Towards a Framework for Production Strategy in Construction

Abstract: The problem with low productivity increase in the construction industry is highlighted in many studies and in Sweden the need to improve productivity and client satisfaction in the construction industry has promoted a number of government investigations. One suggested way of improving productivity and client satisfaction is to move value adding activities offsite, to a more industrial environment. Compared to  traditional on-site production, off-site production has been said to have many advantages such as: higher productivity, lower production cost, higher quality and shorter lead times. The trade-off when increasing the degree of off-site production is the reduced product and process flexibility. The trade-off between productivity and flexibility indicates that different production systems perform well in different areas of competition.The purpose of this research is to develop a production strategy framework for the construction industry, and more specifically for the production of multifamily residences. This framework can help construction firms to design the production system and find the right balance between productivity and flexibility. For the manufacturing industry, production strategy frameworks have been developed and shown useful when designing new or redesigning existing production systems. A corresponding framework adapted to the construction industry would be useful for construction firms when designing production systems to meet the targeted market in the most efficient way.Production strategy theory is traditionally built around two broad groups, decision categories and competitive priorities. Decision categories are areas in which a company must make decisions that are of long term importance for the production function. In this thesis focus is on the decision category traditionally named product/process technology and more specifically on the so called process choice i.e. choosing a production system that meets the demands from the targeted market in the most efficient way. To do this a classification matrix is developed that classify production systems along two dimensions, the degree of off-site assembly in one dimension and the degree of product standardisation in the other. This way of visualising the process and product characteristic has been used before, in traditional production strategy frameworks, to facilitate the process choice.For the classification matrix to be useful, the positions in the suggested classification matrix must be linked to the ability of different production systems to deliver manufacturing outputs. Therefor a performance measurement system is developed. In the process of developing classification matrix and the performance measurement system three research questions are addressed:RQ1. What dimensions can be useful, from a production strategy perspective, when classifying different production systems for the production of multifamily residences?RQ2. What manufacturing outputs/competitive priorities have to be taken into consideration when evaluating different production systems forproduction of multifamily residences?RQ3. How should the ability of a production system to deliver manufacturing outputs be measured?To answer the research questions an abductive approach has been used. The results from a literature review have been used to develop theoretical constructs. Case studies have then been used to empirically test the constructs. Thereafter the empirical data and information from additional literature reviews has then been used to further develop and refine the theoretical constructs. The findings of this research are thereby grounded in both theory and practise.There are two main contributions in this thesis. The first one is the proposed classification matrix for production systems producing multifamily residences. The classification matrix can be used as a base for production strategy reasoning in the construction industry. The second contribution is the suggested performance measurement system in which KPIs for measuring quality, delivery (speed and dependability), cost (level and dependability) and flexibility (volume, mix and expansion) have been defined.By positioning different production systems in the classification matrix and then use the defined performance measurement system, relative differences between the ability of different production systems to deliver manufacturing outputs can be exposed. The classification matrix can help companies to work with production strategy in a structured way, and to visualize the link between the market strategy and the production function of the firm in order to meet the demands from the targeted market in the most efficient way.