The case of AS Kodumaja: How timber apartment buildings rose to greet the sky
Source: Äri-IT, spring 2022
How do you become an innovation leader in Scandinavia that is closely watched even by older and bigger competitors? To start with, you need to combine the desire to learn, discipline, and a clear and simple company culture, then merge all of this with the digital realm. And that is precisely what AS Kodumaja did.
Andrus Leppik, head of AS Kodumaja.
Photo by: Kristjan Teedema / Tartu Postimees
Back in 1996, the company Kodumaja, a timber house manufacturer, was facing a critical situation. The first demo building had been erected at the site of the current K-Rauta hardware store in Tartu, but had not been met with the expected fanfare. More precisely: the factory was not receiving enough orders. Lembit Lump, one of the founders and the first CEO of Kodumaja, was already thinking about how to tell his parents that the money they had received from the sale of their house, which he had borrowed for the company, had melted away like spring snow.
The business idea seemed great on paper: timber house parts would be produced in a factory where it is warm and dry so that nothing could sprout or rot. Then the house would be assembled on the site with what was then phenomenal speed – three months altogether. The problem, however, arose from too much optimism in one area: there was virtually nobody who could and would pay for the whole house at once at the time. Family men generally built their own houses. Saved up money and got to building… over 20 years.
Kodumaja also tried markets further afield, but could manage to establish a foothold in neither Germany, Spain, or France.
THE NORDIC LIFELINE
The team at Kodumaja was starting to lose faith in the success of their business, when fortune brought them together with two adventurous Norwegian engineers, who stated that while they were not interested in private houses, they did have a plot of land available for timber-framed apartment buildings – perhaps Kodumaja could try their hand at that instead! The proposal certainly seemed a bit crazy, since, back then, the proper way to assemble apartment buildings in Estonia was from reinforced concrete slabs, not timber. But in reality there was no choice.
The spatial elements that would make up the apartments in the buildings were prefabricated in Tartu. They were then loaded onto large trailers and hauled across the Arctic Circle to northern Norway. It was there on the shores of the Atlantic Ocean, in Bodø, a town with a population of 20,000, that the story of Kodumaja as we now know it began. Today, Kodumaja has become an innovation leader in its field in Scandinavia, and what started as a small house factory with a few dozen workers has grown into a corporate group that employs 450 people. The fruits of their labour can often be seen on the Tartu–Tallinn highway when a convoy of towering trucks, each pulling a trailer loaded with a room element or two, is making its way to the port of Paldiski to board a ship.
It was also in Bodø that the current head of the company, Andrus Leppik, who was a young engineer in charge of construction at the time, gained his first experience of building abroad with Kodumaja. The company’s top management travelled to Norway with their builders to learn the rules of the game in Scandinavia, which was still uncharted territory for Estonians back then. The apartment buildings were erected successfully, are still standing strong, and the residents are happy. To date, Kodumaja Group has built a total of nearly 9,400 apartments in the Nordic countries using this unconventional method of construction, making it the largest Estonian housing developer in the Nordic region.
Nevertheless, it took years before Norway and the other Nordic countries came to embrace Kodumaja. This was because no one wanted to plunge headlong into unknown waters: Norwegian real estate developers watched the Estonians for several years to see how they would fare. Whether they would keep their word. What the quality of their work is like. And how sustainable they are. The company survived this period, and, in the year 2000, their business really began to bloom in Norway. In 2007, they constructed their first apartments in Denmark, and, in 2013, finally made their mark in Sweden as well.
Over these years, Kodumaja found itself a proper niche, becoming one of the most innovative home-builders in the Nordic countries. Prefabricated apartment blocks, true, but not the identical-looking barrack-like boxes that had previously been the norm in the region. Balancing economy with architectural appeal, each home built by Kodumaja is like a tailor-made suit. The quality of their work is evidenced by numerous design awards received both for blocks of flats and public buildings, such as care homes and hotels.
Kodumaja was the first company in Europe to literally raise timber apartment buildings up to greet the sky. While previous attempts at such construction involved buildings of up to only three storeys high, Kodumaja’s engineers, in collaboration with their clients, managed to develop four-, five-, and even six-storey timber apartment buildings that were also up to code. What’s more, Kodumaja even set a world record when they completed the world’s tallest (52 m) timber building – 14 storeys high – in Bergen, Norway in 2015. In addition, Kodumaja’s engineers have developed earthquake-proof and zero-energy-loss homes. And they are far from running out of steam, as they also expanded to the Dutch market last autumn, where they have again been offering all of the above.
CLEAR AND SIMPLE RULES
So what drove the Norwegians to take such a risk those 26 years ago by commissioning several apartment buildings from an unknown company from southern Estonia that had never done anything like this before?
‘No doubt the Norwegians saw a business opportunity,’ Andrus Leppik reckoned. ‘But it was a leap of faith for both parties. We switched from private houses to apartment buildings. And chose the completely foreign land of Norway over our home market. English over Estonian.’ Leppik added: ‘But when life presents you with an opportunity, it’s up to you to decide whether to take it or not! And we took it.’
Admittedly, Kodumaja was not flying totally blind. Namely, in the 1990s, Germany began to build new settlements for Russian troops returning from there to Russia. They hired a group of Finns as the main contractors, who in turn hired Estonians as subcontractors. Among them was Andrus Leppik. ‘It was there that I first came to an understanding of construction supervision, process management, rhythm, and discipline,’ Leppik said. ‘For example: during the construction of a strip foundation, you would measure the distance of the rebar from the formwork, and if it was even a little shorter than specified, then you would not pour even a single drop of concrete in the formwork. Around 20 to 30 concrete drums would have to wait and keep turning until the issue was fixed.’
The rigour and accuracy in regards to staying focused and honouring what has been agreed, which stems precisely from there, can be seen at every step of the process at Kodumaja. Furthermore, the company values clear and simple rules. ‘Stories certainly have their uses, but it is not efficient to tell stories to everyone. A company needs to have everything written down simply and clearly, so that everyone understands what their role is and what the target is, where things are left at their discretion, and what their responsibilities and daily duties are,’ Leppik explained.
KODUMAJA – AN IT COMPANY WITH A CONSTRUCTION TWIST
Last year, the company made another great leap forward with the acquisition of a robotic and automated line for the production of wood-based panels, which only requires minimal manpower to operate. However, such a production line needs machine-readable drawings. ‘A computer doesn’t do what you want. It does what you tell it to do,’ Leppik noted. ‘The world of figuring out how to give computers professional and high-quality commands is highly fascinating.’
The new robotic and automated production line is another step on the road to digitisation, on which Kodumaja set out in earnest in 2008. Since then, the company has continuously been working on the development of a digital operations and information management environment called eKodumaja. This efficient system makes process management, cross-functional information exchange, along with many other areas, as paperless as possible. With an in-house IT team the size of a small IT company, Kodumaja is now an IT business as much as a construction business.
The digital operations and information management environment is being developed around two principles: to ensure that any data only has to be entered once, after which it can be accessed elsewhere when necessary, and to minimise the need for paper. Everything else follows from the above.
The latest hot topic at Kodumaja is building information modelling. This involves defining certain parameters for a construction project – whether architectural or structural, or a part of the piping and cabling systems – where a 3D model of the building is created based on the initial data. This can then be used to determine the amount of materials and work required, the specifications, the time schedule, and the cost of the project.
For some time now, the company has been specifically focusing on getting eKodumaja and other necessary IT applications to work with these models. As an example of how construction has changed thanks to these developments: when Kodumaja’s assembly team is travelling from Tartu to a worksite in, say, northern Norway or central Sweden, the managers and their teams can open the app on their smartphones during the long journey and see exactly what needs to be done. Each node can be inspected by zooming in and out. This way, when the team arrives at the destination, they are better informed and ready to get to work.
INTEGRATION OF EKODUMAJA WITH OTHER SOFTWARE
In addition to eKodumaja’s developments, suitable external solutions are also being integrated. When a 3D model of a building has been uploaded to eKodumaja, you can inspect the completed building using, for example, the Dalux application. Take photos, generate summaries, add notes, and report on what’s been done. ‘This shows how the digital world has pulled us in and vice versa,’ Andrus Leppik noted.
Indeed, digitisation in the construction industry is progressing at a breakneck pace. Whether in construction supervision with a myriad of photos or in the uploading of data on the materials used. The application even manages builders’ permissions to use one or another material in different countries.
The business management software, too, had to be compatible with eKodumaja, meaning a truly bespoke solution was needed. The company chose BCS Itera as its partner for the deployment of the business management software, and the process has been going on for a year now. ‘Every month, we hold a meeting between the management of Kodumaja and BCS Itera to find out how things are progressing and what the next steps will be. There has been extensive honing and debating to ensure that the new business management software fits Kodumaja to a T! But if we compare these discussions to where things were a year ago, there’s no comparison – it’s been a highly constructive collaboration,’ Leppik said.
He concluded: ‘In the end, the key thing is to be a reliable partner. This starts with understanding what you are doing; in looking around with open eyes and incorporating everything that’s valuable into your management system. When you are digitising, you are thinking about efficiency in the broadest sense. Knowing how to use digital tools is elementary – they’re just modern tools, after all! If you don’t know how, don’t want to, or can’t be bothered to use the tools, then don’t expect to see any change either. In that case, you will have made an expensive investment, but you will still be right where you started.’
KODUMAJA
Kodumaja was previously running Microsoft Dynamics AX resource planning software, but decided to turn to BCS Itera to make the switch to Microsoft Dynamics 365 Business Central in 2020. Kodumaja makes use of a large number of the modules of the integrated solution, including the finance, purchasing, sales, warehouse, and payroll and human resources management modules. In addition, they have had a sophisticated interface developed for the eKodumaja application.