A Preliminary Review on Economies of Scale (EOS) Towards Industrialized Building System (IBS) Manufacturer

¹ Jamilus Research Centre, Faculty of Civil and Environmental Engineering, Universiti Tun Hussein Onn Malaysi,, 86400 Batu Pahat, Johor, Malaysia
² Faculty of Architecture, Planning, and Survey, Universiti Teknologi MARA, Shah Alam Selangor, Malaysia

^* Corresponding author: riduan@uthm.edu.my

Abstract

Industrialized Building System (IBS) is a potential technology to improve productivity of construction industry. Controlled production and minimum generation of construction waste are some of the benefits that can be achieved by replacing conventional construction with IBS. In business, IBS is giving a huge opportunity for manufacturer and supplier to expand their business while contributing to construction development. However, bad strategies will put the company in high risk due to higher initial capital for machines and equipment. Therefore, strategic planning for company’s growth, profit maximization, and enhancement of productivity is undeniable to ensure the success of business in construction industry. This preliminary paper is exploring associated factors that affect Economy of Scale (EOS) and their relationships in catalyzing the IBS manufacturer especially precast concrete as the scope of study to continue their business in the construction industry. Thus, a framework of EOS is proposed to assist IBS manufacturers to ensure their company’s growth and stability, competitiveness in term of monopoly or an oligopoly, increasing productivity, leading constant returns to scale, and finally increasing the firm’s efficiency. The refined EOS’s conceptual framework is an important turning point to support the development of decision making tools for IBS manufacturer towards their stability and survival in this highly competitive industry.