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OM in the News: Construction Sites That Look Like Lego Kits

July 6, 2018

Katerra staffers and robots build prefab wall panels on an assembly line

On the floor at Katerra’s cavernous 250,000-square-foot Phoenix factory, workers and robots hammer pallets of Douglas fir into finished wall panels and put them on an assembly line, where other machines and craftspeople add windows and plumbing before a crane stacks the finished walls on a flatbed. When the truck arrives in Lodi, Calif., 3 days later, a construction materials manager uses an RFID scanner to see what’s arrived and an iPad to show where cranes should set each piece of a 4-story retirement home.

This process is a radical change for the construction industry and a threat to decades of this-is-just-how-we-do-it attitudes. While other construction tech startups try to modernize some parts of the business, designing modular homes or building robot-run factories to make prefab parts, Katerra puts all these pieces together, from design to finished building. The company wants to control everything from “womb to tomb,” says one customer. “Almost everywhere you look, there’s money to be saved,” says Katerra’s CEO. “It’s so inefficient in so many ways, it kind of takes your breath away.”

Katerra saves money by buying everything from wood to toilets in bulk and using software and sensors to closely track materials, factory output, and construction speed. Its architects use software to build a catalog of standard buildings, rather than starting from scratch on each project, and to ensure contractors aren’t making impulsive structural decisions. Each generation of buildings has become steadily more prefab, requiring less work on-site and speeding construction.

The idea of modular housing goes back more than a century—Sears, Roebuck & Co. sold more than 70,000 home kits from 1908 to 1940—but the construction business has been changed far less by technology than any other major U.S. industry, writes Businessweek (June 25, 2018).

Classroom discussion questions:

  1. What the OM advantages of Katerra’s approach?
  2. The disadvantages?
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