The New Norm of Circular Construction

Accelerating successful employment of vertical integration of modular construction’s project- and product value chains. An empirical single case study of an integrated modular building company

More Info


In recent years, the housing market has been under pressure due to growing demand for (inner-city) housing and a lack of supply. Housing is in high demand as a result of factors such as population growth, rapid urbanization, smaller households, the freezing of "mobility in houses, and so on. The low developing speed to cater to these issues might instigate an investigation into possible adjustments to the current building methods to increase the rate of housing production.

The building sector has the potential to fulfil these demands by becoming more product-driven, efficient and sustainable, which are said to be attainable with the use of modular construction (Bertham et al., 2019). However, traditionally, the building industry is characterized as a project-driven industry with unique characteristics such as location-bound design, one-of-a-kind/unique production, changing partnerships per project, outdoor and environmental factors, and multiple clients and suppliers involved in a single project. These characteristics conflict with the product-driven ambitions, leading to negative effects on performance such as low levels of effectiveness and efficiency, low rates of innovation and difficulties in knowledge sharing and learning.
This research explores the potential benefits of vertical integration in modular construction value chains. The study is based on an empirical single case study of an integrated modular building company in the Netherlands. The case study examines the implementation of vertical integration in the modular building company, and its impact on the project- and product value chains.

To achieve effective vertical value chain integration during the development phase, the industry needs to focus on synergy, competency, and organization and adopting the appropriate production system fitting to their organization, product and production profile. Synergy involves establishing a clear and structured collaboration structure between departments, early involvement of key parties, and having a systematic approach to the project. Competency involves having adequate experience in the modular construction industry, defining a modular design system with configurable designs, and focusing on modular design systems with configurable elements, design flexibility, and efficient and streamlined production processes. Organization involves establishing unambiguous guidelines and expectations for each phase of the project, creating a comprehensive project plan that clearly defines the roles and responsibilities of each team member, and identifying the primary coordinator for each phase. Additionally, it is essential to have a supportive and collaborative company culture with trust among employees, morale and motivation, and leadership that encourages and facilitates cooperation and collaboration across different departments and locations for all factors to thrive.

Based on the modular construction goal, fitting product and production characteristics were explored, which resulted in defining appropriate production systems. The focus on modular design systems with configurable products and the need for design flexibility described in the product description align with the characteristics of assemble-to-order production. The emphasis on product-oriented and project-oriented approaches, as well as the need for design consistency and efficient translation to production, aligns with the characteristics of make-to-order production.