Background and Introduction
Indonesia is situated in the Southeast Asian Region. In 2022, it was the largest economy among Southeast Asian countries (Inforum, 2022). According to The World Bank, Indonesia has a GNI (Gross National Income) per capita between $4,516 and $14,005 in 2023, which makes it one of the upper-middle-income countries (Data, 2024). To achieve its vision of becoming a 7th-ranked global GDP (Gross Domestic Product) in 2045, it must become a high-income country by 2036 by accelerating the infrastructure and human capital gaps (Bank, 2024).
Figure 1: The World Bank income groups are classified by GNI per capita (Group, 2023)
The industry, including construction, shares 27.2% of Indonesia’s GDP (Oecd, 2021). Similarly, Setiawan and Abduh (2023) argued that, specifically, the construction industry in Indonesia contributes 3-5% to GDP growth. In response, the authorities target increasing investments in several sectors, including construction and housing. For example, the Financial Services Authority (Otoritas Jasa Keuangan: OJK) launched roadmaps prioritising a green taxonomy and forming a National Taskforce on Sustainable Finance by emphasising Environmental, Social, and Governance (ESG) principles (Bank, 2024). The construction industry, along with textiles, food and beverages, wholesale and retail trade, and electronics, is projected to adopt circular economy practices and principles (Oecd, 2021). Therefore, a sustainable practice in the construction industry can influence the growth of the national GDP by attracting global investment. However, the Indonesia market is less attractive compared to neighbouring countries because of the high risk of the industry (Kesai et al., 2018).
Figure 2: Market attractiveness in Indonesia and its neighbouring countries, UNCTAD and ASEAN (2015), cited in Kesai et al. (2018)
Indonesia's construction vision 2045 can be achieved by implementing five areas of improvement: governance, productivity, human resources, technology, industrialisation, health, safety, and environmental sustainability (Pribadi and Soemardi, 2022). However, many challenges need to be solved, such as unqualified labour with low wages hindering construction industrialisation, lack of knowledge and proficiency in updated technology leading to reliance on foreign expertise, site accidents continue to occur due to a safety culture that is not widely adopted and incoordinated construction industry’s information system between stakeholders indicate the need of digitaly considated data imporvement. Furthermore, Indonesia is a geographically archipelagic country, and it is located in the Ring of Fire, which makes it prone to disasters such as earthquakes and volcanic eruptions. Thus, building infrastructure to reduce disaster risk is identified as a prominent objective set by the authority (Oecd, 2021).
Ofori (1980), cited in Pribadi et al. (2022) argued that several factors characterised a successful construction industry, including economic growth, use of local material, training and education, government participation, national regulation, local contractor welfare, and technology adoption. Furthermore, government influence and investment in the innovation of the construction industry’s technologies are needed until they are widely adopted and result in economic growth. Therefore, this blog will explore the innovations in the construction industry that development can be prioritised in Indonesia to answer challenges and leverage economic growth.
Traditional Construction Method
Recently, the construction industry has faced challenges such as sustainability and environmental concerns, where it consumes high amounts of natural resources and contributes to climate change. It also lacks skilled manpower, and due to supply shortages and demand imbalances, property prices have been soaring and widening the affordability gap (Parisi and Donyavi, 2024). The acceleration is needed to address these challenges.
Li et al. (2014) mentioned that cast-in-situ is one of the traditional construction methods with concrete. It used a manual operation, a non-standardised, fragmented, and discontinued framework, resulting in low environmental, economic, and social sustainability performance. Similarly, (Parisi and Donyavi, 2024) argued that traditional construction is high-cost and time-consuming. Unlike other industries, construction has complicated procurement procedures due to its nature, which are expensive, relatively long processes, unique, and located in a fixed place (Pribadi et al., 2022). Thus, shifting to the modern construction industry can improve building performance and help the construction industry achieve economic growth.
Adopting and implementing new technologies requires cultural change and organisational readiness. Therefore, a leadership commitment is needed to foster an innovative mindset (Topal et al., 2021). Additionally, Hizam-Hanafiah et al. (2020) suggested that strategies, processes, and suitable technology should be among the considerations to ascertain the construction industry's transformation.
The Trends of Built Environment Technologies
Since the 1980s, the use of computers and the internet has connected technology with architecture and construction, particularly by introducing 3d computer-aided design to enhance the precision and shift from mass production to mass customisation (Sony and Naik, 2020). For example, computer-assisted manufacturing (CAM) allows architects to employ machine tools and multiply the product as a digital fabrication approach (Naboni and Paoletti, 2015). Klinc and Turk (2019) defined a digital transformation method in the built environment with Construction 4.0, where the digitalisation of technologies leads to Off-site construction (OSC) processes (Begić and Galić, 2021)
Figure 4: Technologies and trends of the built environment (Castagnino et al., 2018)
Construction 4.0 revolutionised traditional approaches and can enhance productivity by improving efficiency and coordination (Cheng et al., 2020), not only in the process but also in the organisational and project framework. Therefore, the fragmented-traditional construction industry can potentially be integrated (Osakwe et al., 2020). Building Information Modelling (BIM), for example, allows all parties in the project to create and share information that can lead to significant cost reductions (Carvalho et al., 2018) and enhance decision making (Marzouk et al., 2020). Other cutting-edge technologies associated with construction 4.0, namely Internet of Things (IoT), Cyber-Physical Systems (CPSs), Computer-Controlled Manufacturing Processes (CNC), prefabrication, Automated and robotic equipment, etc, can offer better quality, improve safety and risk management, and most importantly can create new business opportunities that result in economic growth and job creation (Singh and Misra, 2021).
Malaysia changed the construction industry from low productivity, investment, and poor safety performance by implementing the Construction Industry Master Plan (CIMP) 2006 -2015. The productivity increased by 60% and reached 87% and 41% in acceptance of adopting industrialised building systems (IBS). BIM also contributes to changing the building plan process to become more streamlined, Chan (2009), cited in Pribadi et al. (2022). Similarly, ASEAN countries like Singapore can overcome the challenges in their construction industry, such as reliability in the unskilled foreign worker, poor safety, high labour intensity, and outdated construction techniques and practices, by employing the Construction Industry Transformation Map (ITM). It comprises a strategy to widely adopt technologies such as Integrated Digital Delivery (IDD), Design for Manufacturing and Assembly (DfMA), Green Buildings, Virtual Design and Construction (VDC), Prefabricated Prefinished Volumetric Construction (PPVC), BCA (2017) cited in Pribadi et al. (2022).
The implementation strategies differ between developed and developing countries. Developed countries have already embraced and implemented construction 4.0 in many industries (Jaiswal et al., 2024). Challenges in developing countries include limited infrastructure and connectivity (Li and Gong, 2020), skill gap, data protection, and management (Olatunde et al., 2022), culture and resistance to change (Topal et al., 2021), regulation, and standardisation (Islam et al., 2018). Digital maturity must also be considered when prioritising suitable technologies and setting the ideal adoption strategies.
The Indonesian government officially introduced the BIM concept in 2017 by promoting the BIM roadmap, creating the BIM team, and mandating the use of BIM on a state-owned building (Sopaheluwakan and Adi, 2020). However, due to the level of digital maturity, infrastructure, and skilled workforce that Indonesia is still developing, attempting to adopt all technologies at once could be resource-intensive and less effective (Olatunde et al., 2022) Therefore, the OSC industry can be focused on, as BIM adoption in Indonesia can lay a foundation for digitalisation in alignment with industrialisation.
The Off-Site Construction Industry Terminology
Table 1: The terminology of OSC and its relation
Terminology | Description |
Off-site Construction (OSC) | A method where construction components are established in a controlled factory, then transported and installed onsite (Staib et al., 2008) |
Off-site fabrication, prefabrication, and preassembly | CII and CIRIA define off-site fabrication as “a process which incorporates prefabrication and preassembly. The process involves the design and manufacture of units or modules, usually remote from the work site, and their installation to form the permanent works at the work site. In its fullest sense, off-site fabrication requires a project strategy that will change the orientation of the project process from construction to manufacture and installation”, cited in Gibb (1999) |
Modular Construction | “ a well-developed off-site manufacturing approach, where prefabricated modules are 85-90% completed with finishes in a factory” (Wang et al., 2020) |
Industrialised Building Systems (IBS) | Formalised by Malaysia’s Construction Industry Development Board (CIDB) in the 1960s, where the use of prefabrication of components in building is used. It also emphasises the mechanisation, automation, and robotic application (Din et al., 2012) |
Open Building Manufacturing (OBM) | “A combined ultra-efficient (ambient) manufacturing method in factories and on sites with an open system for products and components that offers a diversity of supply in the market” (Kazi et al., 2007) |
Off-site Manufacture (OSM) | Construction Industry Council's definition of OSM is a Substantial value added in factory manufacture by using assembly intervention, cited in Abanda et al. (2017) |
Modern Methods of Construction (MMC) | Based on the NHBS Foundation (2016), MMC is an efficient procedure that involves producing structures or their parts at plants. MMC term is most commonly used in the UK, while OSC is in the USA, cited in Švajlenka et al. (2022) |
In this blog, all different terms are included and referred to as OSC or the same concept. The following paragraphs will explain the principles of OSC and how it can help accelerate Indonesia's economic growth.
Principles and Features of Off-site Construction
Kieran and Timberlake (2004) explained that fabricated architecture comprises four objectives and characteristics:
Mass customisation
The building can be replicated on a large scale while also being adjusted to the client’s needs, preferences, and site conditions.
- High-quality product at a cheaper cost
The spirit of fabricated architecture is to create a high-quality asset with a broader scope and features that is efficient in terms of cost and time spent. The process of
- Non-linear process of making
Unlike traditional construction, which is hierarchical, in prefabricated or fabricated architecture, the entire process can be done separately and assembled later. For example, components such as bathroom pods or parts for door modules are produced in a factory setting
- Digital representation
Information control tools are needed to help architects integrate their ideas with other experts, such as builders, product engineers, and material scientists, to transform the construction industry into a more efficient one. This innovation was made available through immediate visualisation and interaction, allowing problems to be solved most broadly.
OSC can also be used in the concept of Open building systems, where the building is ready to be adapted according to the needs of a changing culture. For example, when the mechanical joint is used, it can be dismantled and allows for change without any partial or total demolition (Richard, 2006)
B.1. Off-site construction and Information Communication Technology (ICT)
Figure 5: The relationship between technologies that are linked to each other in OSC (Wang et al., 2020)
B.2. Off-site construction and Design for Manufacture and Assembly (DfMA)
DfMA is a design approach to applying off-site manufacturing and on-site assembly by evaluating and improving product design, considering the downstream processes (Lu et al., 2021). For example, by simplifying and minimising parts (Bogue, 2012). Some previous studies have explored the application of DfMA strategies, particularly for off-site construction, one of which is the adoption of DfMA in highway bridges, houses and commercial buildings (Lu et al., 2021).
B.3. Degree and variation of off-site construction
The Construction Industry Council emphasises five main types of off-site manufacturing, which are panellised, volumetric, hybrid, modular systems, and component and sub-assembly systems, cited in (Abanda et al., 2017)
Table 2: Types of manufacturing construction (Abanda et al., 2017)
Types | Description | Example |
Panellised systems | Factory-produced flat panel unit assembled onsite to produce the 3D structure | Structural Insulation Panel (SIP) technology |
Volumetric systems | Non-structural volumetric spaces produced in a factory | Bathroom pods, plant rooms, lift, and shaft |
Hybrid system | Combination of panellised and volumetric units | Load-bearing service core |
Modular buildings | A building that is assembled from volumetric units. Additional on-site works are permitted, such as external brick skin and tiled roof | Hotel modules |
Components and sub-assembly systems | Factory-produced items are not regarded as full systems, but they replace parts of the structure normally fabricated onsite | Lintels, slabs, column |
Similarly, Gibbs (2001), cited in Lu et al. (2021), states four levels of prefabrication adoption: level 0—level 4 according to the degree of prefabrication.
Table 3: Degree of prefabrication Gibbs (2001), cited in Lu et al. (2021)
Degree | Characteristic | Example |
Level 0 | A project does not apply the prefabrication method | Cast in situ or concrete is poured and cured directly at the project site |
Level 1 | Component and sub-assembly | Lintels |
Level 2 | Non-volumetric assembly | 2D precast concrete wall panel |
Level 3 | Volumetric assembly | Volumetric bathrooms, or kitchen |
Level 4 | Modular building, 3D modules which form the fabric of the building structure | Room module systems made of steel, timber, concrete, and Bathroom pods |
Benefits of Off-site Construction
Zhai et al. (2014) argued that regardless of the degree and variation of off-site construction, the objectives and advantages remain the same: improving project constructability, which involves reducing material and construction waste, labour demand and cost, energy consumption that leads to a smaller carbon footprint, and time needed. The aim is not to compress the time required, but with the same amount of time, we can make many design alternatives
In addition, Lovell and Smith (2010) and Bragança et al (2010) explained that better quality and safer work environment can be achieved with MMC, as cited in Švajlenka et al. (2022).
The benefits of adopting OSC are similar to those of Lean Construction practice. Alarcón (1997) and Koskela (1992) define Lean Construction as a concept for maximising value and minimising waste, cited in Lu et al. (2021). OSC can incorporate Lean production into construction project delivery by increasing the number of factory-based building component manufacture, sections, and elements (Pasquire and Connolly, 2002).
According to previous studies, other benefits of OSC include:
- Improved quality and consistency due to the factory-based environment, which allows the element to be tested before being transported on-site (Abanda et al., 2017).
- Improved predictability performance using streamlined processes and better flow can result in increased efficiency and productivity (Pasquire and Connolly, 2002)
- Compared to traditional construction, OSC offsite has more social advantages, such as improved health conditions. In OSC, a large portion of the construction process is controlled in the factory, which poses a potential risk of hazardous materials (Pasquire and Connolly, 2002).
- Environmental advantages: practice circular economy principles by applying recyclable materials and promoting closed cycles of production and consumption. Therefore, it has potential for adaptability and deconstruction (Švajlenka et al., 2022)
- In terms of resilience and flexibility, OSC buildings not only can be dismantled to meet future needs, but the facilities can also be repaired by continuous monitoring with system information technology (Kazi et al., 2007)
Challenges of Off-site Construction
Many challenges hinder the full potential of OSC realisation. For instance, poor integration between the supply chain due to different software used, variation of objectives and requirements. BIM can streamline the information transfer between organisations throughout the project’s lifecycle (Wang et al., 2020).
Cultural change always becomes a big challenge when it comes to the advancement of technology. Particularly, the construction industry, where developers, contractors, and architects are reluctant to adopt new methods, for example, new materials and production methods(Lu et al., 2021). It can be solved by promoting and facilitating the breakthrough to be implemented daily.
Abanda et al. (2017) argued that a lack of knowledge and skills gap are the main barriers to OSC adoption. Especially on how BIM can be used to foster the benefits of OSC. Moreover, available training and education models do not relate the training’s modules to the industrial needs. This problem can lead to low productivity as the highly skilled individuals required for the OSC are not accessible.
Transporting such huge modules is also one of the difficulties that arise in OSC. For example, highway regulations on module dimensions might negatively affect the possible apartment layout. Additionally, Special cranes and trailers are needed to handle SIPS panels on site (Švajlenka et al., 2022). Employing telescopic or folding technology might help reduce the transportation limitation (Kazi et al., 2007).
Case Study: Heritage Way, Fraserburgh, Scotland
The project was delivered as part of the Scottish Government's energy-efficient social housing development. The site was a heritage area with derelict warehouses and industrial units that had lasted for generations. The area is in the northern part of Scotland, so well-insulated and draft-proof houses are needed to prevent cold exposure from the wind.
The project consists of 30 affordable housing units. Completed in 2017, it employed MMC principles, using a prefabricated, panelised I-beam roof and wall system. Insulated OSB timber panels were also manufactured off-site for the walls and roof. Moreover, the zinc cladding arrived as a pre-fabricated component that was quick to install and minimised loading on the foundation for the coastal location.
Figure 7: Pre-fabricated zinc cladding minimises loading on the foundation and has a low maintenance requirement in the long term (ADS, 2020)
Collaboration during the project between the design team is crucial for delivering the project, especially for a very low energy standard that requires multidisciplinary integration, such as material and structural engineers. Regular monitoring was conducted to evaluate residents' satisfaction, thermal comfort and generous daylight, which was appreciated by them as well as the affordable running cost.
Conclusion
OSC has the potential to reshape Indonesia’s economy and help it achieve its vision of becoming one of the world’s top economies in 2045. OSC provides solutions to the problems of traditional construction by enhancing productivity, reducing timelines, and promoting sustainable practice.
Through integrating digital technologies like BIM and DfMA, OSC improves construction efficiency and safety and contributes to upskilling the workforce and developing local manufacturing capabilities. Both sustainable construction practices and skilled labour can significantly increase Indonesia’s attractiveness to foreign investment, which can boost GDP and increase Indonesia’s global competitiveness.
However, barriers such as limited digital infrastructure, regional disparities in technological readiness, skill shortages, and cultural resistance must be addressed by policy simplification, public-private collaboration, and essential training initiatives connecting education and the industry.
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