction, element prefabrication and volume element prefabrication) is shown in Figure 5 below.

Figure 5: Peculiarities and complexity depending on product delivery

CONCLUSIONS This study shows that it is inappropriate to generalize management of construction without considering the difference in complexity between on-site construction and the different types of prefabricated product deliveries. Therefore, it is proposed that a novel view within the lean construction concept is needed to more clearly incorporate tools and 12

methods in a lean manufacturing context considering, e.g. innovative prefabrication deliveries as volume element prefabrication. Peculiarities in on-site construction, e.g. the temporary organisation, and two or more production locations in element prefabrication are related to fragmentation causing complexity. This study shows that peculiarities in volume element prefabrication are connected to product complexity through the choice of customisation/standardisation strategy, element design and in-built knowledge in the product. The product design therefore influences process complexity, which in volume element prefabrication shows peculiarities as internal logistics, breadth of required knowledge and integration of product and process design. ACKNOWLEDGEMENTS The authors greatly acknowledge the financial support from Kempe research foundation and the persons representing the five case companies for providing the data for this study. REFERENCES Baccarini, D. (1996). “The concept of project complexity – a review.” International Journal of Project Management, 14(4) 201-204. Ballard, G. and Howell, G.A. (2003). “Lean project management”. Building Research and Information, 31(2) 119-133. Ballard, G. and Arbulu, R. (2003). “Making Prefabrication Lean”. Proceedings of the 12th IGLC conference, Elsinore, Denmark. Barlow, J., Childerhouse, P., Hong-Minh, S., Naim, M. and Ozaki, R. (2003). “Choice and delivery in housebuilding: lessons from Japan for UK housebuilders.” Building Research & Information, 31(2) 134-145. Bergström, M. and Westerberg, M. (2004). “Customised industrialised timber frame house manufacturing: prospects and pitfalls.” Submitted to Construction Innovation. Bertelsen, S. (2003). “Complexity - Construction in a new perspective.” Proceedings of the 11th IGLC conference, Blacksburg VA. Bertelsen, S. and Koskela, L. (2004). ”Construction Beyond Lean: A New Understanding of Construction Management.” Proc. of the 12th IGLC conference, Elsinore, Denmark. Björnfot, A. and Stehn, L. (2005). ” Product Design For Improved Material Flow - A Multi-Storey Timber Housing Project” Proc. of the 13th IGLC conf. Sydney, Australia. Björnfot, A. (2004). “Industrialization of Construction – A Lean Modular Approach”. Proc. of the 12th IGLC conf. Elsinore, Denmark. Edmonds, B. (2000). “Complexity and Scientific Modelling.” Foundations of Science, 5(3) 379-390. Fredriksson, Y. (2003). ”Samverkan mellan träkomponentleverantörer och stora byggföretag – En studie av massivträbyggande.” Licentiate Thesis, Department of Civil Eng, Division of timber structures, Luleå University of Technology. In Swedish. 13

Gibb, A.G.F. (2001). “Standardization and pre-assembly – distinguishing myth from reality using case study research”. Construction Mgmt. and Economics, 19(3) 307315 Gidado, K.I. (1996). “Project complexity: The focal point of construction production planning.” Construction Management and Economics, 14 213-225. Hobday, M. (1998). “Product complexity, innovation and industrial organisation.” Research Policy, 26(6) 689-710. Hopp, W.J. and Spearman, M.L. (1996). “Factory Physics.” Irwin, Chicago. Koskela, L. Ballard, G. and Howell, G. (2003). ”Achieving change in construction”. Proceedings of the 11th IGLC conference, Blacksburg VA, USA. Koskela, L. (2003). “Is structural change the primary solution to the problems of construction?” Building Research & Information, 31(2) 89-96. Kotteaku, A.G., Laios, L.G. and Moschuris, S.J. (1995). ”The Influence of Product Complexity on the Purchasing Structure.” Int. J. of Mgmt. Science 23(1) 27-39. Lampel, J., Mintzberg, H. (1996). “Customizing Customization.” Sloan Management Review, 38(1) 21–30. Lucas, C. (2000). “Setting The Scene – Science, Humanity and Interaction.” http://www.calresco.org/setting.htm. Rodriguez-Toro, C., Jared, G. and Swift, K. (2004). “Product-development complexity metrics. A framework for proactive-DEF implementation.” Proceedings of the International design conference, Dubrovnik. Rose-Anderssen, C., Allen, P.M., Tsinopoulos, C. and McCarthy, I. (2005). “Innovation in manufacturing as an evolutionary complex system”. Technovation 25 1093-1105. Roy, R., Brown, J. and Gaze, C. (2003). “Re-engineering the construction process in the speculative house building sector.” Constr. Mgmt. and Economics, 21(2) 137-146. Warszawski, A. (1990). “Industrialization and robotics in building: a managerial approach.” Harper & Row, New York.

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Paper II

TRUST – THE MISSING LINK BETWEEN INNOVATION DIFFUSION AND ADOPTION IN TIMBER VOLUME ELEMENT HOUSING

Matilda Höök, M.Sc., Div. of Structural Engineering - Timber Structures, Luleå University of Technology, 97187 Luleå Sweden, Phone +46 920 491028, FAX +46 920 491091, [email protected] Lars Stehn, Prof., Div. of Structural Engineering - Timber Structures, Luleå University of Technology, 97187 Luleå Sweden, Phone +46 920 491976, FAX +46 920 491091, [email protected] Submitted for publication in Construction Management and Economics (Spon Press) in November 2005. The paper has been edited to fit the format of this thesis, but the content remains the same.

TRUST – THE MISSING LINK BETWEEN INNOVATION DIFFUSION AND ADOPTION IN TIMBER VOLUME ELEMENT HOUSING ABSTRACT Previous research suggests that innovations to increase efficiency and quality are not extensively implemented in construction due to fragmentation and complexity. Swedish timber volume element prefabrication is more related to manufacturing than the traditional management of a complex and fragmented on-site construction project and is competitive for detached housing. The aim of this research was to find characteristics that might affect the innovation diffusion and adoption of timber volume element prefabrication in multi-storey housing. This study shows trust of both the inventor and the innovation to be the missing link between diffusion and adoption. Solutions to link the two are trust-building mediated by visible information and personal experienced knowledge via demonstration objects and strategic alliances. The need for trust is not purely based on timber volume element prefabrication and can thus be a generic solution to innovation adoption in construction. KEYWORDS Timber, prefabrication, construction, innovation, trust INTRODUCTION The applications of lean production (Yusuf and Adeleye, 2002), mass customization (Crowely, 1998) and supply chain management (Tan et al., 1999) have shown their potential to increase efficiency and quality output in construction (Ballard, 2000). However, construction has not been able to implement these innovative approaches (Koskela, 2003) due to the complexity, unpredictability and neglect of changes in the construction industry (Koskela and Vrijhoef, 2001). Swedish Timber Volume Element (TVE) prefabrication displays several of the process attributes regarded as important activities in the above-mentioned approaches (Bergström, 2005). Here, the production is more related to manufacturing than the traditional management of a complex on-site construction project (Höök and Stehn, 2005). The TVEs are prefabricated as “ready-touse” housing volumes complete with electrical installations, flooring, cabinets, finishing, etc. TVE prefabrication is competitive in the Swedish detached house market (roughly 30% market share between 1990 and 2004), but much less on the multi-storey (>2 storeys) market. From a market perspective, this indicates that the industrialized and process-oriented TVE approach could have the potential to increase efficiency in the whole housing industry in Sweden and abroad, including multi-storey housing. TVE prefabrication is clearly not a new or untested building system in Sweden, but the concept is, in this study, considered as a hypothetic innovation in multi-storey housing. A purpose of this research is, therefore, to develop an understanding of the vague interest for TVE 1

prefabrication and the neglect in adopting this concept seen as an innovation. The aim is to get insight into the characteristics and strategies possibly affecting the innovation diffusion (spread of a new idea from its source of invention) and innovation adoption (mental process of the potential adopter) of TVE prefabrication in multi-storey housing. DIFFUSION AND ADOPTION OF INNOVATIONS Diffusion is the process where an innovation is gradually communicated through certain channels among members of a social system (Rogers, 2003). In general, diffusion theory has taken an adopter-side perspective, mostly ignoring the influence of the inventor on the adoption process (Frambach, 1993; Clark and Stanton, 1989). However, neither innovation-push from the inventor side nor market-pull from the adopter side alone will work in reality. Success is shown for those inventors whose market strategies succeed in linking the two (Rose-Andersen et al., 2005). The approach in this paper follows the integrated innovation framework of Frambach (1993) and Clark and Staunton (1989), and centres innovation diffusion and adoption as two linked processes that have to meet to obtain implementation. THE DIFFUSION PROCESS The influence of the inventor role and the importance of communication links between inventor and potential adopters of innovations have been shown. The inventor can play an important role in shaping the diffusion process of an innovation, while the availability of innovation information depends considerably on the level of information flow from the inventor of the innovation (Rogers, 2003; Frambach, 1993; Meyers et al., 1999). Information sharing in the form of education (Saaksjarvi, 2003) and communication activities, such as technology demonstrations and communication with other adopters (Midgley et al., 1992), has also been shown to increase the probability of adoption as knowledge of the innovation increases. Non-adoption of an innovation may be the result of poor innovation management, i.e. the inventor did not have proper prior knowledge of the customer’s needs (Frambach, 1993). THE ADOPTION PROCESS The innovation-adoption process does not take place as a single decision, but rather as a step-wise process (Pereira, 2002) where individuals or other decision-making units’ pass through. The prior knowledge of adopters has a significant effect on their decisionmaking process. Existing knowledge to learn about innovative products or systems are used extensively (Gatignon and Robertson 1991; Rogers 2003), i.e. individuals faced with something unfamiliar use familiar knowledge to understand and comprehend an innovation (Roehm and Sternthal, 2001; Pereira, 2002). A potential adopter perceiving incompatibility between a product and current needs, i.e. the perceived satisfaction of needs, will not progress further in the adoption process. Instead, the individual will stop at the knowledge stage and stick to products or systems that allow them to map what they already know (Rogers, 2003). 2

The level and type of innovation change influence the type of new knowledge needed for adoption, which explains why the literature speaks of incremental innovations based on existing knowledge and radical innovations (e.g. Slaughter, 1998; Henderson and Clark, 1990). A radical innovation is identified through the integration of multiple independent innovations that must work together to perform new functions or improve performance as a whole (Tushman and Anderson, 1986). A radical system innovation often change the character and nature of an industry and may thus require both new knowledge and new linkage patterns (Slaughter, 1998). DIFFUSION AND ADOPTION OF INNOVATIONS IN CONSTRUCTION THE INNOVATION ENVIRONMENT IN CONSTRUCTION

Evolutionary processes such as ideas and conceptualisation of an innovation must be applicable in the context where it is to be implemented, especially concerning radical innovations (Vrijhoef and Koskela, 2001). The notion of the innovation environment is therefore important because it is not sufficient to only describe the innovation as it is. Construction as a business and production system lacks a systematic and strategic approach to change because the culture essentially remains adversarial, e.g. with continuing reliance on price competition and firm contractual arrangements (Saad et al., 2002). The construction industry is also greatly project oriented and as every project precedes the other individually, knowledge and experience diffusion from one project to another is limited (Dubois and Gadde, 2002). Construction retains innovations because ad hoc type on-site problem solving is common (Björnfot and Stehn, 2005). However, high market visibility, government incentives and strategic alliances may push innovation diffusion and adoption in construction (Andersen et al., 2004). THE INNOVATION ENVIRONMENT OF TIMBER IN SWEDISH HOUSING Up until the beginning of the 1990s, Swedish construction activities were governed by political considerations, both directly and indirectly (e.g. construction financing). The diffusion process of timber in Swedish construction has a long history and is very much influenced by these governmental strategies. After a number of Swedish cities burned down in the late 19th century, timber frames were forbidden in houses with more than two storeys. Through the years this restriction has limited the development of any advanced structural use of timber. Instead, concrete and steel were used exclusively and engineered. Consequently, the large Swedish building contractors were, and to some extent still are, connected to the concrete materials industry. Development in using timber in construction instead took place in the singlefamily housing market. Since the 70s, the timber framed housing industry has been dominant on the single family housing market. Some manufacturers decided on a strategy aiming for even better control of the construction process by developing TVE prefabrication and applying a modular approach to construction.

3

Following the EC construction products directive, the Swedish codes released in 1995 opened new possibilities for multi-storey building systems using timber frames, resulting in several TVE manufacturers developing their buildings systems to reach the multistorey housing market. The initial period after the building code change was dominated by technology developments to cope with functionality demands. Today, fewer largescale structural and functional innovations occur and technical development is no longer in focus. IMPLICATIONS AND HYPOTHESIS Construction is a complex innovation environment as it involves several different actors without a joint goal, and a project orientated and fragmented process that limits innovation, knowledge diffusion and change. In the Swedish construction industry, knowledge development and adoption of multi-storey timber frame housing has been low compared to concrete and steel frame housing because of political control and the historical development and use of timber element prefabrication. To obtain innovation implementation it is important that innovation push (diffusion) can meet market pull (adoption), though this does not seems to be the case in TVE prefabrication of multistorey housing. Therefore, the hypothesis employed here is to consider TVE prefabrication of multi-storey housing as an innovation and its low acceptance as the missing link between innovation diffusion and adoption. Based on the theoretically derived assumptions of diffusion and adoption conditions, the theoretical view used in the analysis of the empirical data is presented in Figure 1. The claim is that a specific innovation environment determines the setting for conditions of both the inventor and adopter. These two conditions are separate, but must meet for a successful innovation adoption, i.e. a merge is needed of innovation push and market pull. In our view, integration occurs when the information flow from the inventor, the potential innovation knowledge of adopters and the perceived needs are jointly and satisfactory met. However, this research does not focus on specific inventor and customer characteristics, but the inventor-customer interface –the missing link in Figure 1.

4

Figure 1: Model of analysis

RESEARCH METHOD To analyse the research question, both diffusion and adoption perspectives are required (c.f. Frambach, 1993 and Clark and Staunton, 1989). To achieve an understanding of the product offer from the manufacturers’ view, a multiple-case study of the total population of Swedish TVE manufacturers was performed. The multiple case study approach was chosen because of its ability to examine a phenomenon within its context (Meredith, 1998) as well as the replication logic to predict similar results (Yin, 1994). Data sources in the case study were personal in-depth interviews involving respondents with comprehensive responsibility and understanding of the companies’ product and process design, together with site-visits to the factories (Höök and Stehn, 2005). The collective apprehension of manufacturers regarding the attitudes and needs of potential customers was also investigated. Three low-structured focus group surveys were held with representatives from four of the TVE manufacturers. The focus group as a data source was chosen because of its ability to generate information obtained by interactions among the group members (Wibeck, 2000). The adoption perspective was attained through qualitative interviews with potential Swedish customers, to examine the needs of a general building system together with specific TVE prefabrication product offer attitudes and needs. Initially, 25 Swedish 5

municipalities were selected with 54 contacted respondents within the municipalities and an achieved response rate of 87%. Ten real-estate companies with specific experience of TVE prefabrication also participated in the study. The interviews were quantitative and any reported response rates in results and analysis have thus not been significance tested. The interviews were analysed through clustering and counting and, even if partially clustered, are reported within the groups: Building system needs, Advantages of TVE prefabrication, Disadvantages of TVE prefabrication, Required improvements and Required information. The numbers of clusters were reduced in the analysis to obtain a comparison between the TVE prefabrication view of customers and manufacturers. RESULTS THE TVE PRODUCT OFFER TVE prefabrication processes span from owned or purchased architectural and structural design to the manufacturing and delivery of highly customized turnkey houses or complete projects. Volume elements are assembled and completed by the manufacturers themselves with occasional completion help from subcontractors. The volumes are manufactured with a repetitive production process in a controlled factory environment, Figure 2.

Figure 2: Manufacturing process and assembly of timber volume element prefabrication

The sizes of the volume elements are mainly limited by transport regulations and the factory layout. TVE manufacturers can often offer a lower house price and shorter lead times compared to traditional on-site built houses, if the project contains repetition 6

effects. However, when projects are highly customized, the price is not always advantageous. The offered product and degree of customization differ depending on the manufacturers, Table 1. Table 1: Product characteristics and historical strategy for the case companies

MANUFACTURERS VIEW OF THE PRODUCT AND CUSTOMER KNOWLEDGE The collected apprehension from manufacturers regarding potential customers is that they are doubtful of TVE prefabrication. If the project has been designed by architects and consults without any knowledge of volume element prefabrication (as is usually the case), the TVE concept has difficulty in corresponding to the flexibility demands offered from traditional on-site construction. TVE manufacturing has the best possibility to be competitive when the whole building system – the whole product concept – is considered by customers. TVE manufacturers do not compete with highly technical solutions in their products, but with knowledge of component integration and the construction, and a total economic offer. The manufacturers collected apprehension of the potential adopters’ knowledge about the building system, and the claimed advantages of TVE prefabrication, are depicted as Manufacturer view in Table 2. CUSTOMERS VIEW OF THE PRODUCT AND GENERAL BUILDING SYSTEM NEEDS Missing attributes of TVE prefabrication, required information and the potential requirements of customers regarding a general building system are outlined as Customer view in Table 2. The reported characteristics of TVE prefabrication are independent of 7

the customers’ practical TVE prefabrication knowledge and thus show both practical experiences and beliefs. To obtain a deeper understanding some important requirements for a general building system are further described. The mentioned need for controlled design/quality/costs refers to the respondents’ wish to control the design of technical solutions as well as the contractors’ performance that, according to the respondents, eventually influences quality and costs. By experience, this requirement is often linked to a possibility to fulfil functional demands (sound levels, moisture and fire protection). High quality and long-term durability refers to the need for low, long-range dwelling administration costs, as respondents often mention the ignorance of contractors to address or show solutions aimed at long-term quality. Involve contractor dialogue is linked to the customers’ wish to cooperate with the manufacturer in the construction process. Flexible design refers to the call for a non-limited plan-layout, and convincing design refers to a requirement for an exterior and interior design that could more clearly add value and variation to the customers’ end users, display high quality, or serve as a trademark for the customer. Table 2: Hindrance and possibilities for TVE prefabrication

ANALYSIS AND DISCUSSION LEVEL OF CHANGE

For manufacturers, the use of TVE prefabrication in multi-storey housing is only a refinement of previous technology, since the product and production process is principally identical to detached housing. Instead, the changed customer niche (from 8

dwellings and commercial buildings to multi-storey housing) is the major change and requires new customer knowledge. In this context, properly handled information transfer is prosperous for innovation adoption (Frambach, 1993). However, for potential adopters, TVE prefabrication is a new building system in multi-storey housing that lacks all required information. TVE prefabrication requires new co-operative patterns between the customer and the manufacturer, since the process knowledge of the traditional construction process is outdated. TVE prefabrication thus displays characteristics for a system innovation (requires both new knowledge and linkage patterns) (Slaughter, 1998; Tushman and Anderson 1986). From this point of view it is obvious that manufacturers and potential customers do not communicate at the same level, because TVE prefabrication can be viewed as two separate innovation processes, i.e. diffusion and adoption. SATISFACTION OF NEEDS AND PERCEIVED SATISFACTION OF NEEDS

Innovation adoption and a positive attitude towards an innovation are both connected to if a potential adopter’s needs and problems agree with the perceived innovation attributes and qualities (Rogers 2003). Characteristics of the TVE product are labelled to customer needs, Table 3, by considering the presented views of manufacturers and customers in Table 2. Competitive costs and time efficiency of the TVE system are major market attributes of the product according to manufacturers. The majority of possible customers rank cost efficiency and time efficiency as important. Despite this agreement, Table 3 indicates that some general and important customer needs seem to be unsatisfied. Table 3: Comparison of customer needs, product fulfilment and customer attitudes

Flexible design is a clear customer need. However, limitation in design flexibility is also found in both “disadvantages” and “required improvements” in Table 3. Flexible design has shown to be a limitation in TVE prefabrication as long as the purpose is to minimise costs and offer a lower price than on-site construction. Since both cost and flexibility in design seem to be important for the customer, it is logical to assume that cost efficiency 9

has to add far more value than flexibility in design to able innovation adoption. A successful example of this is found in the construction of student dwellings where the standardisation level is high; a niche that has shown to be competitive for the manufacturers Lindbäcks Bygg and Moelven Byggmodul. INFORMATION TRANSFER AND KNOWLEDGE Knowledge of innovation and inventor The vast majority of the interviewed customers (73%) have a positive attitude to TVE prefabrication, whereas 39% of potential customers are not willing to regard TVE prefabrication for multi-storey housing. Several respondents expressed a similar opinion as: “I am positive to TVE prefabrication, but only for small or detached houses”. However, when multi-storey housing was considered, the respondents articulated a more negative attitude, i.e. “timber is not fire resistant” or “the material is sensitive to moisture and cannot manage required sound levels”. These doubts were apparently connected to the belief that the building system could not fulfil required functional demands, and the respondents were clearly thinking about detached housing, simple booths and movable barracks. Customers faced with something unfamiliar will use familiar and existing knowledge and experience to understand an innovation (Roehm and Sternthal, 2001; Pereira, 2002). Single-family timber frame housing has for several decades been accepted and is highly competitive on the Swedish market (c.f. chapter 2), with movable booths and barracks being the TVE manufacturers’ historical product strategy. However, 95% of customers with their own practical experience positively perceived that it was possible to also manage functional demands for TVE multi-storey houses. The positive attitude can be connected to the prior practice and knowledge (Rogers, 2003; Roehm and Sternthal, 2001) that leads to adopter knowledge of the innovation (Saaksjarvi, 2003). Changed attitudes and adoption of TVE prefabrication is thus connected to a need for improved and appropriate information transformation from manufacturers to potential adopters. Personal experienced knowledge and trust It is evident that the degree of personal experienced knowledge (customers with practical experience of TVE) untainted by system prejudice influences attitude. The need for control and trust, regarding both the building system and the inventor, also influences the connection between diffusion and adoption. This need is articulated as “the manufacturers show an inability to work towards long-term administration costs”. General disadvantages have lead to inquires for guarantees and experience from other customers. Trust is counteracted by contract arrangements, price competition (Saad et al., 2002) and ad hoc on-site problem solving (Björnfot and Stehn, 2005) that prevent customer insight and control of the final quality and cost of the product. However, the customers’ requirement to personally and extensively contribute to the design to obtain trust in the product is not compatible with the manufacturers’ desire to design the product (the house) to fit their production and building systems and obtain low costs.

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Information transformation channels Demonstration objects are according to 83% of the respondents, and study visits according to 22%, the information sources that could able adoption of TVE prefabrication in multi-storey housing. Demonstration objects are important for generic learning in construction, especially towards long-term construction (Femenías, 2004). This result is interesting as it is also in line with the importance of high market visibility, (Andersen et al., 2004) and the increased probability for innovation adoption via technology demonstration (Midgley et al., 1992). The interpretation is that knowledge and trust seem to have to be created by the experience of individuals, without other intervening information channels. The importance of strategic alliances for innovation push in construction has been shown (Andersen et al., (2004). The TVE manufacturers Moelven and Finndomo cooperate closely with large contractors as an alternative way to render trust and information transformation between different projects. “Involve contractor dialogue” is also mentioned by respondents as an important building system need. From a marketing literature perspective on buyer-seller relationships, Mohr and Spekman (1994) suggest that a willingness to coordinate activities and the communication strategies used by the trading partners are critical to the success and trust relationship. THE MISSING LINK The changing context for TVE prefabrication, from dwellings to multi-storey housing, requires new diffusion patterns. Because customers experience incompatibility between needs and the product offer, they appear to lack trust in the product and manufacturers. The missing link between diffusion and adoption of the innovation TVE prefabrication for multi-storey housing is explained by a lack of information transfer. Improved information transfer has to provide trust to the customer concerning both the product and the inventor: ƒ

Trust of the product - can be mediated by visible information to enable personal experienced knowledge via demonstration objects.

ƒ

Trust of the inventor – can be increased through the use of strategic alliances between inventor and adopter

Based on the literature survey, confirmed by empirical results, this study implies that innovation diffusion and adoption are two separate processes dependent on prior conditions in the innovation environment. Figure 4 shows the process where customer knowledge and prior product and process strategies form the market strategy, i.e. the needs, necessary for the inventor to satisfy, and to share appropriate information about the innovation to the adopter. The process is also formed by prior practice, knowledge and needs that shape the adopters initial attitude, and later the perception of needs satisfaction, and innovation and inventor knowledge. Generically, it is important to make the connection by generating trust of the innovation and the inventor. Explicitly for the TVE innovation this can be achieved through demonstration objects and strategic alliances. 11

Figure 3: Trust - the missing link in construction innovation of TVE prefabrication

GENERAL CONCLUSIONS The “missing link” between innovation diffusion and adoption of TVE prefabrication in multi-storey housing has shown to be trust of both the inventor and the innovation. Possible solutions to link the two processes are trust-building mediated by visible information and personal experienced knowledge via demonstration objects and strategic alliances. The missing link of trust can be a generic solution to innovation adoption in construction, because the needs and requirements of a building system presented in this paper are not purely based on a specific solution, but are more general. ACKNOWLEDGEMENTS The authors greatly acknowledge the financial support from Kempe research foundation, the persons representing the five case companies and the interview respondents for providing the data for this research. REFERENCES Andersen, P.H., Cook, N. and Marceau, J. (2004) Dynamic innovation strategies and stable networks in the construction industry Implanting solar energy projects in Sydney Olympic Village. Journal of Business Research, 25, 351-360. Ballard, G. (2000) The Last Planner System of Production Control. School of Civil Engineering, Faculty of Engineering, The University of Birmingham. Bergström, M. (2005) Benefits and disadvantages of ERP in industrialised timber frame housing in Sweden. Accepted for publication in Construction Management and Economics. Björnfot, A. and Stehn, L. (2005) Product Design For Improved Material Flow - A MultiStorey Timber Housing Project. Proceedings of the 13th IGLC conference, Sydney, Australia. Clark, P. and Staunton, N. (1989) Innovation in technology and organization. London: Routledge. Crowley, A. (1998) Construction as a manufacturing process: Lessons from the automotive industry. Computers and Structures, 67, 389-400. 12

Dubois, A. and Gadde, L (2002) The construction industry as a loosely coupled system: implications for the productivity and innovation. Construction Management and Economics, 20, 621-623. Femenías P. (2004) Demonstration Projects for Sustainable Building: Towards a Strategy for Sustainable Development in the Building Sector based on Swedish and Dutch Experience. Doctoral, Dep. of Built Environment and Sustainable Development, Chalmers Frambach, R,T. (1993) An Integrated Model of Organizational Adoption and Diffusion of Innovations. European Journal of Marketing, 27(5), 22-41 Gatignon, H. and Robertson, T.S. (1991) Innovative dicision processes. in Robertson, T.S. and Kassarjian, H.H. (Eds) Handbook of Consumer Behaviour Prentice-Hall, Englewood Cliffs, NJ. Henderson, R.M. and Clark, K.B. (1990) Architectural innovation: The reconfiguration of existing product technologies and the failure of existing firms. Administrative Science Quarterly, 35, 9-30. Höök, M. and Stehn, L. (2005) Connecting Lean Construction to Prefabrication Complexity in Swedish Volume Element Housing. Proceedings of the 13th IGLC conference, Sydney, Australia. Koskela, L. (2003) Is structural change the primary solution to the problems of construction? Building Research & Information, 31(2) 89-96. Koskela, L. and Vrijhoef, R. (2001) Is current theory of construction a hindrance to innovation? Building Research & Information., 29(3) 197-207. Merredith, J. (1998) Building operations management theory through field research. Journal of Operations Management 16(4), 441-454. Meyers, W.P., Sivakumar. K. and Nakata. C. (1999) Implementation of Industrial Process Innovations: Factors, Effects, and Marketing Implications. Journal of Production Innovation Management, 16, 295-311. Midgley, D. F., Morrison, P. D., & Roberts, J. H. (1992) The Effect of Network Structure in Industrial Diffusion Processes. Research Policy, 21(6), 533-552. Mohr, J. and Spekman, R. (1994) Characteristics of partnership success: Partnership attributes, and conflict resolution techniques. Strategic Management Journal, 15, 135152. Pereira, R.E. (2002) An adopter-centred approach to understanding adoption of innovations. European Journal of Innovation Management, 5(1), 40-49. Roehm, M.L. and Sternthal, B. (2001) The moderating effect of knowledge and resources on the persuasive impact on analogies. Journal of Consumer Research, 28(2), 257272. Rogers, E.M. (2003) Diffusion of Innovations. 5. ed., London: Free press. Rose-Andersen, C., Allen, P.M., Tsinopoulos, C. and McCarthy, I. (2005) Innovation in manufacturing as an evolutionary complex system. Technovation, 25, 1093-1105. Saad, M., Jones, M. and James, P. (2002) A review of the progress towards the adoption of supply chain management (SCM) relationships in construction. European J. of Purchasing & Supply Management, 8, 179-183. 13

Saaksjarvi, M. (2003) Consumer adoption of technological innovations. European Journal of Innovation Management, 6(2), 90-100. Slaughter, E.S. (1998) Models of Construction Innovation. Journal of Construction Engineering and Management, 124(3). Tan, K-C., Kannan, V.R., Handfield, R.B. and Gosh, S. (1999) Supply chain management: an empirical study of its impact on performance. Int. J. of Operations & Production Management, 19(10,) 1034-1052. Yusuf, Y.Y. and Adele, E.O. (2002) A comparative study of lean and agile manufacturing with a related survey of current practices in the UK. International Journal of Production research, 40(17), 4545-4562. Marshall, R. and Leaney, P.G. (1999) Holonic Product Design: a process for modular product realization. Journal of Engineering Design, 13(4), 293-303. Tushman, M.L. and Anderson, P. (1986) Technological discontinuities and organizational environments. Administrative Science Quarterly, 31, 439-465. Wibeck , V. (2000) Fokusgrupper. Studentlitteratur, Lund, in Swedish. Yin, R.K. (1994) Case Study Research Design and methods. Second edition, Sage Publications.

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Paper III

INNOVATIVE AND LEAN CONSTRUCTION SUCCESS FACTORS FOR COMPONENT SUPPLIERS

Lars Stehn, Ass. Prof., Div. of Structural Engineering - Timber Structures, Luleå University of Technology, 97187 Luleå Sweden, Phone +46 920 491976, FAX +46 920 491091, [email protected] Matilda Höök, M.Sc., Div. of Structural Engineering - Timber Structures, Luleå University of Technology, 97187 Luleå Sweden, Phone +46 920 491028, FAX +46 920 491091, [email protected] Published in the Proceedings of the 12th Annual Conference on Lean Construction (IGLC-12), Elsinore, Denmark, 2004. The paper has been edited to fit the format of this thesis, but the content remains the same.

INNOVATIVE AND LEAN CONSTRUCTION SUCCESS FACTORS FOR COMPONENT SUPPLIERS Lars Stehn1 and Matilda Höök2 ABSTRACT Compared to other industries, the construction industry has not achieved the same improvements in terms of productivity, customer benefits, and quality. Low innovation activity and supplier cooperation in construction might be one reason for the low level of large-scale improvements. However, the search for improvements in the construction industry has led to interest for new innovations. One way for the construction industry to improve the building process is through use of innovative managerial concepts, as lean and agile construction. The aim of this work is to categorize Swedish component suppliers of different construction materials that act with a clear supplier coordinator commitment, on the basis of lean and innovative business strategic concepts. A secondary purpose is to find success factors for the component suppliers within the derived lean and innovative concepts. Results from the exploratory comparative study of steel-, concrete-, and timber component suppliers indicate differences between different construction material suppliers. This study also suggests a possible strategy where products accompanied with technical support and software knowledge offered to the customer, customer integration in product development, and use of product development networks to generate new knowledge and components seems to be distinct success factors.

KEY WORDS Lean construction, lean thinking, innovation, component suppliers, success factors

1

2

Ass. Prof., Div. of Timber Structures, Luleå University of Technology, 971 87 Luleå, Sweden, Phone +46 920 491976, FAX +46 920 491091, [email protected] M.SC., Div. of Timber Structures, Luleå University of Technology, 971 87 Luleå, Sweden, Phone +46 920 491028, FAX +46 920 491091, [email protected]

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INTRODUCTION Henry Ford developed the automobile industry from craftsmanship into a developed process that eventually evolved to lean production (Womack et al. 1990) and lean thinking (Womack and Jones 2003). Attempts have been made to develop lean (technical efficiency of processes) and agile (customization and effectiveness) construction (Naim and Barlow 2003). It is argued that the focus of developing construction should be on the basics of lean thinking, i.e. transformation, flow, and value (Koskela 2003). In the large enterprise manufacturing industry, supply chain management (SCM) with effective integration of the major supply chain components; customers, manufacturing and suppliers, is key (Tan et al. 1999). Within the area of construction SCM, project management upstream with suppliers and downstream with customers has been treated by, e.g., Lamming (1993). This focus on suppliers and customers emphasizes a strategic vision of lean production, suggested as the lean enterprise. This paper presents an exploratory, comparative focused study of three different Swedish material suppliers of construction components that act with a clear supplier coordinator commitment. Based on a deductive approach, lean and innovative concepts are used to explain and categorize success factors for component suppliers. LEAN PRODUCTION AND INNOVATION The manufacturing industry appears to have been successful in applying methods to render the supply chain and production more efficient. However, the construction industry has not reached the same productivity benefits as e.g., the automobile industry. Actors in the construction industry point to the “one-of-a-kind, project-based nature” of construction as evidence that the innovations of manufacturing cannot be applied to construction (Crowley 1998). In construction, also process innovations are uncommon; instead typical innovations in construction are product innovations by material and component manufacturers (Koskela and Vrijhoef 2001). The theoretical background of the lean production paradigm is lean thinking (Womack and Jones 2003). The principal foundation for lean thinking is the concepts of value, value stream, flow, pull and perfection, or transformation, flow and value (Koskela 2003). The foundation for the concepts of value, pull, and perfection can be related to the basis of the customer’s perspective, as customer requirements of finished products or instant improvements driven by customers’ demands. The concepts of value stream and flow refer to all necessary activities - information and materials conversion - needed through the whole process, from the raw material to a finished product. The salient feature of lean thinking is thus the management of the conversion process to promote flow. Based on this, the lean paradigm ranges over four functional areas related to the product (conversion) process; lean product development, lean procurement, lean manufacturing, and lean distribution (Karlsson and Åhlström 1996). Research within lean construction seems to focus on holistic and theoretical studies of the whole lean production process (Saad et al. 2002, Ballard and Howell 2003, Koskela 2

2003). However, one of the most critical factors of lean production principles appears to be the management of external relationships rather than internal operations (Karlsson 1992, Panizzolo 1998). In the Swedish construction sector and within construction research, the interest of finding key characteristics and success factors for component suppliers is increasing and it is this potential that motivates this paper. Hence, this paper highlights the characteristics of the organized external network while excluding the manufacturing process and internal organizational questions. The same type of differentiation has formerly been developed into a model where the lean procurement and the lean distribution principles result in the lean enterprise (Karlsson and Åhlström 1997). Based on this demarcation, the aim of the paper is to investigate how supplier coordinating component suppliers in construction act in their marketplace towards other suppliers and customers and how these can be categorized on the basis of lean and innovative concepts derived from literature. A second purpose is to identify strategic success factors within the framework of the lean and innovative concepts. THE LEAN PARADIGM AS AN INNOVATION Culture of innovation in the firm is almost connected to the leanness of a firm. Thus, the adoption of lean management principles and techniques can result in an innovative culture (Bröchner et al. 2002). Innovative activities can be divided into three broad categories: x x

x

Product development or improvements (Montoya-Weiss and Calantone 1994, Cooper 1996). Process innovation, regarding improved processing or manufacturing, where a firm’s process innovation culture depends on, e.g., workers integration and organization structures (Smeds 1994, Martins and Terblanche 2003). Business systems, regarding new or improved business and marketing practices (Hovgaard and Hansen 2004) that are customer and market-oriented, focusing on solving customers problems (Martins and Terblanche 2003).

LEAN AND INNOVATIVE SUPPLIER AND MARKET CONCEPTS The reviewed principles are related to each other and linked to the features of the lean enterprise. Without aiming for a direct comparison, the condensed concepts based on parts of the lean and innovation theory is depicted in Figure 1. The figure explains the evaluated relationship between the explored basic principles of lean thinking, lean production and innovative theory to our conceptualization, the lean and innovative supplier and market concepts. The concepts in Figure 1 - knowledge networks (KN), supplier networks (SN), customer focus (CF), and customer integration (CI) - are labelled by considering the grey coloured area of Figure 1. This means that the principles found in the literature regarding the external supplier-market focus of lean thinking and innovative business systems can form a base to describe lean and innovative supplier and market concepts. Each concept is explained below. 3

Figure 1: Lean and innovative supplier and market concepts.

SUPPLIER FOCUS CONCEPTS Knowledge networks The principle of knowledge network relies on the ability to collect knowledge from others into the firm and to keep the obtained knowledge inside the organization. Using knowledge networks implies that the company has an ambition to learn from specialists in different areas such as technical consultants and suppliers as well as competitors (Karlsson and Åhlström 1997). The lean enterprise can benefit by learning from larger suppliers who may already be a partner in another supply chain (Jina et al. 1997) along with establishing a long-term agreement cooperation that creates a rational framework for sharing profits (Lamming 1993). Research shows that development in networks is very often beyond the capability of a single firm and that efficient utilization of external and internal capacity will form the “total capacity” that enables a firm to better meet customers demands (Awuah 2001). Supplier networks The concept of supplier networks implies that a company has strategic and long-term supplier relationships. Also, the lean producer assigns a whole subcomponent instead of several individual parts meant to be put together by the producer (Karlsson 1992). The lean enterprise therefore often becomes a “system-integrator” that from our point of view is a supplier coordinator commitment, providing specialized parts and final assembly of subsystems using a network of suppliers, as Figure 2 shows.

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Figure 2: Traditional supply chain and system-integrator supply chain.

Therefore, the system integrator’s major role is design, marketing, and service rather than production (Crowley 1998). If a supplier is not involved in, e.g. the component design, the manufacturer has to invest extra time and resources to solve any problem their suppliers encounter when manufacturing a part they have not designed (Sanchez and Pérez 2001). This highlights the importance of establishing closer and longer-term relations with suppliers, not only at a logistic level, but also at the technological/strategic level (Lamming 2003). MARKET FOCUS CONCEPTS Customer focus If a company have functional customer focus it offers activities and services beside the main product. A complete service raises the value and the customer satisfaction for the product compared to similar products marked by competitors (Crowley 1998). Therefore the lean enterprise system provides loyalty from the buyer and makes it extraordinarily hard for new competitors to gain share (Womack et al. 1990). Constant innovations are a competitive advantage for the long-term survival of an enterprise because it allows the company to better meet customer needs (Cooper 1996). A wide range of choices for the customer can also be delivered through the use of standard components flexible in assembly (Gann 1996). Simultaneously managers must shift focus from their existing organisation and production to the customer (Kippenberger 1997). Companies that use appropriate innovation management in a coherent and rational manner will therefore better provide the total value that customers demand (Naim and Barlow 2003).

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Customer integration Customer integration implies that a company work in close relationships with customers. A lean enterprise should be part of a global network where process integration is particularly important (Karlsson and Åhlström 1997), meaning that no one should produce a good or service until the customer asks for it. Instead of pushing complete products at customers, the customer communicates demand through pull (Green 1999, Womack and Jones 2003). Continuous improvements are important since customer demands are constantly increasing and new technical solutions and enterprises are emerging. Hence, it is important that improvement suggestions are solicited from customers (Forza 1996). The lean enterprise has to develop a “customer-in” organization whose important topics are the capability and competence of the sales network, the exchange of information with customers, and customer involvement in product planning and design (Panizzolo 1998). EMPIRICAL RESEARCH METHOD A comparative approach based on exploratory studies of component suppliers acting as system-integrators in the Swedish construction industry was undertaken. Focused studies were chosen, whose characteristics are that a minority of cases is studied and that the study aims to explain a certain situation with an average level of generalization. A critical moment for comparative studies is the election of cases and the selection regarding generalization and explanation (Ragin 1987). Here, five component suppliers were chosen as being representative within the material areas of steel, wood, and concrete in the Swedish construction material industry. The five companies being both small and large were solely compared regarding their business strategies concerning their supplier and customer relationships. In the classic paradigm of comparative research, studies are often qualitative to attain a wider understanding. Consequently, the research was conducted qualitatively involving personal interviews. Respondents from each company were chosen from comparable functions in the companies’ organizational structures and the same questionnaire was used to ensure that the collected data were likely to demonstrate the same characteristics. DESCRIPTION OF COMPANIES Company A Company A is subsidiary to one of Scandinavia’s largest manufacturers of thin sheet steel products. The firm’s main purpose is to manufacture and market shelf products in steel and aluminium for roofs, walls, and joists to building contractors and the material trade. The products are based on a mature in-house developed technology. The company offers several established products and some new innovative prefabricated steel-based wall elements and is a well known actor on a mature market. Since the company manufactures all of their products they have a large production facility. Three people were interviewed;

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one business developer manager within sales, one product developer manager, and one person from the sales staff. Company B Company B is a member of the concrete group Consolis, the largest manufacturer of prefabricated concrete elements in Europe. The company produces a wide range of prefabricated concrete elements for walls and joists and thus has a large production facility. Company B have a well developed knowledge about the products and is a well known actor on a mature market. The company’s main customers are building proprietors within the industrial sector. One project development manager with competences within sales and technical development gained from working in several positions within the company was interviewed. Company C Company C is owned by the German concrete group Heidelberg. Its business concept is to provide building proprietors constructing residential blocks with project adapted system solutions and concrete products. The studied company has just like companies A and B, several years ago participated in the development of the products for walls and joist that is offered to the customer. They have a well developed knowledge about the products and is a well known actor on a mature market. Company C also offer an innovative product concept that consists of shell elements of concrete that are partly prefabricated and partly finished on the construction site. The production capacity of the studied company is large. One senior manager in the housing division, responsible for the subdivisions of marketing, selling, product development, and manufacturing, was interviewed. Company D Company D is a firm within a Swedish timber association where the business concept is to market and sell timber based products and systems for multi-storey houses to building proprietors on the European market. The technology for multi-storey timber frame houses is to date not well known and developed structural systems are lacking; why company D is rather innovative since they have developed timber joists elements and a new advanced timber component. The company has no manufacture capacity in-house; instead they utilize a business relationship with one strategic production company. The respondent in company D is a salesman, with product development knowledge and management experience. Company E The business concept of company E is to sell and market solid timber house components for residential blocks and detached houses to building proprietors. This concept means that the company offers only a few wall, roof and joists components to the customer. The studied company has no own production capacity since the solid timber elements are imported. Though the company does not manufacture any products, they have 7

participated in the development of new solutions for solid timber joists. In company E, two owners were interviewed; one mainly responsible for selling, and customers, the other works with marketing and product development. Table 1 shows comparable values for the studied companies. Table 1: Age on market, turnover (2002), number of employees (2002), and ROA*(mean value 1999-2002).

* ROA is calculated as net income divided by total assets and indicates financial performance. Higher value indicates comparatively better financial performance. ** Age on market after fusion

RESULTS AND ANALYSIS The empirical findings of the studied component manufacturers strategies and external networks are summarised below. The results are analyzed and categorized in relation to the lean and innovative supplier and market concepts in Figure 1. KNOWLEDGE NETWORKS (KN) Company A is a mature company where no dramatic changes occur and they have all needed competence within the company. Similarly, the company does not consciously try to profit knowledge input from suppliers or consultants to the product development or manufacturing process. Both companies B and C hire consultants, often technical, when new knowledge is needed. They also attempt to give their employees’ additional knowledge by using their respectively networks. Company D has since the start spent efforts on technical improvements and continuously utilized an external network of consultants and researchers for the planning and designing process. All employees have participated in product development, which explains why the company today has knowledge built into the organization. Finally, company E really makes use of competence outside the company organization through a broad knowledge network of consultants and researchers. Company E only has three employees and none of them have proper technical knowledge. SUPPLIER NETWORKS (SN) Company A believes that they have all the necessary competence with most product components being manufactured within the company. However, company A acts as a system integrator of type B (Figure 2), since raw material is supplied from the parent 8

company. Company B’s turnover consists of 30-40 % of services provided; implying that company B has several supplier relationships. Occasionally, company C buy the same type of concrete elements as they produce by themselves from other concrete manufacturers when the own capacity is not enough. The company also buy non-concrete products as e.g., windows and doors from other suppliers. In the past company D managed their own manufacturing of structural wood components. Today, the manufacturing of the timber components is outsourced and other subcomponents are supplied from the supplier network. Company E does not manufacture the timber components by themselves. Instead they act as a system-integrator of type A and buy the wood elements and other components from suppliers in their network and coordinate services as design and assembling. CUSTOMER FOCUS (CF) The customer focus for company A has taken the form of a powerful distributor network, customer services such as software methods for calculation, design knowledge they share with their customers, and a strong confidence in the well-known owner’s name. Company B manufactures concrete elements, but they have no constraints to sell buildings containing concrete. Instead, they focus on offering the customer the product the customer asks for. Company B says that their customer focus implies that they can handle flexibility and late decisions from the customer. Company C have a distinct customer focus and emphasize their solid experience and knowledge that is used when products are designed to different projects. In this manner customers buy knowledge built-in to the product. The strategy of company D is a clear system thinking where the customer focus is to share its knowledge about timber house building via a handbook. Company E also have a low, or blurred, customer focus and relies on that they have supplied timber components to several finished houses, now used as reference objects. CUSTOMER INTEGRATION (CI) Company A struggles with large costs caused by the location of the manufacturing plant in relation to the main market. Therefore, company A focuses on retailers to enable close and daily contact with customers, and they also arrange different customer activities. However, they do not utilize customer integration in product development. Company B focuses on key customers since around 80% of their sales are to previous customers. They also arrange customer activities and most product development is done in collaboration with customers. Company B claims a clear pattern between products developed in collaboration with the customer and marketability. Contrary to this observation, company C has not seen any difference according to sales between their own developed products and products developed in collaboration with customers. However, company C perceives a connection between sales and the vicinity to customers and therefore the company has enlarged and spread the sales staff organization during a fusion and reorganization six years ago to enable closer contact with the customer. Company C also arrange different customer activities. Company D tries to be at the construction site as often as possible, 9

since these contacts present the best input for improvements. They also actively work with development ideas from customers. Finally, company E works with an architect who has contact with potential customers and examines the customers demand. The company also often visits customers at the construction site. However, company E is a micro company; therefore it is hard for them to relate the organization towards customers and main market segments. Table 2 shows the categorization of the studied companies within the theoretical derived supplier and market concepts. Within each concept the firm’s salient strategy is shown. A description in italic text in the “CF”-column describes the company’s main market focus. Table 2: Categorization of companies in lean and innovative supplier and market concepts.

* System integrator Type A respectively Type B according to Figure 2. ** Make to stock implies standard products. *** Make to order contain products that are planed/designed/manufactured after customer order.

DISCUSSION AND CONCLUSIONS Based on the pooled integrated supplier (KN&SN) and market (CF&CI) concepts a company may be categorized. A company that work with a high value of integrated supplier focus and integrated market focus is defined as the “lean enterprise” in Figure 3a. The lean enterprise here briefly means that the company collect knowledge from others 10

(Karlsson and Åhlström 1997, Jina et al. 1997) and able the knowledge to stay within the company, purchase whole subcomponents from suppliers, add value to the product via adding activities (Crowley 1998) and involve customers in product development (Forza 1996). The suggested “market enterprise” focus customer involvement and strive hard to satisfy the customer, but does not make use of other suppliers or external knowledge in any larger extent. The “supplier enterprise” utilizes external knowledge and suppliers but does not have a clear focus on the market and customers needs. The “internally enterprise” develops and manufacture all products in-house, to stock, and focus more on the own production than customers needs, which is the opposite of lean supplier thinking according to Kippenberger (1997). By using Table 2 the companies’ integrated supplier and market strategy, and the companies’ age on market, with contemporaneous noting of the ROA-values, are shown in Figures 3a and b.

Figure 3a: Market focus vs. supplier focus.

Figure 3b: Supplier focus vs. age on market.

Figure 3a displays two distinct company groupings according to supplier focus. The three steel and concrete suppliers (A, B, and C) show a low degree of knowledge and supplier network utilization but also high ROA-values. However, the low degree of supplier focus (KN&SN) seems to be independent of the chosen strategy concerning market focus (CF&CI) when ROA is concerned. The opposite is shown by the two timber suppliers (D and E) within the “lean enterprise quadrant”, with high supplier and market focus, but low ROA. Large companies (A, B, and C) seem to have a low degree of supplier focus, while small companies (D and E) have preferred to jointly have a high degree of supplier and market focus. Interesting to note is that the mature company C went through a company fusion six years ago, with a shift of strategy towards a higher market focus. Figure 3b clearly shows the low integrated supplier focus of the mature steel and concrete suppliers and the higher degree of supplier cooperation of the younger and smaller timber suppliers. This study surprisingly indicates that the companies that make use of a “lean enterprise strategy” have not succeeded on the market, at least according to their ROAvalue. This might be explained by several circumstances. Companies D and E are newcomers that sell and develop timber components. Timber is a material that has not yet 11

gained confidence from the Swedish construction market. Both companies have also chosen a high level process innovative strategy. This apparently is the wrong way to go as the “change competence” is low in construction, especially concerning process innovations (Koskela and Vrijhoef 2001). The mature and more successful companies A, B and C have clearly developed another strategy, namely focusing on several consecutive product innovations through the years, while today not involving suppliers or utilizing knowledge networks in this work. Based on the results and discussion, it is possible to outline success factors, based on the supplier and market concepts, used by the studied companies. The results also incline that the success factors should be prioritized in two steps: 1) Customer Focus: Knowledge influenced by key customers increases the value and competitiveness of key products. Value raising activities is exemplified by company A that offers technical support and software knowledge to the customer, company C that offers the knowledge built-in to the product and company D that provide knowledge to the customer via a handbook. Customer Integration: Organizational design influenced by chosen customer niche, and customer involvement in product development. To enable close relationships with customers, companies (A, B, C and D) have their sales network oriented after the customer. Customer involvement is utilized in the product development by four of the five studied companies. However it seems to have minor effects except for company B. 2) Knowledge Networks: Acquiring of knowledge from others, striving for knowledge building inside the organization through employees participating. The majority of the studied companies acquire knowledge from others when the internal knowledge is not enough, and try to build in the new knowledge to the organization. Supplier Networks: Utilizing of supplier networks and focusing on the final assembly of subsystems instead of focusing on the own production. This is exemplified by companies D and E that in a high extent use supplier networks in their role as system-integrators, focusing on the final assembly of subsystems, with design and assembling built in to the product. It must be noted that because of the exploratory comparative research setting in the study, it is only possible to achieve a low or average level of generalization which has to be considered regarding these conclusions. The fact that the lean and innovative thinking seems not to be successful for companies D and E might also be explained by the fact that these two companies have been studied too early. These companies have been acting on the market for only a few years. Therefore, a longitudinal study of how the companies act and develop in the future is interesting. It is also interesting to investigate if the strategy 12

of mature companies with low supplier focus is prosperous and competitive and if the younger companies will follow the same strategy. REFERENCES Awuah, G.B. (2001). “A firm’s development through its network of exchange relationships”. Journal of Business & Industrial Marketing., 16(7) 574-599. Ballard, G. and Howell, G.A. (2003). “Lean project management.” Building Research & Information., 31(2) 119-133. Bröchner, J., Josephson, P-E. and Kadefors, A. (2002). “Swedisch construction culture, quality management and collaborative practice.” Build. Resrch. & Inf., 30(6) 392400. Cooper, R.G. (1996). “Overhauling the New Product Process.” Industrial Marketing Management., 25, 465-482. Crowley, A. (1998). “Construction as a manufacturing process: Lessons from the automotive industry.” Computers and Structures., 67, 389-400. Forza, C. (1996). “Work organization in lean production and traditional plants.” Int. J. of Operations & Production Management., 16(2) 42-62. Gann, D.M. (1996). “Construction as a manufacturing process? Similarities and differences between industrialized housing and car production in Japan.” Construction Management and Economics., 14, 437-450. Green, S.D. (1999). “The missing arguments of lean construction.” Construction Management and Economics., 17, 133-137. Hovgaard, A. and Hansen, E. (2004). “Innovativeness in the forest products industry.” Journal of Forest Products., 54(1) 26-33. Jina, J., Bhattacharya, A.K. and Walton, A.D. (1997). “Applying lean principles for high product variety and low volumes: some issues and propositions.” Logistics Information Management., 10(1) 5-13. Karlsson, C. (1992). “Knowledge and Material Flow in Future Industrial Networks.” Int. J. of Operations & Production Management., 12(7/8) 10-23. Karlsson, C. and Åhlström, P. (1996). “Assessing changes towards lean production.” Int. J. of operations & Production Management., 16(2) 24-41. Karlsson, C. and Åhlström, P. (1997). “A lean and global smaller firm?” Int. J. of Operations & Production Management., 17(10) 940-952. Kippenberger, T. (1997). “Apply Lean Thinking to a Value Stream to create a Lean Enterprise.” The Antitote., 2(5) 11-14. Koskela, L. and Vrijhoef, R. (2001). ”Is current theory of construction a hindrance to innovation?” Building Research & Information., 29(3) 197-207. Koskela, L. (2003). “Is structural change the primary solution to the problems of construction.” Building Research & Information., 32(2) 85-96. Lamming, R. (1993). Beyond Partnership, Strategies for Innovation and Lean Supply. Prentice Hall, New York. Martins, E.C. and Terblanche, F. (2003). “Building organisational culture that stimulates creativity and innovation.” European J. of Innovation Management., 6(1) 64-74. 13

Montoya-Weiss, M.M. and Calantone, R. (1994). “Determinants of New Product Performance: A Review and Meta-Analysis.” J. Prod& Innov. Mgmn., 11, 397-417. Naim, M. and Barlow, J. (2003). “An innovative supply chain strategy for customized housing.” Construction Management and Economics., 21, 593-602. Panizzolo, R. (1998). “Applying the lessons learned from 27 lean manufacturers. The relevance of relationships management.” Int. J. Production Economics., 55, 223-240. Ragin, C.C. (1987). The Comparative Method - Moving Beyond Qualitative and Quantitative Strategies. University of California., Berkley. Saad, M., Jones, M. and James, P. (2002). “A review of the progress towards the adoption of supply chain management (SCM) relationships in construction.” European J. of Purchasing & Supply Management., 8, 179-183. Sánchez, A.M. and Pérez, M.P. (2001). “Lean indicators and manufacturing strategies.” Int. J. of Operations & Productions Management., 21(11) 1433-1451. Smeds, R. (1994). “Managing Change towards Lean Enterprises.” Int. J. of Operations & Productions Management., 14 (3) 66-82. Tan, K-C., Kannan, V.R., Handfield, R.B. and Gosh, S. (1999). “Supply chain management: an empirical study of its impact on performance.” Int. J. of Operations & Production Management., 19(10) 1034-1052. Womack, P.J., Jones, T.D. and Roos, D. (1990). The Machine that Changed the World. Rawson Associates, New York. Womack, P.J. and Jones, T.D. (2003). Lean Thinking. Simon & Schuster, UK.

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APPENDIX 1: A PRESENTATION OF THE STUDIED COMPANIES Main case study The total population of Swedish timber volume element producers of commercial, multi-family and multi-storey housing were included in the main case study. The studied timber volume element manufacturers produce volume elements with load bearing frame in timber integrated in the volume elements.

Flexator AB History The history of Flexator began in 1956 when the company Oresjö started manufacturing of movable structures as station buildings, booths and wagons. During the 1960s Oresjö developed the manufacturing towards schools, pre-schools and office buildings. 1990 the name was changed to Flexator and the main focus became volume element manufacturing of stationary buildings that still were possible to move because of the volume element technique. During the last years the design of the products have changed from rather standardized concepts to more flexible and customized concepts to meet customer demands. The main part of the house production is today located on the same place and in the same factories as in the beginning of the 1950s. Organization The company has 162 employees and a turnover of 22 MEuro and is a part of Skanska, the largest construction contractor in Sweden. Since Flexator is a subsidiary company to Skanska, the company has agreements with some suppliers that are key-suppliers to Skanska. The company also has agreements with other selected suppliers of keycomponents as e.g. windows, doors and white goods. Flexator has the whole spectra of occupational groups that are required in a traditional construction project, from design to assembly of a complete house. Thus it is possible for Flexator to plan the whole house design and the construction process, because they have all required knowledge to manage the complete process. The company has own structural designers, carpenters, electricians etc. and the only occupational group that is not represented in the own organization is tiling. However, this profession is purchased and the same company and individuals have been working for Flexator during several years. Products and customers Flexators main customers are municipalities and authorities and the company offer products as official and commercial, social service and office buildings, group dwellings, hotels, schools and pre-schools, Figure A1.

Figure A1: Exteriors from a pre-school and an office building

Of these building categories the main focus is social service and care buildings. Social service and care buildings require a flexible and wide organization and the company also have to use the whole organization to receive profits. Projects that are most suitable for the production organization is projects with a throughput time of approximately ten weeks. Too large projects are not suitable because some parts of the organization can be without work, something that is seen as waste. It is also argued to be advantageous for the company to take care of the whole process from design to manufacturing of the complete house where the contract agreement also includes foundation and infrastructure. The timber volume element technique is traditionally used for single-family houses, but this is not the main focus for Flexator. However, this type of houses has been produced by Flexator, but in these cases the company has manufactured several similar houses to the same project and the same area to obtain repetition effects. Flexator does not build houses higher than three storeys. The production capacity and the machinery is not a limitation but the company has, today, not the required competence in structural engineering for this type of houses. Although the company does not have this competence in-house it is not perceived as a real problem because competence and knowledge can be purchased. However, multi-storey housing is not perceived to be a market where the main focus shall be today. Some of Flexators products are standardized and the company has standard concepts for office buildings, schools, preschools and hotels. However, products are often customized why one house is often not the same as another. Similarities and repetition effects is instead found in the planning and production process, where the process has similarities in activities, and sometimes also in the design of elements as wall and floor structures. Production flow and development areas Former, standardised concepts were more common in Flexators product offerings. The change towards more customized solutions has influenced the production process and the principal change is the increased need for information, both to and from customers, but also in the manufacturing process. Compared to earlier the production process is slower, though the company tries to think in modularized and recurrent element concepts. The problem is that different parts and elements although have to be put together in different

ways from project to project. Increased customization therefore cause problems in the whole supply chain, mostly due to the increased information flow. More information is needed to suppliers because material differs from time to time, and it is important that customer’ demands and needs are correct understood and passed to suppliers and following stages in the process. Sometimes problems occur when information is lost in the supply chain. The supply chain contains several individuals and actors where information can disappear or be misunderstood. One employee thinks that this problem would decrease if information paths from customers to production could be shortened. It is also important that information to every level in the supply chain is received early and before the actual factory production starts, and this is even more important when products are complex containing several different special designs. One problem here seems to be that the company is too good natured towards late changes when the factory production already has started. Furthermore it seems to be more common that customers demand documentation and construction plans in digital format and the problem here is that different customers have different demands and standards for file formats. One employee states that “today it is almost more time consuming to build the house on paper then in reality”. To develop the internal production process, the internal and the external logistics, i.e., the material and information flow, have to be improved. Moreover, the factory layout is not optimal for volume element manufacturing, and is rather small, why elements and components are stored in disadvantages ways and elements sometimes have to be moved back and forth.

Finndomo Group History Finndomo is a Finnish company that is established in Sweden. The Swedish part of the company consists of three house factories that have been independent historically why the factories have their own trademarks and building systems. The sales-, market- and administration divisions are located in the production facilities in Hjältevad and Hässleholm, while the production facility in Hultsfred solely is a production plant. The production plant in Hultsfred was founded in 1929. The factory in Hässleholm was founded 1965 and is a factory that from the beginning was built for volume element prefabrication and therefore is suited after this type of manufacturing. The production plant in Hjältevad was founded in 1947 and is a former small sawmill. In the beginning the manufactured products in Hjältevad were small wall elements and thereafter the production shifted towards larger wall elements, and has now turned to volume element prefabrication. This change has conveyed extensions of the production plant in smaller stages why the factory layout not is fitted to volume element prefabrication. The difference between the productions facilities in Hjältevad compared to the production facility in Hässleholm is that all manufacturing is collected in the same production hall in Hässleholm, while the production in Hjältevad takes place in different manufacturing halls, as well located in different storeys. Manufacturing both occur in the basement and in upper floors. This factory layout influences the internal logistics negatively. As an example,

painting is performed in the upper floor, the storage of building materials is placed in the basement while the assembly line is located on the ground level. Finndomo tries to coordinate the different buildings systems so that e.g. wall heights, wall designs and floor element designs are the same in all factories and for all trademarks. The purpose is to unify production knowledge and to facilitate increased purchase volumes. Earlier Finndomo manufactured both dwellings and official and commercial buildings as office buildings and restaurants. However, manufacturing of a wide product offer, as both dwellings and restaurants, demand a wide organization and also a flexible production plant. Finndomo did not think this strategy was advantageous for good profits in projects, why the focus was slimmed towards dwellings to become more efficient in the whole supply chain. Former it was also common that Finndomo worked towards inquiry from customers, but today the whole project activity within multi-family housing is performed in close cooperation with a large Swedish contractor. This enable Finndomo to take part in the construction process in early stages why the company can participate in early design decisions so that the design is adopted after the company’s building system. This improves both the construction process and control of costs in projects. Organization Finndomo Group has 850 employees and a turnover of 158 MEuro in Sweden. A fundamental strategy within the company is to have employees for 80 % of the needed capacity where the remaining part is purchased by sub-contractors. This implies that the factories have a fixed base of working staff where peaks in production are managed with supplied staff. However, it does not seem to be any difference between supplied staff and in-house staff due to the developed cooperation with a number of manning companies. Mostly the same individuals also recur to the company. Key-components as windows are always purchased from the same supplier. Mostly the same suppliers for other components and materials are also used and when a fixed supplier is used, the company knows prices, assortments and lead times. The advantage with fixed suppliers is not only lower purchase price, but also the total price where everything from way of delivery to assembly influences the price. In larger projects the company also search for other suppliers than the fixed, but this type of procedure demand more work and longer lead times. Thus a large project demands more information both from customers and suppliers, and also to suppliers and customers. Simple, standardized concepts have standard sub orders where no extra information is needed. The earnings in large and complex projects are to use gaps in sub-suppliers manufacturing where low prices often can be offered. In this case the cost price is the most important and not the long-time relationship and the total costs. Products and customers The company has concentrated the production towards dwellings as detached houses for private consumers, terrace houses and larger projects with multi-family dwellings. Finndomo group works with three trademarks; Hjältevadshus and Modulenthus, towards

private consumers and the Finndomo-trademark towards professional customers, Figure A2.

Figure A2: Exteriors of a detached house for private consumers and a multi-family dwelling

Practically the same building system and the same production technique are used. Differences instead arise in different house types and finishing. The multi-family dwelling projects have been executed in close cooperation with the large Swedish contractor and consist of standard flats where size and number of flats within a house can be changed. The most important advantage with the standardisation is the repetition effects. However, it is possible for Finndomo to design and produce different flats between different projects as long as flats are standardized within a project. Finndomo has in-house knowledge and experience to produce houses up to four storeys in timber. The company prefers to handle the house “above foundation”, since foundation and infrastructure not is a part of the core competence. Though it happens that sub-suppliers is engaged to enable total product offers where foundations, and in some cases also infrastructure, is included in the product offer to customers. Production flow and development areas The more customized a product is, the more information is needed from and to customers. The customers decision process is lengthen and thus early stages in production are also lengthened. The more choices the customer has access to, there is an increased risk that the customer chose products with long lead times. Doors in special colours can as an example have twice as long lead times as a door in a standard colour. Problems often occur when customers do not make their choices at once. It is common that customers change their decisions several times, also when production has started, and Finndomo consider themselves to sometimes be too good natured towards customer wishes. Sometimes also the manufacturer’s goodwill seems to increase customer’s dissatisfaction because changes,

after customers’ request, lengthen the lead time of the complete house. The longer time to a ready house annoy customers that often “forget” their own willing to change already taken decisions. The information flow is almost the same through the whole supply chain and the information flow per se is often not a problem for Finndomo. Instead problems occur in interfaces i.e., customer choices have to be correct perceived by a salesperson and then delivered correctly to the next step in the supply chain. Besides the information flow, the internal material flow is mentioned as a development area for Finndomo. The company mention a need for improvements in production flows so that material is delivered in the most favourable way to different work stations. Also the factory layout is mentioned as a development area. Small changes in the production machinery can improve the whole process considerable because the production is argued to be almost traditional but performed in a factory.

Lindbäcks Bygg AB History Lindbäcks Bygg AB was established by the family Lindbäck 1924. The origin activity was a little sawmill that through the years was developed to also include construction activities. Since 1945 the company has solely devoted the activity to housing. After 1995, when timber frames were allowed for houses with more than two storeys, Lindbäcks has focused manufacturing of multi-storey houses. The majority of houses produced until today is student and senior lodgings. These types of houses convey repetitive production that can be compared to mass production. However, the company strive towards new market shares and today the business focus is widened towards co-operative apartments that can be suited after customer demands. During the last five years the company has increased the turnover with approximately 15% and the manufacturing halls has been enlarged and better adapted for volume element prefabrication. The internal logistics has been changed and the product flow has been improved to enable a more rational production process and higher quality in products. Organization Still Lindbäcks is a family owned company, with 90 employees, and a turnover of 22 MEuro. The company has in-house knowledge for all activities in the construction process and has own structural design, purchasing and sales divisions, as well as factory manufacturing and on-site assembly resources. Architects and sub-contractors for electricity, sanitary and foundation activities are supplied. The company is also a property manager and can therefore utilize the own manufacturing capacity to build own houses when the market demand is low. The property management also enable the company to try new concepts and technical solutions on own houses before new concepts are used in houses for external customers. Lindbäcks strive to build-up long-term co-operation agreements as annual agreements with suppliers. Materials purchased via annual agreements on call are often purchased in

large volumes which results in relatively low prices and specified delivery times. Often lead times are shortened for materials purchased on annual call and the company can also make use of fixed prices and lead times in their calculations. Thus the annual agreements both favour Lindbäcks and the supplier at the same time as needed information to the supplier is reduced. The purchase process for material that has no annual agreement and is delivered via a procurement process is more time and information consuming as Lindbäcks then have to choose a new supplier. In many cases also the procurement process has to be initiated long before the actual building contract is signed. Suppliers are often chosen from demands as price, quality and delivery precision. The estimated number of suppliers in an ordinary construction project is approximately 50 suppliers of which about 30 are purchased on annual agreements. Sub-contractors are purchased from the same criterions as material, and the sub-suppliers are often chosen from the local neighbourhood. Products and customers Lindbäcks Bygg has three strategic product offers that consist of student lodgings, senior dwellings and multi-family dwellings (mainly four storey houses), Figure A3.

Figure A3: Exteriors of multi-family and multi-storey dwellings

The most common customers are co-operative building societies, real estate trustees and student associations together with the own property management company. The company

both sell houses on offers and for general agreement. The latter type of contract demands less time in planning stages and also in manufacturing because a few typical house layouts are used. The tendering process includes already designed house layouts, and only minor changes are allowed to keep high production efficiency and low costs. The company can easily estimate the total price and lead time for a house from known data and experience. Fifty percent of the production is based on this type of contract and it is also a pronounced strategy to achieve a solid economical base. Lindbäcks also manufacture houses on offers and then the company often make use of a supplied architect to outline different solutions to fit the building system to the suggestion and demands from the customer. In this case the only actual limitation in house layouts are transportation limits and structural demands for the volume elements. Production flow and development areas Though houses are customised the company reuse building system solutions. Student lodgings projects are often standardized within a project and this brings repetition effects in production. Every project is unique but this seems to have a minor influence on the production efficiency. Even though products are highly customised, the same type of system solution is used independent of product design. Projects are suited after the customers’ demand except for e.g., student lodgings where the repetition effects are gained since house design is standardized within and between every project. The degree of customization influences the efficiency of production and an increased information flow is argued to be a key issue. Information from customers has to be collected before production starts and therefore it is important that customers are aware of what in their decisions that cause problems and delays in the production flow. The company has also trained their salespersons to refuse late changes from customers to avoid delays and problems in production. Customization also influences production because dimensions in elements and volumes are changed and employees do not know dimensions and layouts by heart. Another effect is that sub-suppliers need more information and require a higher need of guidance. An increased customization and information flow also influences production employees, since many changes lead to decreased project learning. However, the company has observed a decreased efficiency due to employees getting into a rut when projects exceed 100 to 150 flats. The ambition and the future vision of the company is to control the information flow much better. To reduce waste occurring in production defects, it seems important that information about new projects is not handed over from the design phase to production before all information is absolutely complete and correct. Former the company focused every single project. Today the focus is the production and the product why long-time detail planning is important. However, it is also stated that the project have to be respected; to follow settled time tables, make exact planning, and carefully follow routines and processes. Obstacles for development of the industrialised process for the company are mentioned to be authority demands as raised fuel prices, transport limitations and tough plan processes.

Internal problems and development areas are efficiency in product design and manufacturing and documentation to enable experience feedback that can further develop the process. Today it is possible for the company to produce four volumes per day, but the production lines are to be changed to enable a double capacity.

Moelven Byggmodul AB History Moelven Byggmodul is a part of the Moelven-group. Moelven Byggmodul AB is made up by four producing divisions and the group of companies was established 1998. However, each of the companies has experience of volume element manufacturing since the 1950s, why the collected experience is accumulated for more than 50 years. The four companies in Moelven Byggmodul has different histories and manufacture different products. Moelven Byggmodul Sandsjöfors AB started as a factory with production of parts to brushes. Through the years the company developed towards manufacturing of movable cottages and booths. Through purchases and consolidations the company has expanded and is today manufacturing more permanent buildings. Moelven Byggmodul Säffle AB started with manufacturing of crew booths in the 1960s. The company has since then developed to enable production of the whole spectra of products from simple booths to customized multi-family dwellings up to five storeys. This factory is the larges production plant in Moelven group, and is best suited for production of larger projects with high repetition effects. Moelven Byggmodul Torsby AB has a 35 year history and is the company which is most specialized on customized and flexible solutions, but mainly for smaller houses. The company was established 1968 and during the first 15 years the manufacturing focused on booths to manufacturing and construction industries. The first product manufactured by Moelven Byggmodul Kil AB was movable crew booths for onsite building projects. The product offer has then been developed and today the booths can be used e.g. as flexible office buildings, crew booths or dining-halls. Organization Moelven Byggmodul in Sweden has a total turnover of 49 MEuro and 313 employees located on the four separate factories. The company has own structural designers and knowledge and experience within production; both in the factories and for on-site assembly. Design of buildings as schools and day-nurseries is performed by own employees that produce production plans, while external consults often are purchased for the architectural design of dwellings. The structural design competence is located in Sandsjöfors where the company has high competence to design and plan larger and more complicated projects. The structural design division in the Säffle-factory is phased-out because focus in Säffle is changed to be a complementary manufacturer to projects designed in Sandsjöfors. One reason to have the design and plan division in Sandsjöfors is that there is a tradition and high competence in Sandsjöfors regarding volume element prefabrication. Further reasons are that it is possible to obtain a personal connection between the production and design process in large and complex projects. Complicated and flexible parts are also manufactured in Sandsjöfors while simpler and more repetitive

parts are manufactured in the Säffle factory. The factory in Torsby has own required knowledge and resources for planning and design of products manufactured there; smaller projects as schools, pre-schools and office buildings. Subcontractors are purchased for activities as ventilation, house foundations and infrastructure and when facings not are made of timber, as e.g. plastered facades. Most of the competence for manufacturing is in-house competence and employees, but for some activities, as tiling, the company has annual agreements where the subcontractor has Moelven as its only employer. This type of agreement facilitates varying degree of needed tiling without any waste in redundant employees. Peaks in production sometimes also demand sub-contractors within electricity and sanitary activities. There does not seem to be any difference between own employees and sub-contractors, this because the company insist on having the same individuals from project to project. Moelven has to a relatively high degree fixed contracts with material suppliers that have been selected. It is also lucrative to work with known suppliers both regarding the total material price and reliable and known delivery times. However, it is not always possible to make use of annual agreements, especially not when projects are customized and customers chose materials from other suppliers than the fixed. To enable larger purchase volumes Moelven has a vision to standardize detail designs in products for all factories. Products and customers Moelven offer a wide spectrum of different products and the flexibility in products is possible because of the four separate factories that manufacture the different products. The company offer products from simple booths and detached houses, to office buildings, schools, multi-family dwellings and student lodgings, Figure A4. Moelven do not offer houses to private consumers, but the product offer can despite that consist of small private houses where a project consists of several similar houses. Moelven prefers to produce the house above foundation, without responsibility for the house foundation and infrastructure. However, the company is often “forced” to include the house foundation in projects if they are to attract customers. Although the company purchases foundation activities, extra management activities outside the core competence is added. Moelven has in some cases cooperated with their customers, where the customers have purchased the foundation in a separate contract. For approximately half of the projects the company’s undertaking comprises executing of the foundation. For remaining projects Moelven is providing the customer or the co-operation actor a foundation plan with directions for bearing lines and point loads. Historically the company has designed own houses to enable production after the own building system, but today the company also tries to find projects where their system can be used without larger changes. It is in these types of projects the company can be most efficient and enable good profits in projects. In Moelven there is a belief that the market has to design houses based on the volume element building systems if decreased costs compared to traditional on-site construction is aimed at. However, the company also has to offer customized solutions and different apartment sizes and layouts, but based on the

volume element system. Moelven vision the future customization to be based on exterior adaptations of houses together with options and extras for inside finishing.

Figure A4: Exteriors of a detached house, temporary movable houses, student lodgings and a multi-family dwelling

Production flow and development areas Moelven Byggmodul offers both standardized and customized products. The standard system is mentioned as less complex to produce since the product is designed after the building system and the production conditions. The standard concept demand less time and effort for planning and design and results in lower production costs and thus a more advantageous total price. In a customized house, the house is unique although the house is based on volume element thinking, and therefore the house has to be designed and the production flow has to be planned from scratch. The customization also affects learning of employees because they have to learn new system solutions in every new house project. A standardized house or project obtains repetition effects that convey learning in processes.

Hence, employees can learn certain operations, and the purchase division has finished material specifications for purchasing of materials etc. Customized products also convey longer lead times from purchasing of materials because special materials are not purchased via annual agreements. In customized projects the company also often has to find new suppliers. A customized house demands more information through the whole supply chain. Especially the connection between the purchasing division and the design and planning division demand extensive information flows. The company presumes that future success is associated to a product that is designed after the production conditions and the buildings system to a higher degree. A mentioned development area is the development of an industrialized manufacturing process. The company already has competence within construction and in this area the present knowledge seems to be enough. Instead one problem with the factory manufacturing of volume element houses seems to be the overrepresentation of construction knowledge compared to knowledge in factory manufacturing. Therefore internal development areas are connected to internal logistics as improved and adapted material and information flow. Moelven consider the combination of factory management and construction knowledge to be the optimal solution. Hindrance for development of volume element prefabrication is, according to Moelven, the market. Customers show low acceptance and adoption intentions for the unknown volume element building system. Therefore one mentioned development area is to enable market acceptation of the building system. Moelven mention that one possible solution is to make customers attentive of the economical gains a standardized and rational house production can offer.

Norvag Byggsystem AB History Norvag byggsystem started in Bygdsiljum in 1962 as a producer of caravans and special suited crew booths. In the beginning of 1980 the product offer was developed and expanded to also include simple buildings in volume element prefabrication. In 2000 the company was divided into two parts and the crew booths part of the product offer was sold. Today Norvag manufacture highly customized products to be able to compete on the market. Organization Norvag has design and planning competence within the company organization, but tries to avoid too many employees in-house, and therefore purchase sub-contractors for installation activities. Sub-contractors are often the same and the company perceives employees and sub-contractors to work like teams, why there are no perceived difference between in-house and purchased resources. Norvag has employed project leaders that coordinate employees and subcontractors through projects. The company has no own competence in transportation of volume elements and assembly of volume elements is also purchased from subcontractors. Norvag has a wide product offer due to the high

customization and this demand a wide and flexible knowledge base. Parts of the knowledge are represented in-house but mostly needed knowledge in design phases is purchased, as e.g. architectural competence. Products and customers Norvag mainly manufacture official and commercial buildings as office buildings, schools and pre-schools, Figure A5.

Figure A5: Exteriors from pre-schools and school buildings

The company has also developed suggestions for multi-family dwellings, volumes for electricity hypersensitive persons and a student lodgings volume. The company does not have any actual standard products, but manufacture products after customer demands. Main customers are local authorities or governmental customers and sometimes private companies. Often, the company also has to include house foundation and infrastructure in product offers to enable comparable contracts with traditional building contractors although the foundation activities not are part of the core competence. When foundation is included in the product offer, the company purchases sub-contractors from the area where the house is erected. Production flow and development areas Norvag’s internal problems and development areas are mostly related to internal logistics, i.e. material and information flow, depending on the high customization. Often customization carries different kitchen fixtures, white goods, carpets and wallpapers etc., as well in different volumes. Therefore it is advantageously for Norvag if suppliers can deliver materials to different volumes in different packages. It is also important that material from suppliers is received in time. The production time of volume element houses are short and fast and therefore the design phase is a problem area. Every detail has to be considered and

has to be finished on time because details that seems to be small and not so important, as e.g. switches, can cause large and expensive faults in production. Especially installations can cause expensive faults because installations are built into the building elements before the elements are assembled into volumes. Norvag strive towards high prefabrication degree in the factory because the costs to finish volumes on-site are argued to be twice as high as if the activity is made in the factory. Moreover, the factory is too small and the layout is not optimal for volume element prefabrication.

Comparative case study Five Swedish building material component suppliers were included in the comparative case study. The companies consist of one steel component supplier, two concrete component suppliers and two timber component suppliers, that all make use of a complete building system undertaking.

Company A – Plannja History Plannja is subsidiary to one of Scandinavia’s largest manufacturers of thin sheet steel products. The company has been on the market since 1967 and investments on product and market development and strategic company investments during several years have made the company to one of the leading thin sheet steel suppliers in Europe. Large system innovation are unusual today, as the main part of large development steps in steel and thin sheet steel products were developed long time ago, why the steel market today is a mature market. Product developments in Plannja are thus today mainly connected to refinements of products. Organization and business strategy The company’s sales and market divisions are mainly organized after main customers’ location. Plannja do not in any larger extent make use of cooperation with other companies and do not purchase competence outside the own organization. Reasons to this is argued to be that the Plannja act on a mature market where no large changes occur why the company have all needed competence within the own organization. The main part of the production is performed by the company and only smaller sub-assemblies as screws, weather strips, insulation etc. are purchased outside the company. Since the company manufactures all of their products the production facility is large. The firm’s main purpose is to manufacture and market shelf products in steel and aluminium for roofs, walls, and joists to building contractors and the material trade. The products are based on a mature in-house developed technology. The company offers several established products and some new innovative prefabricated steel-based wall elements and is a well known actor on a mature market. Market strategies The company has three clear market segments that is focused in the market strategy; the building material trade, building contractors and sheet-metal shops. Plannja has thorough knowledge of customers’ needs and expectations and has through the years developed knowledge about which types of projects where main profits can be gained. Hence, the company focus their marketing efforts mainly towards the three market segments, and projects that are perceived to be advantageous. A focus area in the marketing strategy is to centre the strong trademark. The company argue that a great part of the customer trust of products is based on the well-known trademark. Another part of the market strategy is to offer technical support and clear assembly instructions and product specifications to customers. The company has a great conviction in the relation between degree of service

to customers and sales rates. The company offer their main products through a complete building system undertaking where all parts in a system, e.g. comprising wall elements, screws, insulation etc., are included in the product offer.

Company B – Strängbetong History Strängbetong is a member of the concrete group Consolis, the largest manufacturer of prefabricated concrete elements in Europe. The company started in 1942 and have since then been working without any larger reorganizations and a majority of the employees have been working for the company for 30 - 40 years. Developments within the company have instead focused the building system. The concrete building system had a low system level in the 1950s when the company mainly manufactured concrete structures after customer demands. Thereafter the building system has been developed and today the company offer a complete building system undertaking that also comprise assembly and other sub-components beside the manufactured concrete products. Organization and business strategy The company produces a wide range of prefabricated concrete elements for walls and joists and thus has a large production facility. Strängbetong have well developed knowledge about the products and is a well known actor on a mature market. The company’s main customers are building proprietors within the industrial sector, but the company also manufacture systems to multi-family dwelling projects. The business concept is to offer houses and industry halls, frames, facades, systems of joists etc, complete with doors, windows etc. The characteristics that are argued to separate the company from other concrete manufacturers is the complete building system undertaking where the company consider themselves to offer high-qualitative product within settled time limits to competitive costs together with a high flexibility. 30-40 % of the company’s turnover is based on purchased sub-components and services and the company have long-term relationships with most of their sub-suppliers. Market strategies The company does not focus marketing strategies that comprise e.g. advertising campaigns in newspapers to the wide construction market. Instead marketing is performed as direct activities towards potential customers within specific customer niches. When the company has finished an object that is perceived to be interesting, potential customers are invited to visit the project on arranged customer meetings.

Company C – Abetong History Abetong is owned by the German concrete group Heidelberg. The company has a long history from different company structures, but is relatively young within the present organization structure. Abetong was established 1998 in a fusion of five companies and the

main difference, that evolved with the fusion compared to earlier, is the developed focus towards customers and an developed offer of more customized products. Organization and business strategy One of the company’s business concepts is to provide building proprietors constructing residential blocks with project adapted system solutions and concrete products. The company also manufacture and offer buildings to the farming industry and the manufacturing industry. Furthermore, Abetong offer an innovative product concept that consists of shell elements of concrete that are partly prefabricated and partly finished on the construction site. The company do not offer standardized products and almost all objects are project adapted system solutions. Project adopted system solutions comprise all from e.g. a complete house project to a simple retaining wall. The company has a large production capacity and almost all needed knowledge is found inside the company organization. The company has e.g. in-house knowledge in structural design, manufacturing, sales and assembly of larger projects. When additional knowledge or capacity is needed, the company purchase services and knowledge from actors they have long-term relationships with. Market strategies Personal contact with prior and potential customer is argued to be important and the company arrange different customer activities for building proprietors and consultants. This seems to be profitable even if invented actors change employer, as the same individuals are found to return although in other positions and organization structures. Large investments are used to launch the company trademark and the company sponsor different sports activities to attain goodwill. This latter activity is however most directed towards perceptions of employees towards the company as an employer.

Company D – Södra Building Systems History Södra Building Systems is a firm within a Swedish timber association. The association have since the beginning of the 1990s purposeful invested in development of products and building systems to enable increased timber construction. With the introduction of the performance based Swedish 1994 building code, the timber association saw possibilities on the multi-storey house market to generate new disposals for timber products. Large efforts were thus invested in Södra Building Systems, but today two years after this case study was performed, the company no longer exist. The following company description of the company strategies may however increase the understanding of strategies that do no seem to be successful due to the shut down of the company. Organization and business strategy The company organization was designed after the two competence areas marketing and sales and had seven employees (2002). Design, structural design and production were supplied external services. Technological developments were performed with own internal

competence, but likewise frequent was that the company purchased technical competence outside the company. However, the same competence and individuals were often supplied. The business concept in Södra Building Ssystems was to market and sell timber based products and systems for multi-storey houses to building proprietors on the European market. The company focused development and sales of a system of joists in timber, but did also offer a complete building system undertaking where the company specific components were offered together with other sub-assemblies and assembly. In this latter case the company co-operated with other companies. Market strategies Södra Building System mainly focused three market segments; building contractors, detached house manufacturers and the building material trade. The marketing strategy in the company was shifted from focus of marketing of particular building components to marketing of light building techniques in timber. Marketing was mainly based on a handbook with technical descriptions. To find out customers needs, the company gathered information from present customers.

Company E - Ekologibyggarna History Ekologibyggarna have been on the market since 1995 where the first business concept was based on traditional stick-built housing. The company shifted focus 1998 towards housing based on prefabricated solid wood elements. The business concept thus evolved towards a complete building system undertaking where the company provide customers with elements that are assembled together with other sub-assemblies to a complete house. A future vision is however to prepare prefabricated solid wood elements (where the solid wood kernel, without panel work are purchased) in the company factory and then hand over the assembly to a sub-supplier. Organization and business strategy The company is little and is in a build-up face why the internal competence is limited. Instead the company make use of several external competence sources both for manufacturing and technical product development. The business concept of Ekologibyggarna is to sell and market solid timber house components for residential blocks and detached houses to building proprietors. This concept means that the company only offers a few different wall- roof- and joist components to customers. The studied company has no own production capacity since the solid timber elements are imported. Market strategies The company is under construction and thus there are no specific market segments or any articulated marketing strategies. The company investigate customer needs through customer meetings either on the construction site or through customer visits in the factory. The company mention that customer trust of timber has to be obtained on the

market and the company demonstrate finished objects to potential customers. Amongst other things, the company has invented potential customers for study trips to Austria from where the solid wood elements are imported.

APPENDIX 2: INTERVIEW GUIDES Main case study Areas of interest and examples of question at issues Produkt och produktionsprocess: -

företagets produkt/produkter

-

produktens flexibilitet/kundanpassning

Kunder: -

företagets kunder

-

marknadsföring/samarbete med kunder

-

kundanpassning av produkt

Leverantörer -

processen från beställning till leverans

-

medverkan av aktörer (leverantörer/underentreprenörer) i processens olika faser

Problem/utvecklingsområden: -

problem/ begränsningar i processen från design till leverans av färdig produkt

-

problem/ begränsningar som ofta uppstår

-

faktorer som inverkar på informations- och materialflöde

-

skede i processen där informations- och materialflödet är störst

-

lönsamhet i förbättringar av produktionsprocessen

-

hinder för utveckling av produkten/processen

Customer survey – potential customers

Upphandling av nya byggprojekt 1. Vilken policy eller metod används vid upphandling av nya projekt? 2. Hur känner du generellt för att ge ett helhetsansvar till en entreprenör som tar hand om hela processen från design till nyckelfärdigt hus?

Generellt byggsystem Med byggsystem menas t.ex. traditionellt platsbyggande eller ett prefabricerat system. 3. Ange dina tre främsta behov och förväntningar på ett byggsystem. 4. Vilken typ av byggsystem har du mest kunskap och erfarenhet av? 5. Vad behöver du för att känna dig säker med ett nytt och obeprövat byggsystem?

TräVolymByggande 6. Känner du till volymbyggande i trä? 7. Har du tidigare arbetat med eller kommit i kontakt med projekt med volymbyggda hus i trä? 8. Vad är din definition av volymbyggande med trä som stommaterial? 9. Vad är din inställning till trävolymkonceptet (fördelar och nackdelar)? 10. Upplever du att dina främsta behov vad gäller ett byggsystem kan tillfredställas av trävolymkonceptet? 11. Vad krävs av den här typen av byggsystem för att du ska välja det? 12. Vilken typ av information behöver du för bli intresserad av volymbyggande i trä?

Customer survey – prior customers

Upphandling av nya byggprojekt: 1. Vilken policy eller metod används vid upphandling av nya projekt? 2. Hur känner du generellt för att ge ett helhetsansvar till en entreprenör som tar hand om hela processen från design till nyckelfärdigt hus?

Generellt byggsystem: Med byggsystem menas t.ex. traditionellt platsbyggande eller ett prefabricerat system. 3. Ange dina tre främsta behov och förväntningar på ett byggsystem. 4. Vilken typ av byggsystem har du mest kunskap och erfarenhet av? 5. Vad behöver du för att känna dig säker med ett nytt och obeprövat byggsystem? TräVolymByggande: 6. Vad är din inställning till trävolymkonceptet (fördelar och nackdelar)? 7. Upplever du att dina främsta behov vad gäller ett byggsystem kan tillfredställas av trävolymkonceptet? 8. Vad krävs av trävolymkonceptet för att en beställare ska välja det? 9. Vad var anledningen till att ni valde trävolymbyggande? 10. Vilken typ av information krävs för att beställare ska bli intresserade av volymbyggande i trä?

Comparative case study Areas of interest and examples of question at issues Affärsstrategi/organisation: -

Historik, omsättning, antal anställda

-

Organisatoriska funktioner, organisatorisk uppbyggnad

-

Vad är företagets särprägel i förhållande till konkurrenter?

-

Vilket/vilka är företagets framgångskoncept?

-

Hur fungerar kedjan från beställning till leverans?

Kunder: -

Vilka är företagets huvudkunder?

-

Hur undersöks kundbehov?

-

Vad fokuserar marknadsföringen på?

-

Arbetar företaget mot ett speciellt marknadssegment?

-

Utvecklas produktidéer i samarbete med slutkund?

-

Varför väljer kunder ert företag?

-

Varför litar kunder på företagets produkt?

Leverantörer: -

Samarbetar ni med andra externa företag?

-

Hur sker samarbete med externa företag?

-

Hur hanteras avsaknad av kunskap inom företaget?

DOCTORAL AND LICENTIATE THESES Division of Structural Engineering – Timber Structures

Doctoral Theses 2001

Nils Olsson: Glulam Timber Arches – Strength of Splices and ReliabilityBased Optimisation. 2001:12D.

2004

Helena Johnsson: Plug Shear Failure in Nailed Timber Connection – Avoiding Brittle and Promoting Ductile Failures. 2004:03D.

2004

Max Bergström: Industrialised Timber Frame Housing – Managing, Customization, Change and Information. 2004:45D.

2005

Andreas Falk: Architectural Aspects of Massive Timber-Structural Form and Systems. 2005:41D.

Licentiate Theses 2001

Helena Johnsson: Systematic Design of Glulam Trusses. 2001:07L.

2003

Ylva Fredriksson: Samverkan mellan träkomponenttillverkare och stora byggföretag – En studie av massivträbyggande. 2003:14L.

2003

Sunna Cigén: Materialleverantören i byggprocessen – En studie av kommunikationen mellan träkomponentleverantören och byggprocessens övriga aktörer. 2003:69L.

2004

Anders Björnfot: Modular Long-Span Buildings – A Systematic Framework for Buildable Construction. 2004:34L.

2005

Henrik Janols: Communicating Long-Span Timber Structures with 3D Computer Visualisation. 2005:30L.

2005

Tomas Nord: Structure and Developments in the Solid Wood Value Chain - Dominant Saw Milling Strategies and Industrialized Housing. 2005:57L.

2005

Matilda Höök: Timber Volume Element Prefabrication – Production and Market aspects. 2005:65L.

DISSERTATIONS FROM WOOD WORKS The cooperation between Luleå University of Technology and Linköping University, Institute of Technology No. 1 2003

Ylva Fredriksson: Samverkan mellan träkomponenttillverkare och stora byggföretag –En studie av massivträbyggande. Licentiate thesis. LTU-LIC2003:14.

No. 2 2004

Anders Björnfot: Modular Long-Span Buildings – A Systematic Framework for Buildable Construction. Licentiate thesis. LTU-LIC-2004:34.

No. 3 2004

Max Bergström: Industrialised Timber Frame Housing – Managing, Customization, Change and Information. Doctoral thesis. LTU-DT2004:45.

No. 4 2005

Markus Henningsson: Retail trade demands on distributors – Strategic and operational implications. Licentiate thesis. LiU-TEK-LIC 2005:24.

No. 5 2005

Daniel Fransson: Outsourcing strategies for wood product manufacturing firms – Driving forces and strategic development. Licentiate thesis. LiUTEK-LIC 2005:25.

No. 6 2005

Karolina Andersson: Suppliers in collaboration – The impact on strategies of the individual firm. Licentiate thesis. LiU-TEK-LIC 2005:56.

No. 7 2005

Tomas Nord: Structure and Developments in the Solid Wood Value Chain – Dominant Saw Milling Strategies and Industrialized Housing. Licentiate thesis. LTU-LIC-2005:57L.

No. 8 2005

Matilda Höök: Timber Volume Element Prefabrication – Production and Market aspects. Licentiate thesis. LTU-LIC-2005:65L.