Understanding a company’s business model is a very important factor to make your investment decision.  In my last article, I have shared my personal opinions on Gamuda’s business model, management teams and financial situation. For this article, I would like to share my humble opinions on Gamuda’s IBS.

Industrialised building system (IBS) is a construction technology which building components are prefabricated in factory/off-site and assembled on site. CIDB Malaysia has been promoting IBS since long time ago. CIDB has also developed an IBS scoring system and some government projects need to have a minimum IBS score of 70. The shortage of skilled workers and the rise in the labour wages are the biggest challenge in construction industry nowadays. Therefore, IBS is playing an important role to transform the construction industry into next level.   

One of the leading construction companies in Malaysia, Gamuda has been investing a lot to build their IBS factories since many years ago. The first IBS factory of Gamuda is completed at 2016 and the IBS factory has started their operation on 15 June 2016. Gamuda’s IBS factory is the Malaysia’s first fully automated digital IBS plant which is at the forefront of the precast industry. In a conventional precast factory, the reinforcement steels are placed in a mould manually and then the concrete will be poured into the mould to form the reinforced concrete. The same process can be done faster and required less labours by a fully automated digital system in Gamuda’s IBS factory.

To fully implement a project by using IBS technology, more time need to be spent during planning stage. In planning stage, BIM (Building Information Modelling) is very important to create a 3D model based on the inputs from all the disciplines (Architect, C&S engineer and M&E engineer).The 3D model needs to be well-coordinated within all the disciplines to avoid the design mistakes (pipe clashing or low headroom) as the IBS technology is highly rely on the BIM. Lack of BIM expertise is one of the reasons why the IBS technology is not very common in Malaysia. As Gamuda has ventured into IBS technology since many years ago, they have already developed a very strong BIM teams to support their operation.

Gamuda Land, the property development arm of Gamuda is also using IBS technology for its own housing project. Gamuda is developing few township projects such as Gamuda Cove (1500acres), Twentyfive (257acres) and Gamuda Garden (810acres). Those township developments will keep the IBS factories busy for many years. The IBS plant at Sepang which is near to those township developments has brought advantages to Gamuda in logistic planning. The digital IBS technology can also help Gamuda to increase the productivity, reduce wastage, shorten the construction period and reduce the number of skilled workers on site which can reduce the construction cost and improve the profit margin.

There are many other advantages of Gamuda IBS system. You guy can visit Gamuda website to understand more about their automated digital IBS technology. Obviously, IBS technology will be the future of construction industry in view of the lack of skilled worker and rise in the labour wages. The barrier of entry into IBS technology especially automated digital IBS technology is high which other competitors are not easy to copy this business model. They need to have very high capital expenditure to achieve the same scale as Gamuda.

Gamuda has pursued its vision to revolutionise the construction sector by having Malaysia’s first fully automated digital IBS factory. Warren Buffett believes that competitive advantages or economic moat is a very important factor to pick a company to invest. I also believe that Gamuda has always been one step ahead of the competition which has brought them the competitive advantages or economic moat in the construction sector.