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Off-site manufacturing delivers major benefits to the automotive, food and beverage industries, but construction has been slower to explore its potential, especially in the UK. Led by Dr Mohamed Zaki, the Deputy Director of the Cambridge Service Alliance, CDBB researchers sought to study the variety of business models and digital services currently used internationally. 

The project focus was not on the technology of the digital innovations, but on the new business models and contracts (e.g., outcome-based contracts) needed, the supply chain challenges, the financial implications of investment in innovation and the attitudes and interests of different stakeholders. The research sought to understand and evidence the impacts of digital innovation in construction and to identify, understand and evidence value beyond productivity. 

Gathering evidence from successful and unsuccessful use cases, the researchers have been able to measure outcomes and benefits and the value of innovation. The results support greater uptake of digital innovation in construction, providing industry actors with clear information about the challenges and guidance to avoid failure. Armed with a better understanding of how to choose the right capabilities for OSM, firms can reduce the need for sub-contracting or employing intermediaries, securing better value for (public) money.

Dr Zaki and collaborators discuss the significance of this work at the 2022 Cambridge Festival


Work began with a survey of existing digital business models within the construction industry, comparing product-based and project-based models. 

Responding to the industry question, “Is off-site manufacturing more or less profitable than on site construction?”, the researchers reviewed financial metrics to understand the economic implications of OSM. Comparative data from 100 onsite/offsite construction organisations (using the FAME database) demonstrated that there was no significant difference in profitability, and that a tendency to ramp up production could be harmful to the long-term viability of offsite manufacturing. Using this data to design tools for companies considering the business case for offsite digitisation, the researchers created a Value-Price-Cost framework. This helps companies to consider how their operational structure influences performance, and to appraise the necessary fixed-asset, staffing, and shareholder investment.

This line of inquiry strongly indicated the desirability of alternative contractual models, to facilitate digital service provision within the construction sector. In particular, researchers presented a strong case for outcome or value-based business models. An outcome-based business model shifts construction from a centralised model, in which project requirements are fulfilled according to the location of the contractor and subcontractors available in the region, to a decentralised model, in which a bundle of digital services can be provided regardless of the location thanks to digital technologies. For example, via CAT Connect, Caterpillar launched job site services that use its digital capabilities to offer customers outcome-based/consultancy services. The service provides remote information to help customers manage their fleets and different jobs on site with clearly defined outcomes (e.g., increased uptime, efficiency, cost reduction). This goes beyond traditional centralized support services that rely on regional dealers, for example.

Researchers also pursued 19 in-depth cases (in various industries) to explore data-driven business model innovation. A key finding of this research is that offsite manufacturers typically take one of four different approaches in their digital strategy, distinguished in part by their directness. Indirect approaches begin with capacity-building (technical and analytic) and work toward incremental change. Direct approaches set out an overarching strategy and a route map, commonly influenced by a clear vision from the CEO. Responding to this observation, researchers developed a value-based guide to support decision-making about the best approach to digitising within a given enterprise.

Construction ought ultimately to serve the customer. An additional strand of research explored the interaction between OSM models and customer experience. This is significant, because construction companies more often consider their work finished when a property has been handed over to the end user. The prospect of providing services to that user (and benefiting from a construction’s digitalisation in an ongoing way) rests on a better understanding of their post-construction experience.

In the final months, the project also documented the case of an OSM start-up that failed despite major investment, identifying ten lessons for the sector. Findings were shared at the Frontiers in Service conference (Boston, August 2022).

Throughout each investigation, the researchers have developed and maintained connections with companies across the construction sector. Fresh lines of inquiry have been shaped by gaps in industry knowledge, with industry partners keen to learn from the findings. In keeping with standard practice, peer-reviewed publications based on the research have already begun to appear in relevant journals; details of these can be found on the Cambridge Service Alliance website, with publications up to September 2022 also findable in the CDBB Knowledge Base Navigator.

So what?

The research has provided a clear evidence-base and tools for companies seeking to understand if and how they can best invest in digitising off-site manufacturing. With the appropriate structures and resources in place, development and innovation executives and middle managers can now follow a consistent process to design and implement data-driven business models. 

The value-based model developed by CDBB researchers assesses new capabilities, new organisational structures, processes and cultures. It is informed by dozens of case studies, and the team have created resources to help firms implement value creation activities using a structured approach.

Industry impact

For larger companies, the research supports a shift towards a production-based model and opens the door for vertical integration (bringing the supply chain in-house). This enables new digital services benefiting from digital and data-driven capabilities to analyse data at scale, enhance efficiency, and identify patterns that can be investigated. Changes in service provision could include traceability systems to monitor construction production. This will increase visibility for the supply chain and is useful for work towards net zero targets, etc. as well as to improve quality control and reduce risk. Digitalisation also facilitates predictive maintenance, optimising the economic benefits during the operations and potentially increasing the lifespan of the built assets and sustainability objectives such as reducing carbon impact.

Highlighting the equal profitability of off-site manufacturing should also encourage companies to weigh up the cost and benefit of other resources when making construction decisions. 

Industry actors have been keen to learn from the research. In Spring 2021, Bouygues Construction partnered with Cambridge Service Alliance to accelerate their learning. More than 40 other companies have been actively engaged throughout the research through workshops, interviews, sharing data and seeking to understand the findings.

At each stage, industry actors have greeted the research with fresh questions. A follow-on inquiry is already underway, investigating the role of start-ups as (potential) disruptors within the OSM marketplace.  

Wider benefits

While the focus of this research has been upon actors within the construction industry, the learning about data-driven business models and digitalisation is relevant for other sectors too. Adopting best practice for off-site manufacturing and remote asset monitoring can have significant positive outcomes for carbon consumption, as well as profitability.

HCL Technologies delivers holistic services to leading enterprises, including 250 of the Fortune 500 and 650 of the Global 2000 (HCL, 2022). As part of their Cambridge Service Alliance membership, the company is co-investing in further research and plans to adopt the CSA-recommended approaches to diagnose and help their customers in construction and other sectors to achieve successful digital services and data-driven business model innovation. 


  • Cambridge Ahead
  • The Manufacturing Technology Centre (MTC)
  • Institute for Manufacturing (IfM)


The research addressed key components of the Construction Innovation Hub proposal by focusing on learning across sectors, on international comparisons and learning, and on understanding the different contexts in which innovation is needed, and on the interests, motivations and requirements of the different stakeholders. Enquiring about customer experience in the construction sector, and generating proposals for new contractual models that take account of digitalisation’s promise, the research offers significant innovations to be developed further by Cambridge Service Alliance and partners.

Find out more

To find out more about the origins of this project and the research team read the Research profile

The project is closely aligned with two other CDBB research projects, Analysing the social context to transforming construction through digital innovation and Driving business model innovation.

Further work in this domain will be reported and shared via the Cambridge Service Alliance website.

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