According to Dr. Perry Daneshgari, “A swimmer can never measure the depth of the water while in it.” Similarly, job productivity measurement requires independent reference points.¹ This also applies to construction companies and the industry as a whole; they are on the path of industrialization, but how far and how fast are they going? What lies ahead and how can they keep up?

Building on MCA, Inc.’s research and publications on the Industrialization of Construction^®, including articles in CFMA Building Profits,² this article will provide a framework for companies in construction to evaluate their progress along the trajectory of industrialization. This article will also review the impediments to moving forward and revisit the role of the CFO with examples on how they can support industrialization.

Industrialization of Construction^®

Industrialization, which occurs in any industry that is skilled-trade-centric (such as agriculture, manufacturing, and now construction), happens when work is transferred from the tacit knowledge of humans to digitized explicit knowledge.³ Through the five steps of industrialization (Exhibit 1), the results that occur include significant productivity improvement, market expansion, and labor force expansion.

Research conducted by MCA, Inc.⁴ indicates that the construction industry has made progress over the last decade toward Industrialization of Construction^®, moving from Step 1 to Step 2 (Exhibit 2). However, moving through the next steps requires a transition away from the current reliance on the tacit knowledge of the skilled trades toward an environment where the trade knowledge is explicit and work operations become optimized through additional roles and resources, which results in more, better, faster, and cheaper products for consumers.

Industrialization Self-Reflection

To assess the construction industry’s state of industrialization, MCA, Inc. translated the five steps of industrialization and developed an Industrialization Index and a self-evaluation for companies to reflect on and evaluate their own status of industrialization.⁵

ELECTRI International and MCA, Inc.’s Industrialization Index Self-Evaluation⁶ is a 15-question assessment that a company can take with a response-based scoring system that determines the degree of industrialization by evaluating which and how often different practices, measurements, or models are applied within an organization and/or across projects for each of the five steps of industrialization.