In Belgium, construction is worth around 100 billion euros a year, more than 5% of GDP. Yet we still build much as we did a hundred years ago: every building is a prototype, made on a building site and at the mercy of the weather.
Can it be done differently? Bert Lenaerts is convinced it can. He started at Vanhout in 1994 as a young civil engineer and project manager. Today he is CEO of Vanhout Group, part of BESIX, the largest construction company in the country. In our podcast Bakstenen en Boterhammen (Bricks and Sandwiches), he tells FixForm CEO Edward Boete why construction has to industrialise, and why you only build well when you know what the maintenance will cost.
"Everything you do on a building site loses money"
It is a line that sticks. Lenaerts readily admits he exaggerates on purpose to make a point, but the point is serious. The building process is still largely a craft: brick by brick, on site, by skilled workers who are increasingly hard to find.
The figures are sobering. According to studies, the total failure cost in the building process, from design through handover and even maintenance, runs as high as 15% of the value. "When you know that construction companies end the year with a net margin of 2 to 3%, there is still a great deal of potential."
His solution: move as many activities as possible to a controlled production environment, and only assemble on site. A factory is not bothered by rain, wind or frost, and a standardised process makes fewer mistakes.
Build like a car, choose like at IKEA
Lenaerts draws his inspiration from other sectors. A car rolls off an industrialised production line and rarely gives trouble, even though it is driven in all weathers. And anyone putting together a kitchen at IKEA feels free in their choice, while in fact they are choosing from a database of standard elements.
Vanhout applies that principle at Circl, a subsidiary that builds homes for private buyers and investors. The concept works with:
- 2D elements for walls, floors and roofs. They are standardised, but the dimensions are flexible, so the homes still vary.
- 3D elements such as the stair core and a technical module that holds all the installations. That module is placed in the home plug-and-play.
The technical module in particular is a smart move. "In a traditional house, the plant room is an anthill of activity," says Lenaerts. Different trades work there one after the other, often without much respect for each other's work. A standard module from the factory solves that in one go.
The result: a home goes up in 9 to 12 weeks, and the whole process from first brick to handover takes 3 to 4 months. A traditional home easily takes a year. A Circl home is not cheaper yet, Lenaerts honestly admits, but you do get more value: quality materials, a negative E-level (Belgium's energy performance score) and a process from which failure costs have been squeezed out as far as possible. Even the brick facade, which Belgians, born "with a brick in their stomach", hold on to, is laid by a robot.
How long before modular construction becomes the norm in Belgium? Lenaerts estimates twenty years. A sector with so many players simply has inertia. But technically, up to 80% of a building can already be made off site today.
Why a contractor also does maintenance
Twenty years ago, Vanhout was a pure building contractor. Today the group covers the whole value chain: design, build, finance, maintain, operate. That is a deliberate choice, and Lenaerts sums up the reason in one question:
"How can you build something well if you don't know what it costs to maintain a building?"
If you only build, you think short term and quickly go for the cheapest solution, because after handover you are gone. If you also have to maintain and operate the building, you think in total cost of ownership. Then you dare to invest in sustainable techniques, because you reap the benefits yourself. Vanhout also uses what it learns from maintenance and facility management to make its next buildings better.
A few examples from the group:
- Public swimming pools. Vanhout is one of the two major players in Flanders that design, build, finance and operate swimming pool complexes and manage their energy.
- BEO fields. With this form of geothermal energy (borehole thermal energy storage), you draw heat and cold from the ground to heat and cool buildings.
- ESCOs. Vanhout invests in sustainable installations itself (a BEO field, heat pumps, solar panels), and residents pay a monthly subscription for heating and cooling, spread over 25 to 30 years. If it is too hot or too cold, it is Vanhout that has to step in.
What crises taught about contracts
Covid brought building sites to a halt, but the Ukraine crisis hit construction even harder. Building and energy prices soared, and the classic price revision clause, which let you estimate future price rises and buy them off, no longer worked. That led to major disputes with clients, who don't have unlimited budgets either.
The lesson, according to Lenaerts: agree up front who carries which risk, and have an open conversation about it with your client. "Maybe in the past we took too much risk on ourselves." Strategically, too, after a difficult period in the red, the group chose focus: choose better, execute better. That also means daring to say no to projects and activities that add no value, inspired by the Pareto principle.
Four trends that will shape construction over the next ten years
Who will still be in the game in Belgian construction and real estate ten years from now? According to Lenaerts, the companies that bet on these four trends, and stay agile enough to respond to a fast-changing market:
- Industrialised construction, to reduce failure costs and cope with the shortage of skilled workers.
- The energy transition. Many apartment buildings that are thirty or forty years old no longer meet current standards. Renovating them is an enormous challenge, especially with an association of co-owners in which not everyone can or wants to pay.
- Digital transformation. "We really have to embrace it, not be afraid of it. It's not going to replace us." AI can, for example, interpret specifications and screen texts, work that today is still done by hand in an Excel sheet.
- Human capital. Younger generations look at work differently and attach more importance to work-life balance. In a sector where people work in Bredene one week and in Maaseik the next, at opposite ends of Flanders, that is a real challenge.
What does this mean for anyone managing buildings?
The conversation with Bert Lenaerts makes a few things clear:
- Maintenance is not an afterthought. The best building decisions are made by those who know what a building costs over its whole lifetime.
- Data from operations makes buildings better. If you keep good track of maintenance, faults and costs, you know which design choices pay off and which don't.
- Going digital is no longer optional. Processes that still run on paper, by email or in Excel today will become the exception in the coming years.
Do you manage buildings and want a firm grip on maintenance, assets, documents and compliance, so you base your decisions on what your buildings really cost? FixForm helps property managers keep their buildings in perfect condition, with reactive and preventive maintenance in one platform. Get in touch and we'll look together at what that could mean for your buildings.
