Drive to De-Risk Feeds Rise of Self-Perform Construction

Touted as an industry disruptor, a growing number of builders are taking on self-perform construction as well as in-housing skilled labour and equipment as sub-contractor risk continues to bite. 

Speaking at an industry lunch this month in Melbourne, hosted in partnership with Procore, Ironside chief operating officer James Grant said he believed it would be a big innovation that would shake up the construction industry. 

The Tier 2 builder has recently taken on precast concrete production as well as ground excavation. Grant said it enabled greater risk mitigation and an ability to add value to projects. 

“If you just go in with your builder’s margin you don’t have much to play with, but if you’re going in with builder’s margin and subbie’s margin it gives you a much bigger playing field to make better decisions,” Grant said. 

“I think we’re now starting to see that you need to take on a bit more [risk] in order to get a better outcome, and that comes down to certainty as well.

“If you’ve got better certainty it might cost you a bit more, it might be more heartache, but you can sit there and guarantee the outcome.”

▲ Ironside chief operating officer James Grant (pictured right, with Tim Lowe) says self-perform construction is a game-changer.

Grant said builders were taking on self-perform construction in the face of adversity in the construction landscape. 

“Having a subbie not deliver, if you’re in a lower-tier space and you’re looking around and not seeing anyone who can do it, you just take it on yourself. 

“Next thing you know you’ve got 80 form workers, 20,000sq m of gear and four factories. 

“We’re doing structure precast now, we’re doing 15 panels a day and we’ve got nine excavators as well. You’ve got be brave as well, just give it a go.”

Grant said the challenge of growing into self-perform construction was you had to “keep feeding the beast”. 

“But we don’t want to go and work for others, we feel like it’s our secret sauce and we should keep it for ourselves and it puts a lot more pressure on the front end,” he said.  

“But you can also squeeze your margin accordingly to win jobs.”

Builder-developer Pace has also taken on self-perform construction, while Hacer is investigating modular construction. 

Hickory has championed prefabrication as an early adopter in the Australian market.

▲ Legacy Project Management’s Elissa Loh-Brown at the Procore lunch.

Hickory construction manager Michael Perdikaris said the construction firm would produce about 6000 prefabricated bathroom pods a year, and was building out precast floors and clip-on facades. 

“You’ve just got to reduce site labour, anything that you can modulise and anything that you can build offsite will reduce labour costs. You’ve just got to find efficiencies,” Perdikaris said. 

“And you’ve got to keep your finger on the pulse because if you become complacent you lose productivity. It’s going to cost you money.”

Perdikaris said Hickory used the Procore dashboards to manage productivity onsite and ensure they were across it. 

Hickory recently completed a job for Meriton, which was less than 1000 square metres. Perdikaris said they had 18 workers onsite installing the structure and facade, when a job of that size would ordinary require 50 to 60 workers. 

“But that job cost us more on a square metre rate. We had another tower going up around the corner, and the modular one was costing us $150 per square metre more, so until that levels out why would you do it?

“If the 5 per cent [price] increases come then maybe one day it will be more efficient.”

▲ Hickory construction manager Michael Perdikaris says while prefabrication reduces labour costs, it wasn’t necessarily a cheaper option.

Henny managing director Ben Turner said prefabrication was a game-changer for the industry. 

“If you can prefabricate like the Hickory guys do, that’s smart. At the end of the day you’ve got critical path onsite, and even if you go through with your fitout you’ve still got the lifts to go in and follow in behind it,” Turner said. 

“I think if you can get smart and prefab, that’s great, that’s the best way to do it.”

But Turner said the wedding-cake built form in Victoria was not suited to modular construction in the current landscape.