Lessons from Brian Potter

Lessons from Brian Potter

Brian Potter is a structural engineer who worked at the construction startup Katerra and is now a Senior Infrastructure Fellow at the Institute for Progress. He writes the Construction Physics newsletter about why building is slow and expensive, and is the author of The Origins of Efficiency. — Construction Physics: "Why Do We Need Infrastructure Policy?" (Brian Potter).

Part 1: The Puzzle of Construction Productivity

1. On Construction Costs: Potter: "construction rarely gets any cheaper over time, and construction costs tend to rise at or above the level of overall inflation." — Construction Physics: "Construction Costs Rarely Fall" (Brian Potter).
2. On Productivity Trends: Potter: "in the field of construction we find that productivity tends to at best stay constant, and at worst decline over time." — Construction Physics: "Construction Costs Rarely Fall" (Brian Potter).
3. On Why Cost Is the Metric: Potter prefers cost as a measure of progress because "we basically care about more abstract measures like productivity to the extent that they're a proxy for costs." — Construction Physics: "Construction Costs Rarely Fall" (Brian Potter).
4. On Hours Per Home: Potter: "the number of hours required to construct 100 square feet of single family home has slightly increased over the past 50 years." — Construction Physics: "Construction Productivity: Structural Steel" (Brian Potter).
5. On Measuring Steel Erection: Potter chose structural steel erection because "the output of this task (a structural steel frame) doesn't change substantially over time." — Construction Physics: "Construction Productivity: Structural Steel" (Brian Potter).
6. On Quality Versus Productivity: Potter asks: "If people are spending slightly more hours to build a much better product, has productivity really stagnated?" — Construction Physics: "Construction Productivity: Structural Steel" (Brian Potter).
7. On the Empire State and the World Trade Center: Potter: "On every productivity metric - tons per crane, tons per worker, square feet per crane, square feet per worker - the World Trade Center was significantly worse than the Empire State." — Construction Physics: "Construction Productivity: Structural Steel" (Brian Potter).
8. On Process Change: Potter: "Anything that requires the slightest bit of process change faces an enormous uphill battle that mostly doesn't get easier or gain momentum." — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
9. On Evolutionary Change: Potter: "innovation in the construction industry tends to proceed one tiny, evolutionary change at a time." — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
10. On Unclaimed Rewards: Potter on the claim that construction is too traditional: it is "a high dollar value, low profit margin, highly competitive industry - the potential rewards for someone who can find a cheaper, more efficient way of doing things is enormous." — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).

Part 2: Lessons from Katerra and Prefabrication

1. On Katerra's Origins: Potter: "Katerra was originally founded as a supply chain and logistics company." — Construction Physics: "Another Day in Katerradise" (Brian Potter).
2. On Specifying Products: Potter on why the first Katerra model stalled: "architects and designers weren't willing to specify Katerra's products, they wanted to use what they were familiar with." — Construction Physics: "Another Day in Katerradise" (Brian Potter).
3. On Product Development: Potter: "The product development effort simultaneously felt both enormous and chronically understaffed." — Construction Physics: "Another Day in Katerradise" (Brian Potter).
4. On Prototypes: Potter: "Products would spend months or years in various stages of design without ever so much as a prototype being constructed." — Construction Physics: "Another Day in Katerradise" (Brian Potter).
5. On Factory Economics: Potter: "the economics of factory production still hold - making the numbers work requires maximizing your factory's production volume." — Construction Physics: "Another Day in Katerradise" (Brian Potter).
6. On the CLT Bet: On Katerra's heavy investment in cross-laminated timber, Potter says: "The problem is that once that decision was made, it was hard to change direction." — Construction Physics: "Another Day in Katerradise" (Brian Potter).
7. On Acquisitions: Potter on Katerra's acquisitions: "it also meant Katerra often had trouble operating as a single, unified whole". — Construction Physics: "Another Day in Katerradise" (Brian Potter).
8. On Startup and Bureaucracy: Potter: "In some ways Katerra had the worst aspects of both a young, nimble startup, and a large, entrenched bureaucracy." — Construction Physics: "Another Day in Katerradise" (Brian Potter).
9. On Slow Iteration: Potter: "Things that could have been tested in a single weekend by a small, scrappy company would drag on for months at a time." — Construction Physics: "Another Day in Katerradise" (Brian Potter).
10. On Working at Katerra: Potter: "I worked at Katerra for 2.5 years, from early 2018 to the end of 2020, and had a first-hand look at how a company that seemed so promising ended up where it did." — Construction Physics: "Another Day in Katerradise" (Brian Potter).

Part 3: The Mechanics of Efficiency

1. On the Model T: Potter: "The Model T would change the world, both by making the car a ubiquitous feature of American life and, more subtly but no less significantly, showing what could be achieved with large-volume production and a cascading chain of improvements." — Construction Physics: "Ford and the Birth of the Model T" (Brian Potter).
2. On Repeated Steps: Potter on Ford: "Since any production step would be repeated millions of times, it was worth carefully studying even the smallest step for possible improvements." — Construction Physics: "Ford and the Birth of the Model T" (Brian Potter).
3. On Continuous Improvement: Potter: "This resulted in an environment of continuous improvement, where processes were constantly experimented on, tweaked, ripped out, and replaced with better ones." — Construction Physics: "Ford and the Birth of the Model T" (Brian Potter).
4. On Precision Parts: Potter on the assembly line: "This entire chain of improvements was itself made possible by the development of precision-machined parts." — Construction Physics: "Ford and the Birth of the Model T" (Brian Potter).
5. On the Assembly Line: Potter: "The ultimate example of this environment of constant tinkering is the assembly line, which took years of experimentation to fully work out and required restructuring almost all of Ford's operations." — Construction Physics: "Ford and the Birth of the Model T" (Brian Potter).
6. On Building Size: Potter: "we see few economies of scale at the level of individual buildings - a large building is only marginally less expensive on a per-square foot basis than a small building is." — Construction Physics: "Why Are There so Few Economies of Scale in Construction?" (Brian Potter).
7. On Large Builders: Potter: "Large volume builders use substantially the same methods of construction that small volume builders do, and do not in general produce buildings more cheaply." — Construction Physics: "Why Are There so Few Economies of Scale in Construction?" (Brian Potter).
8. On Competitive Bidding: On the largest homebuilders, Potter says "cost control is achieved via competitive bidding, not by taking advantage of any type of high-volume production method". — Construction Physics: "Why Are There so Few Economies of Scale in Construction?" (Brian Potter).
9. On Industry Size: Potter: "By market cap, the largest US construction company is smaller than the 15th largest mining company". — Construction Physics: "Why Are There so Few Economies of Scale in Construction?" (Brian Potter).
10. On Economies of Scale in Steel: Potter on steel: "Steel production was subject to very large economies of scale: the larger your blast furnaces, and the more Bessemer converters and open hearth furnaces you operated, the cheaper making steel became." — Construction Physics: ""No inventions; no innovations," a History of US Steel" (Brian Potter).

Part 4: Regulation and Environmental Review

1. On What NEPA Requires: Potter: "NEPA does not require environmental impacts be limited, only thoroughly documented through a specific process." — Construction Physics: "How NEPA Works" (Brian Potter).
2. On Predictability: Potter: "NEPA doesn't create predictability. In fact, it greatly reduces predictability and increases coordination cost and risk, because it's so unclear what's needed to meet NEPA requirements." — Construction Physics: "How NEPA Works" (Brian Potter).
3. On Risk Reduction: Potter: "Agencies are forced into risk-reduction strategies that at best require spending significant time and resources to defend against possible litigation, and at worst mean projects don't happen at all." — Construction Physics: "How NEPA Works" (Brian Potter).
4. On an Indirect Effect: Potter: "To the extent that NEPA does result in reduced environmental impacts, it seems like an indirect effect of making doing anything procedurally costly." — Construction Physics: "How NEPA Works" (Brian Potter).
5. On Impact Statements: Potter describes environmental impact statements as ones "which can be thousands of pages long and take years to prepare, and must be completed before the project can start". — Construction Physics: "How NEPA Works" (Brian Potter).
6. On Government Process: Potter: "the thing that NEPA does create directly - additional government process - is something we want less of." — Construction Physics: "How NEPA Works" (Brian Potter).
7. On Infrastructure Policy: Potter on his work at IFP: "At a high level, that work is figuring out which things we should be building, and how we can make building those things easier." — Construction Physics: "Why Do We Need Infrastructure Policy?" (Brian Potter).
8. On Infrastructure Failures: Potter: "the nature of infrastructure makes it extremely susceptible to a variety of market and coordination failures". — Construction Physics: "Why Do We Need Infrastructure Policy?" (Brian Potter).
9. On Coordination: Potter: "One of the government's most important functions is to solve coordination problems and address market failures". — Construction Physics: "Why Do We Need Infrastructure Policy?" (Brian Potter).

Part 5: Historical Infrastructure and Industrialization

1. On Chasing Old Technology: Potter on US Steel: "US Steel was consistently behind on adopting the latest steelmaking technology, and was often forced to license technologies from more forward-looking companies". — Construction Physics: ""No inventions; no innovations," a History of US Steel" (Brian Potter).
2. On Shipbuilding's Long Struggle: Potter: "U.S. shipbuilders have struggled to compete in the commercial market since roughly the Civil War." — Construction Physics: "Why Can't the U.S. Build Ships?" (Brian Potter).
3. On Shipbuilding Costs: Potter: "The situation we face today, with U.S. ships costing at least twice as much to build as ships built elsewhere, is not a recent development; it's been the norm for at least the past 100 years." — Construction Physics: "Why Can't the U.S. Build Ships?" (Brian Potter).
4. On the Empire State Building: Potter: "The Empire State Building is often the first example reached for by those nostalgic for an America that builds." — Construction Physics: "Building Fast and Slow, Part 1" (Brian Potter).
5. On the World Trade Center: Potter: "The World Trade Center, on the other hand, was continuously mired in controversy and difficulty." — Construction Physics: "Building Fast and Slow, Part 1" (Brian Potter).
6. On What Slowed the Project: Potter: "It was slowed by lawsuits from displaced residents, political opposition from both New York and New Jersey, difficult site conditions, union strikes, and problems with its novel building systems and construction methods." — Construction Physics: "Building Fast and Slow, Part 1" (Brian Potter).
7. On Scale and Cost: Potter on the Empire State Building's on-site rail system: "Only the enormous size of the building made such a system cost effective." — Construction Physics: "Building Fast and Slow, Part 1" (Brian Potter).
8. On Repetition: Potter: "repetitiveness shouldn't be confused with ease of operation". — Construction Physics: "Building Fast and Slow, Part 1" (Brian Potter).
9. On an Assembly Line of Standard Parts: Potter reports that the Empire State Building's builders described their process as like "an assembly line of standard parts". — Construction Physics: "Building Fast and Slow, Part 1" (Brian Potter).

Part 6: Systems Thinking and Complexity

1. On Cost Distributions: Potter: "a project that goes extremely well might come in 10 or 20% under budget. But a project that goes badly could be 100% over budget or more." — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
2. On Upside and Downside: Potter: "The upside of any given project is usually a single-digit profit margin. But the downside is “whatever your company is worth”." — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
3. On Beta Testing: Potter: "A building, for the most part, can't be beta-tested to work the bugs out." — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
4. On Undoing Work: Potter describes construction as "building mostly unique things each time" and "consisting of tasks that are costly to undo". — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
5. On the Cost of Innovation: Potter: "An innovative construction method would thus not have to just be cheaper, it would have to be SO much cheaper that it would have to bring the cost of the entire building down by 9%." — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
6. On Old Ideas: Potter: "When researching construction, you invariably discover that any new or innovative idea has actually been tried over and over again, often stretching back decades." — Construction Physics: "Where Are The Robotic Bricklayers?" (Brian Potter).
7. On the Appeal of Automation: Potter: "masonry seems like the perfect candidate for a task to hand over to a machine, and it's something people have been attempting for over 100 years." — Construction Physics: "Where Are The Robotic Bricklayers?" (Brian Potter).
8. On Robots That Never Left the Lab: Potter on academic masonry-robot research: "Most didn't get past the level of technical descriptions", and "essentially no progress was made beyond that." — Construction Physics: "Where Are The Robotic Bricklayers?" (Brian Potter).
9. On Hardware Timelines: Potter on the Hadrian bricklaying system: "Hadrian has been in development since 2006, and has only recently started to be used on commercial jobsites". — Construction Physics: "Where Are The Robotic Bricklayers?" (Brian Potter).

Part 7: Housing Costs and NIMBYism

1. On the Physical Structure: Potter: "for most American housing, the largest cost comes from building the physical structure itself." — Construction Physics: "What Makes Housing So Expensive?" (Brian Potter).
2. On Dense Cities: Potter: "in dense urban areas — the places where building new housing is arguably most important — this changes, and high land prices driven by regulatory restrictions become the dominant factor." — Construction Physics: "What Makes Housing So Expensive?" (Brian Potter).
3. On Land Prices: Potter: "over 100 million Americans live in places where most of the cost of residential property comes from the land itself." — Construction Physics: "What Makes Housing So Expensive?" (Brian Potter).
4. On Zoning and Building Costs: Potter says people concerned about housing should pay attention to zoning, "But they should not neglect the physical costs of building homes, which are overall more important." — Construction Physics: "What Makes Housing So Expensive?" (Brian Potter).
5. On Reducing Costs: Potter: "Unfortunately, as we'll see, reducing these physical costs is far from straightforward." — Construction Physics: "What Makes Housing So Expensive?" (Brian Potter).
6. On Building Cars and Houses Alike: Potter: "For decades, people have tried to bring mass production methods to housing: to build houses the way we build cars." — Construction Physics: "Why Levittown Didn't Revolutionize Homebuilding" (Brian Potter).
7. On Levittown's Window: Potter: "Levitt's model of large-scale, efficient homebuilding using mass production-style methods worked for a brief window in the 1950s". — Construction Physics: "Why Levittown Didn't Revolutionize Homebuilding" (Brian Potter).
8. On Temporary Conditions: Potter: "Levittown was ultimately a response to a temporary set of housing market conditions, not the herald of a new, better way of building." — Construction Physics: "Why Levittown Didn't Revolutionize Homebuilding" (Brian Potter).
9. On Pushing Past the Economics: Potter: "And even at its peak, Levitt likely pushed large-scale building beyond what could be justified on pure economic terms." — Construction Physics: "Why Levittown Didn't Revolutionize Homebuilding" (Brian Potter).

Part 8: The Path Forward for Building

1. On Addressing Risk: Potter: "any new system that would involve a substantial change to the process needs to be delivered in a way that can address these issues of risk." — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
2. On Internalizing Risk: Potter: "Another is to internalize the risk yourself - instead of selling your new amazing system, use it to build buildings yourself". — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
3. On a Less Fragmented Market: Potter: "This is also something that might be improved by a less fragmented market - fewer, larger players that could more easily absorb the potential risk". — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
4. On Management Tools: Potter: "Because monitoring progress is so important, contractors seem fairly willing to adopt tools that make it easier to do this." — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
5. On Who Captures the Upside: Potter: "the person specifying a new system won't capture the upside from actually using it". — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
6. On the Risk Penalty: Potter: "A new or innovative system that involves changes to the process thus incurs a significant risk penalty that would likely exceed the expected benefits of the innovation." — Construction Physics: "Why It's Hard to Innovate in Construction" (Brian Potter).
7. On Machines and Short Walls: Potter on the SAM bricklaying robot: "It can perform well on very long stretches of wall, but on short walls it has trouble outperforming human masons." — Construction Physics: "Where Are The Robotic Bricklayers?" (Brian Potter).