The fall of Silicon Valley modular unicorn Katerra could have been predicted but that doesn’t mean construction can never industrialise, say Dr Kell Jones and Professor Jacqui Glass from the Bartlett School of Sustainable Construction at University College London.

Six years after bursting forth as the great hope for construction productivity, US-based construction start-up Katerra is calling it a day. The decision leaves clients and a directly employed workforce that in its heyday peaked at around 8,500 facing an uncertain future.

Katerra’s founders, drawn from the property and tech sectors, saw the opportunity to apply the lessons learned from the tech sector to address construction’s yawning productivity gap.

They aspired to integrate, industrialise and digitise a fragmented, low-tech, craft and site-based delivery process.

The plan was to grow rapidly, acquiring and integrating companies from across the construction supply chain, including architects and contractors. It tried to assemble an end-to-end value chain and built multiple factories across the US to serve a global market.

Integration by acquisition strategies like Katerra’s are a well-understood and challenging way to address fragmentation and low productivity. It leads to big overhead costs that need continuous feeding. In pursuing this strategy, Katerra chose to ignore the fact that the industry has evolved as a best-fit response to the nature of the demand it serves.

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