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    Changing perceptions around prefab: prefabAUS' Warren McGregor [profile]

    Stephanie McDonald

    Warren McGregor consults as a senior advisor with Thinc Projects and was recently appointed CEO of prefabAUS. He has experience in management consulting, project development, finance and construction in Australia and southeast Asia. He has more than 20 years’ professional experience in financial and management consulting.

    Architecture and Design spoke to him about low-cost housing in Jakarta, establishing a start-up and the changing perceptions about prefabrication.

    You lived in South East Asia for nine years. Can you tell A&D about your experiences there?

    I went to Indonesia in 1990 for a two-week holiday to visit an ex-colleague who had just been seconded to the KPMG office in Jakarta. Management consulting was just beginning to take off. Completely unexpectedly, over the next five weeks I completed a small assignment for a bank client, got involved in proposals for new work and was asked to join the KPMG Jakarta management consulting practice, which I accepted. That had me living in Jakarta, where I stayed, even with wider work commitments in the region. 

    What did you learn about property while you were working there that you don't think you would have learnt in a western country?

    One thing that stands out is the entry level (low cost) housing being produced on the outskirts of Jakarta – then a city of about 9 million people. Typically comprising one-and-a-half rooms, unfinished concrete block surfaces inside and out, with the underside of the roof tiles as the ceiling, they had one exposed light bulb in each room, one power point, and primitive communal bathroom facilities out the back. 

    There were queues for these homes, and remarkably, rather than becoming slums, the proud home owners would progressively transform them over a few years into attractive housing estates – many with a second floor added (the land plots did not have room to build out).

    You have also been involved in a start-up. Can you tell A&D about that?

    That start up set out to commercialise a patent. It entailed the full range of pleasure and pain often associated with start-ups and the challenges they present, but ultimately resulted in a $5 million contract with the US military for a (restricted) application that was not anywhere in our thinking when we set out. 

    Being involved in the drafting of the patent documentation and understanding the commercial and practical aspects of patents across legal jurisdictions was a very interesting, as was engaging with the US Military, which operated on a scale that is almost incomprehensible by Australian standards.

    How did running your own business impact your approach to property financing?

    In particular it focused attention on outcomes, rather than effort and inputs – which while necessary, can easily become misaligned to overall objectives and priorities. One way this shows up for project funding is that the relevant funding requirements and parameters need to be understood from the outset and regularly revisited as the project planning progresses. Otherwise there can be an unpleasant shock if the project has evolved down a path that is inconsistent with prevailing funding arrangements.

    How have you seen prefab develop over the past few years and what changing perceptions have there been around prefab?

    I first explored the unitised building prefabricated apartment modules more than five years ago. Many things have changed since then – more players in the market, a much wider range of products being offered, and increasingly more sophisticated design, right through to multi-million dollar homes built off-site and transported to the site for installation. 

    While housing (standalone homes and apartment modules and bathroom pods) remain a key part of the prefabrication industry, it is increasingly being adopted in other sectors, such as education, health, hospitality and industrial applications. Technology advances and more involvement by a wider range of construction disciplines have certainly helped and will continue to be important in the future. And there is certainly more of a buzz about prefabrication and off-site construction these days.

    What are some the financing challenges with prefabrication?

    It is no secret that traditional funding can be a challenge for prefab projects. As more of the value of the project is constructed off-site, the less the project fits with the normal financing models – whereby construction finance typically is drawn down against the progress of works on-site, as certified by the quantity surveyor, and with the bank holding a mortgage over the site and construction to date. This is one area in need of attention to devise a solution that works for all involved; the client, bank, contractor and prefab suppliers.

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