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Developing a Factory Mindset on a Path to Industrialized Construction

Factory Mindset

How Goldratt's Theory Influences the Construction Industry

In 1984, Eli Goldratt introduced his book “The Goal,” outlining how organizations can find practical, effective solutions to business problems. For construction companies moving toward a factory-like building process, using Goldratt’s Theory of Constraints can help you understand how to both identify your constraints and manage them.

According to Goldratt, focusing your efforts, energy, and attention on identifying the overall “system constraint” – or that one thing that is restricting the output of the entire system is the first step.

By identifying the system constraint, you’ve essentially identified your primary leverage point for improvement. Goldratt’s theory states that by removing your system constraint, you can:

  •  Offer on-time delivery to customers
  • Eliminate stock-outs across your supply chain

  • Have better control over operations while reducing firefighting

  • Reduce cycle times and, therefore, inventories

  • Create a rapid response culture

  • Expose additional production capacity without any investment

  • Realize higher net profit and revenues


While Goldratt probably didn’t have the construction industry in mind when he developed his theory, it clearly applies. By eliminating your uncontrollable variables (i.e., weather, site size, available labor, theft, or property damage), you gain control of your schedule and, thus, your project outcomes.


Profitability, Investment, and Flow

As you migrate from the traditional onsite, stick-built approach to construction, it’s important to remember that your focus should be on increasing project profit versus worrying about factory profit. Your factory itself isn’t going to be immediately profitable. The entire process is a capital investment that, over time, will result in the outcomes identified by Goldratt.
Key to a successful factory is continuous flow – getting things running at a continuous pace. And keeping that pace consistent.

Think about your factory output schedule versus thinking about getting the project done. If you can track your project schedule against your factory output schedule, you’ve then created a project flow. As you become more confident in your factory output timelines, you can add functionality, thus maximizing factory output.

After years of fine-tuning our approach to prefabricating buildings, we know the hardest part is getting things up and running and then keeping them running. Scheduling is critical – otherwise, a stop and start mentality causes output fluctuation.

So how do you manage to keep everything running? It all comes back to data – at every step of the process, from design to ribbon-cutting. Your system should include a data-centric connected workflow starting upstream and flowing from design through to construction. This data-centric workflow makes interoperability between all of these systems and components possible and unlocks automation across the process stack – from design to factory, eliminating manual effort wherever possible.

As you are refining your processes to keep data flowing from beginning to end, it’s important to keep your stakeholders top of mind. A platform that integrates tightly with popular software solutions familiar to your internal experts is critical. Creating the right Kit-of-Parts for your factory setting will help tie together all aspects of the design/build process – from architecture, engineering, supply chain management, and construction will enable you to begin your migration to a fully Industrialized Construction methodology.


Drew A Buechley, CEO


Drew brings more than 25 years of extensive strategic advisory, financing, and operational experience in various industries, including the manufacturing, technology, and retail sectors. His expertise lies in directing companies through high growth and transitional periods. Follow Drew on LinkedIn & Twitter.


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