Klaus Freiberg is an experienced blue chip CxO with a deep treasure trove of operator’s knowledge in the real estate sector. As COO of Vonovia, Europe’s largest residential real estate company, he insourced and operated the largest amount of skilled construction workers in the country – and reaping lean construction efficiencies from it. His heart beats to make companies customer-focused in real estate – and optimize the supply chains to get there. That is why we are happy to have him on board and talked to him about excuses, first principles, and the potential of standardization in construction.
You’ve worked in the built environment for quite some time. Looking at the industry in 2020, what is your state of mind?
We certainly are in a challenging situation. Construction is one of the biggest polluters globally, and the annual productivity growth has remained flat since 1945. And while I think everyone has recognized and accepted the challenges, not much has happened yet.
We have clear, unambiguous energy and CO2 reduction requirements from politics and society. But we are on no trajectory to meet them. Something needs to happen. That is also true concerning costs. And it is increasingly difficult to find qualified workers that build today’s buildings.
What are the underlying problems?
Today’s industry just isn’t industrialized or standardized at all. There is a reason that construction’s productivity dropped by 27 percent in the last twenty years, while agriculture or manufacturing went the other way. Honestly, when I started working in this sector some twenty years ago, I thought we would be much further in this regard as we are today. In the end, construction is still a ‘crafted’ process, not an industrialized one. That’s a pity.
But doesn’t construction have quite unique first principles that make it much harder to do so?
Of course. You will always have a unique location and assembly on-site, which means that your environment is much harder to control as a car factory. But the belief that every building is unique has been an excuse not to industrialize construction for too long. It’s just not true.
…depending on the origin, function, and date a building was constructed, you can see quite a lot of similarities and the same underlying logic. Just take a two or three-room flat built in 1970 Germany. You won’t find any round windows. They are 60 x 80, 80 x 100, or 100 x 120 (centimeters), and you have a balcony door, which is not oval. That’s for sure. The size of bathrooms only differs by 12 percent and is around 8 square meters. I bet you. Or take non-residential buildings. For decades, we have discussed the bad shape of our school buildings, especially sanitary rooms. But I don’t see why we can’t set up a standardized renovation approach for it. They all have pretty much the same size. So why don’t we pre-fabricate the sanitary rooms at low costs and make the final assembly on-site?
All I want to say: We should start focusing on the similarities of buildings instead of where they differ. The potential of standardization is tremendous. And it’s an answer to the shortage of skilled workers, too…
…which is another key challenge construction faces.
Absolutely. The young just don’t want to get their hands dirty. Only three percent of the 18-25 year-olds are interested in joining the construction trades. That is why we already are thousands of workers short. It’s a tough job, but we need to change the perception of the construction industry to attract young and motivated people.
That certainly is a tough job, too. What else can be done?
Well, we need to increase the productivity of a single worker. One way is augmented reality. If we have fewer experts in any given trade, we need to make the best use of the experts we have. If a worker is unable to fix a heating from 1982, why can’t he get support from an expert who is connected over data glasses? Another answer can be exoskeletons. I must admit I had my doubts, but recent solutions seem to make it right for lightweight and the high power to weight ratio while still being affordable. Human-machine collaboration is clearly something we should look into.
But as I said before, the most promising way to increase productivity is standardization.
Could you give an example of how you think standardization improves productivity?
Sure, let’s take the bathroom again. Usually, a craftsman comes with a toilet, a sink, 20 meters of copper pipe, and some bits and pieces to set it up in a unique way, which takes time. Why don’t we offer the whole module pre-fabricated so that two workers can lift and easily plug in?
If you look at how hotels are built these days, you get the idea. No one deals with interior construction on site anymore. Once the skeleton is complete, they start to slide in the nearly complete rooms, including interior walls and bathrooms — highly efficient and low costs.
Don’t get me wrong. I am not saying these ideas are brand new, but we finally have to get going.
Sounds good, but how do we get there?
Well, if you look at the industry, you see some resilience to change. While in other sectors, half of all companies have been acquired or gone bankrupt in the last 20 years, 85% of construction companies are still there. Unchanged and undisrupted. That shows us that the sector won’t change from within. We need outside innovation to lift these potentials and apply the right tech. And we need venture capital to accelerate that change.