Project-based business models in the construction industry – key success factors for sustainable timber extension projects

Figures & data

Figure 1. A project-based business model for wood construction projects.

Figure 2. Traditional building process steps with relevant actors involved.

Table 1. Brief description of the six case studies.

Description:	Case A	Case B	Case C	Case D	Case E	Case F
Building type: Extension/Existing	Office/Office	Office/Office	Residential/Residential	Residential/Office	Office/Office	Office/Office
Construction solution/system	CLT, joists walls & steel frame	CLT & glulam	CLT	CLT & steel frame	Both concrete & CLT frames	CLT & glulam
Construction period	2019–2021	2012–2014	2008–2009	2017–2019	2016–2018	2020–2022
Construction size (approximate)	5600 sqm. (Renovation of 2 floors & addition of 3 floors)	6500 sqm. extensions	1000 sqm. (3 floors + 1 attic)	4700 sqm. extensions	16,000 sqm. total	10,600 sqm. total (incl. 1250 sqm extension)
Construction cost	11 M€	12.5 M€	1.5–2 M€	20 M€	30 M€	18.5 M€. (estimate)
Actors interviewed	Architect, building contractor Building system supplier	Property owner, building contractor	Building contractor, building system supplier	Architect, property owner, building system supplier	Property owner, building contractor, building system supplier	Property owner, building contractor

Table 2. Challenges in wood extension projects.

Project challenges with wood extension constructions	Key actors affected
Not enough understanding, knowledge, and expertise in utilizing wood for building purposes.		CT	SU		CS	RG
The friction between involved actors regarding the level of prefabrication.		CT	SU	AT
The requirement for a flexible supplier of wooden products, owing to the customized demands of projects.		CT	SU
Conflicts in regulations when it comes to approving detailed development plans – for instance, due to the taller height of wooden constructions.		CT		AT	CS	RG
The dynamics of collaboration among key actors.	PO	CT	SU	AT	CS	RG
Challenges in meticulous planning and maintaining a smooth progression of tasks and costs in the project.	PO	CT	SU	AT	CS
The challenges with logistics in ensuring the proper sequencing of loading prefabricated modules at the factory.		CT	SU
Technical challenges in maintaining water, heating, and sewage connections between the existing building and the wood extension structure.		CT			CS
Challenges related to the frame structure include differences in technical and material properties between concrete and wood.		CT	SU	AT	CS
Difficulties in building extension on top of buildings with high historical significance.	PO	CT		AT	CS	RG
Issues related to fire safety, moisture retention, and sound transmission in wood building constructions.		CT	SU		CS

Key actors: Property owners (PO), Contractors (CT), Suppliers (SU), Architects (AT), Consultants (CS), and Regulators (RG).

Table 3. Important elements for success in wood extension building projects.

Important elements for success in wood extension building projects	Key actors involved
Value creation & delivery: cooperation, documentation, and recurring relationships – knowledge and long-term learning
Engage in early dialogue with the local municipality regarding the detailed plan and local regulations.	PO			AT
Contact the frame supplier early to acquire knowledge about the wood building system.	PO	ET	BS
Establish contact with a key supplier to create a knowledge advantage.	PO		BS
Collaborate with architects and designers who possess expertise in wood construction.	PO			AT
Formulate collaboration agreements to ensure access to and effective coordination of specialist knowledge.	PO	ET		AT
Initiate early contact and establish manuals related to wood construction.		ET	BS
Document that the work continues to facilitate organizational learning.	PO	ET	BS
Establish and accept cost and schedule requirements at an early stage.		ET	BS
Establish internal standards for climate and environmental aspects.	PO	ET
Active client with own project management competence.	PO
Active client with own organization for implementation.	PO	ET
Value proposition: properties of the wood material
Own expertise in a wooden construction system facilitates efficient implementation	PO	ET
The wood construction system has an excellent strength-to-weight ratio.			BS
Leverage the challenges associated with the wooden building system (extra focus on moisture resulted in a more even workload over the project timeline).		ET	BS
Utilize tent solutions to enable moisture-proof construction and quick installation.		ET
Adjust the level of pre-manufacturing depending on schedule and internal competence.		ET	BS
Value capture: value added for sound project finances
Optimize prefabrication degree for fast assembly and minimize on-site costs.		ET	BS
Explore the possibility of a high level of prefabrication (including transportation) of complex parts such as the frame and bathrooms.		ET	BS
Implement incentive structures for environmental certification and reuse.	PO	ET
Wood building systems yield a high leasable area, thereby enhancing good property owner economy.	PO

Key actors: Property owners (PO), Entrepreneurs (ET), Building system suppliers (BS), and Architects (AT).

Table 4. Value creation and value delivery in extension projects.

Value creation and value delivery in extension projects
Resources Committed property owner working on an excellent collaborative project regardless of the type of contract. Collaboration model within the chosen type of contract. Dialogue and cooperation between key actors in the project early in the planning process. Experience in large wooden construction is essential. Knowledge and competence in wood construction need to be involved early in the design phase. Wood material properties are utilized in the building process; for example, low frame weight requires much lower crane capacity for lifting construction materials. Tenants involved in the design phase reduce changes prior to occupation.
Activities Optimize the use of the detailed development plan for the most significant effect of the extension. The degree of prefabrication needs to be decided. Accurate time planning of deliveries to the project – optimization. Efficient logistical planning of frames for the construction site. Quick installation of the wooden frame results in low impact on existing tenants and the surrounding area of the project site. The detailed plan for the assembly and subsequent activities for a moisture-proof construction. Accuracy in planning the work with the existing building’s primary conditions and existing framework, and the transition to the new building reduces the risk of disturbances in the extension project.

Table 5. Value proposition in extension projects.

The value proposition in extension projects
Technical value proposition The low weight of the wooden frame material makes it possible to build more floors. The relative strength and weight ratio favors wood in comparison to other construction methods. Better accuracy in planning provides a higher level of predictability for the final delivered solution. Technically possible to make late changes without a significant impact on the project. Technical characteristics for building with wood:  ○ Results in larger flexible areas with the possibility of open floor plans.  ○ A higher degree of energy efficiency in a property developed with an extension.  ○ Constructing in wood results in quieter on-site construction.
Economic value proposition A shorter time is required for tenants’ temporary accommodations. Shorter construction time reduces the establishment cost. Fast construction gives shorter “time to market”. This means a shorter period until income is generated. Larger rentable area by utilizing the limits of the detailed development plan concerning the wood material’s advantages regarding, for example, weight. Energy efficiency has positive effects on operating economics.
Social value proposition Fewer disturbances to existing tenants. Shorter construction time on site. Less disturbance to the surrounding area. A quieter construction benefits the environment and those working on the project. The environmental profile of the construction project creates a positive value. Visible wood has positive effects on the user. Exclusive construction projects with a high profile provide value for the city, the area, the company, the project, and so on. Wood in building extension projects further strengthen the cultural heritage.
Environmental value proposition Energy optimization through building extension together with renovation. Lower carbon footprint through construction in wood compared to other construction methods. Reuse and recycling of building materials. The possibility of environmental certification is facilitated when building with wood because wooden constructions provide good values from, among other things, a climate perspective. Wood is a renewable material.

Table 6. Value capture in extension projects.

Value capture in extension projects
Technical value Energy efficiency-related cost reductions because of wood extension projects. A wooden frame provides a higher rentable area than other building systems. Dialogue between the actors involved captures values linked to knowledge about building in wood and the possibility of extensions. Extensions face some challenges, which, if planned well, will enable clear values for the actors involved during and after the project’s implementation.
Economic value Profits for property owners are linked to a shorter time from the start of the construction of the extension to the possibility of renting new space. Owning, building, and managing the property in-house gives a long-term perspective on the various profits and cost savings that can be made over the property’s lifetime. Lower costs for property owners during the operational phase are linked to energy optimization. Shorter construction time results in lower financing costs for the property owner. For contractors, a shorter construction time means reduced labor costs and lower costs related to the construction site and workplace protection costs.
Social value A shorter time is required for tenants’ temporary solutions, of accommodation or offices. Several high-profile projects have been built with wooden frames, which capture a more market-oriented value through increased visibility and the feeling of a premium product. Dialogue and cooperation between the extension project’s actors contribute to a social value that can be linked, for example, to an opportunity to influence the design of the building or the surroundings.
Environmental value Building in wood creates the opportunity for certification, and a high environmental profile for the actors involved – for example: promoting sustainable construction through the municipality, property owners, and through the interest and commitment of the client and contractors. Reuse and recycling increase the degree of environmental impact and commitment.