Snapshot of NZ’s prefab challenges

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By , and - , Build 186

Prefabricated housing could help alleviate New Zealand’s housing shortages, but local manufacturers must address several issues to ensure they meet the market’s needs.

Figure 1: Importance of critical performance challenges for prefab manufacturers in New Zealand.

PREFABRICATION AND OFF-SITE construction are gaining attention globally with their potential to provide innovative, affordable and sustainable housing solutions. However, the niche market nature of the sector has made the prefab industry highly competitive. Companies, mostly small to medium-sized enterprises, are facing critical performance challenges.

Growth depends on performance

Prefab manufacturers can potentially increase supply to meet demand and improve housing affordability. However, the adoption of prefabrication across the house building supply chain is highly dependent on their performance. This is the capacity and capability to integrate within the upstream and downstream house building supply chain, with a focus on the performance dimensions – cost, quality, features, delivery, flexibility and innovativeness.

Local research into manufacturers’ challenges

Prefab manufacturers’ performance challenges vary from country to country due to the prefab market maturity. Prefab industry dynamics are also influenced by regulatory reforms and technological innovation.

A pre-COVID-19 research study explored prefab manufacturers’ critical performance challenges in New Zealand.

Critical factors identified

Nineteen critical factors were initially identified from an open-ended questionnaire completed by interdisciplinary prefab experts. These were used to further survey prefab manufacturers and ranked by importance – high, medium and low (see Figure 1).

Quality and cost dimensions dominate in high and medium-level critical factors. Innovation has challenges in both the long term and short term. Flexibility has the fewest factors associated with it.

Figure 1: Importance of critical performance challenges for prefab manufacturers in New Zealand.

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Looking further

Critical performance challenges were further evaluated based on the organisational maturity, supply chain roles, prefabrication type (by type and material) and business scope:

  • Differences in responses for on-site cranage requirements, stakeholders’ awareness and setting competitive pricing were found based on years of experience.
  • Supply chain roles (mainly manufacturing and integrated upstream or downstream) had varied responses for competitive pricing, stakeholder awareness and economies of scale.
  • Based on the product type (from framing and panels to modular), companies' responses varied for financing issues, skilled worker shortages, off-site facilities issues and capital investment.
  • Stakeholder awareness is the only key difference for prefabricated product according to material – timber, steel and precast.
  • Business scope, defined based on local and international engagement or both, has differences in stakeholder awareness and poor off-site payment mechanism.

In comparison, a similar earlier study driving innovative off-site construction techniques in New Zealand found the most critical performance challenges to be on-site cranage constraints, poor delivery system and unoptimised and less-precise manufacturing. These remain a focus.

Our challenges differ to more mature markets

The New Zealand house building industry is still transitioning towards extensive adoption of prefabrication. Prefab companies as flagbearers for innovation must maintain a high level of performance to counter challenges.

In leading mature global prefab markets such as Sweden, non-critical factors are complex consenting process, high on-site engagement and high design variability, while in Japan, the only non-critical factor is on-site cranage constraints.

Using the findings

Identified critical performance factors can be used to benchmark performance over time at an organisational level for prefab companies.

These findings are applicable to both existing and prospective companies with prefab as a business strategy. They could help them to set short-term and long-term goals and shape performance barometers so they can survive in the competitive and volatile house building market.

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Figure 1: Importance of critical performance challenges for prefab manufacturers in New Zealand.