What it looks like to move from
Engineer-to-Order to Configure-to-Order.
The offsite construction industry is undergoing a operating system-level shift — from a long-dominant Engineer-to-Order (ETO) model, in which each building is uniquely designed and delivered as a one-off service, toward a Configure-to-Order (CTO) model rooted in productization, standardization, and supply chain integration. (See essay From ETO to CTO.)
This transition requires new social technologies to support the physical tech of modules, pods, and panels. It reflects a reorganization of roles, contracts, workflows, and mental models across the entire design and delivery ecosystem.
The table below outlines the defining logics of each mode, contrasting two fundamentally different paradigms that structure how buildings are conceived, produced, and assembled.
Summary
| Engineer to Order (ETO) | Current awkward hybrid | Configure to Order (CTO) | |
|---|---|---|---|
| Phrasing | Projects as Services | Products not Projects | Product Lines as Interoperable Systems |
| Where frequently cited | De re aedificatoria Leon Batista Alberti, Mid 15th Century |
Modular construction: From projects to products McKinsey & Company, June 2019 |
The Product Platform Rulebook Construction Innovation Hub, March 2023 |
Legal
| Engineer to Order (ETO) | Current awkward hybrid | Configure to Order (CTO) | |
|---|---|---|---|
| Guiding Principle | Design &/or Construction as a Service | Productization as a Service | Products offered to Customers |
| Result / Consequences | Bespoke, temporary relationships | (Same.) | Consistent, repeatable relationships |
| Legal Framework | Common Law | (Same.) | Uniform Commercial Code (UCC) |
| Medium | Includes offer, price, nature of work, quantity, and performance. | Contractual transactions with goods and tangible objects | |
| Participants | Technicians with Clients | (Same.) | Merchants with Customers |
| Result / Consequences | Adversarial relationship from unaligned economic incentives | Channel partnerships from aligned goals | |
| Primary Agreement | Service Contracts (AIA B100, etc) | (Same.) | Bill of Sale |
| Jurisdiction | per State | Per state, plus municipal and third-party | Nationwide |
| Result / Consequences | Disorganized local legal support / bespoke, context-dependent, unreliable | Consistent references & precedent / “uniform,” predictable, reliable | |
| Instruments of Service (pre-transaction) | Construction Documents (Designers to Builders) | Production Drawings (Modular to Owner) | Product Catalog with Feature List |
| (Irrelevant) | |||
| Instruments of Service (post-transaction) | Shop Drawings | (Same.) | (Same.) |
| Instrument of Use | As-built drawings | (Same.) | Owner’s manual |
| Instrument of Transfer | Deed or Titles transfers ownership | (Same.) | Title for product (like car title) |
| Result / Consequences | Requires extensive documentation / expensive | Secondary marketplace and Circular economy | |
| Instrument of Change (pre-transaction) | Revisions to Contract (pre-agreement) | (Same.) | Update shopping cart |
| Instrument of Change (post-transaction) | Change Orders (post-agreement) | (Same.) | Refund or Exchange |
| Result / Consequences | Requires legal council & elaborate documentation / expensive | Simple updates / Clear documentation | |
| Inspection | Onsite Municipal Inspection | In-factory Inspections in addition to on-site. | UL Listing or CE Listing |
| Result / Consequences | Contested Interpretations of Zoning and Code | Dual-permitting processes / Third-party inspection market | No municipal project inspections |
Market
| Engineer to Order (ETO) | Current awkward hybrid | Configure to Order (CTO) | |
|---|---|---|---|
| Guiding Principle | Competitive Bids between undifferentiated competitors | Bid vs. Price‑per‑Unit tension | Price transparency from Product Interoperability |
| Result / Consequences | Incremental price discovery through adversarial tendering | Price discovery distorted by late entry of offsite products into bid structures | Price discovery through catalog publication |
| Unit of Engagement | Client with a Service Contract | Client with a Production Agreement | Customers representing Market Segments |
| Result / Consequences | Innovation is fragmented and contextual | Innovation is dependent on demand aggregation | Innovation is centralized and higher‑level |
| Producer’s Motive | First secure contract, then change orders manage risk. | (Same as ETO.) | Product Differentiation |
| Result / Consequences | Alignment mismatch: adversarial incentive to protect scope | Alignment between sellers wanting recurring customers, and customers wanting reliability. | |
| Solicitation | RFPs, RFQs, Bidding Documents | (Same as ETO.) | Digital Catalogs & Configuration Software |
| Result / Consequences | Focus on technical qualifications / Confusion about scope. | Direct‑to‑Consumer Solicitation | |
| Selection Process | Bid Leveling | (Same as ETO.) | Price Transparency |
| Customer Agency | Clients accepts lowest offer | Customers chooses best product | |
| Product‑level Assembly | Trade‑based scope‑of‑work | (Same as ETO.) | Universal Interfaces (between products) |
| Result / Consequences | Designer‑led coordination / No unified assembly logic or re‑use | Product assemblies designed up‑front; not part of project scope | |
| Aggregation of demand | None | (Same as ETO.) | Aggregation across delivery regions |
| Result / Consequences | No scaling. Every project is a silo | Limited repetition | Scale economies proportional to market share. Creates unlocks financing and accelerates learning curves |
| Marketplaces | Local contract network, opaque | Some GCs acquiring offsite manufacturers | Platform Marketplaces (software configurators) |
| Result / Consequences | Individual procurement is relationship‑driven | Efforts to secure supply chain | Comparing product lines across manufacturers |
| Pace of Innovation | Slow | Moderate | Fast |
| Result / Consequences | Requires consistent full redesign at project level | Individual firms experiment, but innovations don’t diffuse. | Product lines evolve incrementally, updates propagate through catalogs |
Risk
| Engineer to Order (ETO) | Current awkward hybrid | Configure to Order (CTO) | |
|---|---|---|---|
| Guiding Principle | Per Trade Contract | (Same as ETO.) | Per Product Line |
| Root | Common Law service contracts | UCC transactions | |
| Boundaries | Unique, per contract | Unclear | Consistent, per Standard Interfaces |
| Result | Ambiguity incentivizes defensive behavior / Unpredictable scope disputes. | Gaps between GC and modular must be defined and managed | Clear boundaries between products and installers |
| Risk Management (pre-transaction) | Indemnities, insurance requirements | (Same as ETO.) | Warranties, Guarantees |
| Risk Management (post-transaction) | Bonds, adversarial contract clauses | Traditional clauses + factory QA, often contradictory. | QA/QC procedures, Product recalls |
| Result | Litigation-prone, expensive | Coverage duplication, confusion, and contested scope | Predictable, easier to finance and insure |
| Remedies | Change Orders, Lawsuits, Liens | (Same as ETO.) | Refund, Replacement, Repair under Warranty |
| Result | Slow, complex, adversarial, and costly | Fast, predictable, legally enforceable | |
| Coverage | Builder’s risk insurance, Project-specific liability. | Mixed, with complexity around product shipping insurance. | Warranties |
| Result | Slow, complex, adversarial, and costly | Expensive / Coverage gaps are common & contested | Consistent coverage, transferable, lowers systemic costs → easier to underwrite financing. |
Time
| Engineer to Order (ETO) | Current awkward hybrid | Configure to Order (CTO) | |
|---|---|---|---|
| Guiding Principle | Linear time | Hybrid (Parallel, but subordinated) | Parallel & Decentralized |
| Result / Consequences | Jobsite sequencing; owner, designer, builder silos as risk-management structures | Factories treated as subcontractors within Design–Bid–Build logics; factory cadence is forced to match project critical path; idle time and rework. | Parallel, distributed time — across supply tiers. Project time becomes an integration window; product lines run on stable cycles. |
| Management | Critical Path Method (CPM) | CPM with factory overlays | Takt Time (MRP II or JIT) |
| Result | Constrained by site access / Linear trade sequence mean delays cascade. | Fabrication in parallel, but risk of two clocks (project vs factory) collide; expediting becomes the norm. | Manufacturing-first logic / Takt times create flow efficiency across tiers; predictable cycle times and release dates. |
| Payment Rhythm | AIA Schedule of Value | Production deposit, tied to delivery, and installation | Deposit, Delivery, and Installation |
| Result | Monthly on-site progress billing + retainage / Cash follows labor; incentives favor slow, claim-driven progress. | Mixed cadences; cash conversion uncertain; disputes over what “percent complete” means for products | Cash conversion cycle is forecastable / Alignment with production gates and logistics. |
| Unit of Time | Man-hour / Trade day / Weather day | (mixed) | Cycle time (production); Lift window (site) |
| Result | Effort measured, not flow; hard to benchmark across jobs. | Factory cycle times exist but don’t govern the project. | Throughput is the KPI / Site becomes a paced installation event. |
| Buffer Window | Contingency | (mixed) | Yard/storage buffers & Schedule float |
| Result | Effort measured, not flow; hard to benchmark across jobs. | Variability absorbed in planned buffers, not the critical path |
Labor
| Engineer to Order (ETO) | Current awkward hybrid | Configure to Order (CTO) | |
|---|---|---|---|
| Guiding Principle | Hierarchy, by trade | Hybrid | Holacratic, by product |
| Root | Skilled labor moved through a confined space | Difficulty in concentrating value in products | Product-centric decentralization / Skill organized offsite around product lines |
| Concept of Operation | On-site construction | “Indoor Construction” | Manufacturing |
| Result | Sequential mobilization of trades / Efficiency limited by coordination & space. | The “factory” mimics site logic indoors, with trades still sequential. | Efficiency from repeatable flow and takt. |
| Enterprise Planning | Design / Bid / Build | Same | Just in Time |
| Result | Unique mobilizations, per sites, per project | Same | Stationary Labor and predictable cycle times. |
| Organization | Subcontractors assigned specification sections | Same | Supply Chain (Tier 1, 2, 3 suppliers) |
| Result | CSI MasterForm Spec Divisions claimed per trade | Same | Labor planned by product; focus on throughput |
| Training & Credentialing | Apprenticeships, licenses. | Ad-hoc factory upskilling | Lean certifications |
| Result | Deep craft expertise; limited transferability across projects. | Productivity varies; no industry-recognized credentials. | Portable skills; labor pool becomes scalable and mobile. |
| Labor Relations | Trade unions, collective bargaining per trade | Factory-based | |
| Result | Protection of scope, adversarial to efficiency. | Same | Aligned to manufacturers’ output goals. |
Building Design
| Engineer to Order (ETO) | Current awkward hybrid | Configure to Order (CTO) | |
|---|---|---|---|
| Guiding Principle | Composed, from scratch | Hybrid | Configured, from a kit of parts |
| Root | Invent and detail bespoke solutions | Adapt production into project-driven frames. | Assemble from standardized modules and interfaces |
| Project Starting Resources | Norms & Standards | Precedent Products | Catalogs & Standard Interfaces |
| Result | Require all assemblies and junctions to be designed, per project | Same | Predefined in a products (before project start) |
| Lead Role | Architect | Architect | Configurator |
| Result | Define all assemblies, per project | Same | Selects out of catalogs |
| Software | Drafting | Building Information Modeling (BIM) | Configurator |
| Result | Representational / Requires skilled interpretation | Representational-Simulation hybrid / Assemblies poorly defined | Predetermined elements & limited arrangements |
| Coordination form | Coordination Meeting (Vellum overlays) | Clash Detection | (Irrelevant.) |
| Timing | Early, often, labor-intensive, error-prone | Delayed, usually during technical checks | Pre-engineered, pre-resolved |
| Locus of Coordination | Firms’ Detail Library | Firms’ BIM library | (Irrelevant.) |
| Result / Consequences | Require all products and interfaces to be designed, per project | Product catalogs & BOMs (with coordination embedded) | |
| Unit of Data | Line | Parameter | Product Family |
| Composition | Construction Documents | Federated model | (Irrelevant.) |
| Designer Focus (and Liability) | All scales | All scales | Highest scale (only) |
| Result | Broad, with fragmented responsibility | Same | Work and liability are clear, bounded. |
| Unit of Budget | Dollars | Dollars | Connections |
| Result | Line items, service, and bespoke solution is tracked in financial terms | Favor product interfaces, others must be made under unpredictable field conditions. | |
| Unit of Progress | Drawing template revision | Same | Catalog version |
Project Delivery
| Engineer to Order (ETO) | Current awkward hybrid | Configure to Order (CTO) | |
|---|---|---|---|
| Guiding Principle | Onsite orchestration | Factory parallelism | Platform interoperability |
| Each trade to be managed, work intertwined | Multiple production spaces, some parallelism, but still locked CSI MasterFormat silos | Pre-assembled poducts installed on site, repeatable integration | |
| Paradigm | Construction | Construction | Design for Manufacture & Assembly |
| Process | Commodities converted to products, onsite | On site construction sped with indoor construction methods | Fabrication and assembly done offsite, installation only onsite |
| Delivered Elements | Commodities | Commodity-product blend | Large products |
| Examples | 2x4s, bricks, wire, pipes, windows | Some pods; products with highest concentrations of value | Pods, panels, mods, etc. |
| Primary Value Stream | Jobsite | Blended | Assembly Line |
| Locus of value increase | Single production location, coordinated by project docs | Same | Multiple production facilities coordinated by demand |
| Waste Handling | Dumpsters | Dumpster | Factory-based recycling |
| Reuse Streams | Salvage | Same | Factory-based recycling |
| Locus of value capture | Architectural salvage stores or recycling facilities | Same | Secondary market for resale of pods, panels, etc. Active parts marketplaces |
| Logistics & Supply Chain | Ad hoc and episodic, compounding delays feel chaotic | Same | Integrated, predictable, scaled |
| Result | Delays, conflicts, and excess carrying costs from ad hoc deliveries. | Dependent on logistics plan, leading to variability and risk | Logistics become standardized infrastructure, not a project problem. |
| Installation Method | Trade-by-trade onsite installation | Craned modules/panels treated as subcontracted scopes | Systemic, Fungibile, pre-engineered “plug-in” installation the norm |
| Result | Extended timelines and coordination as multiple trades work sequentially | Same | Rapid plug-in installation with minimal onsite labor — predictable schedules and safer sites. |