Annual review | 2017

Fira’s direction

From the CEO

Last year was again a time of strong development and growth for Fira. Net sales increased by 29 per cent to EUR 217.4 million. Earnings before taxes amounted to EUR 5.5 million. The profit from construction operations amounted to EUR 8.1 million, or approximately 4.3 per cent of net sales. Return on equity was 85 per cent.

Accident frequency rate decreased to 12.5 (17.6) accidents per one million hours worked. We will continue our systematic work to significantly decrease the number of accidents also this year.

The Group’s business comprises of construction and the commercialisation of new service concepts and smart business solutions. We want to be a trailblazer and valued by our customers in all construction categories. Construction is the cornerstone of our business, laying out an excellent foundation and interface for the built-up living environment. It thereby facilitates the development of scalable service concepts and information-based smart solutions for the Finnish and international markets.

We invest in accelerating development

We believe that value will accumulate increasingly in various platforms in the future. In order to accelerate the development, we have launched two significant Tekes-funded projects with a combined value of approximately EUR 10 million. We are also recruiting several specialists of new kinds, such as experts in user experience, artificial intelligence, and software specialists. At the same time, we will develop the systematics and cooperation models of innovation activities with Finnish and international partners.

We revised the Group’s structure and management last year to support our development. The construction business was centralised in Fira Oy, and Topi Laine, one of our key players, was appointed as the company’s CEO. The role of CFO Kimmo Kärkkäinen was expanded to cover Groupwide operational management. I personally will focus especially on promoting the scaling-up of operations, internationalisation and smart business as well as leading the Group in the future. Our goal is to have a positive impact also globally and to create an international phenomenon in the future.

Towards sustainable living

We want the impact of people to increase in the built-up environment. New technologies and business models work with and for the benefit of people. Our vision about sustainable living is an expression of our will and direction. It changes the world into a better place and gives room for people’s creativity already along the journey. The information-based solutions we have developed decrease wastage during design and construction, improve productivity and are environmentally friendly. Our solutions for housing and living, on the other hand, are sustainable and have longterm effects. Examples of our development work include cooperative communal housing, utilisation of renewable and distributed energy, group construction, modular construction as well as software and services that support working and residents’ choices.

New technologies, service platforms, user-oriented applications, digitalisation and attitude change make our living environment more democratic, serving people, society and nature. At Fira, we are taking this change forward and call it the Building Movement.

We believe that we will reach an international position of significant impact and value within five years from now. The future we are pursuing cannot be built alone, and we want to be open towards all parties interested in cooperating with us.

We estimate that our net sales will exceed EUR 250 million this year and that we will succeed in key development work. We also estimate that our profit will improve.

I would like to thank our customers, all Fira employees and our partners for their precious input and collaboration. Together, we are building an astonishing future.

Jussi Aho, CEO of Fira


Fira in brief

Cities grow and change with people, on their residents’ conditions. Fira is a growth company that wants to be part of this megatrend, modernising the construction business and developing it towards customer-centric service business.

Fira group consists of Fira Oy, which serves as the main contractor in a wide range of new build, renovation and modernisation construction projects, Fira Palvelut Oy, which develops new service concepts and digitalises construction business, and Smart Solutions Business, which strives for completely new business models.

Group’s net sales and number of personnel have grown profitably every year since 2009, and similar growth is expected to continue.

Key figures - Fira 2017


Fira builds a better society and focuses on people

Fira suuntaa kohti ihmistä
People want to lead smooth, everyday lives at home and work. Digitalisation, new technologies and the platform economy facilitate services and smart solutions that make life easier for people. Being a trailblazer in construction and our service-oriented operating method have provided us with an understanding of the needs of customers and professionals.

We digitalise information and release it to flow among all parties. This way, we can develop information-based solutions to make the work of professionals easier, reduce waste and loss of planning and construction time, and increase the efficiency of material and time usage. At the same time, we are protecting the environment and improving productivity.

Accelerating urbanisation brings people together, which creates new opportunities for community spirit and building living environments that meet the requirements. We want to bring people with their dreams and needs to the core of construction. We develop services and solutions relating to housing and living, allowing people to influence their living environments themselves. This way, we can offer healthier, more affordable and more climate friendly options to our customers.

Towards sustainable living. Building movement.

Our vision for sustainable living and wellbeing gives direction for the development of our business. It guides us in releasing the flow of information and in developing a platform that facilitates smart solutions. This way, we can increase people’s freedom of choice, decrease the need for owning and help people to exchange services within the community. Examples of our development work include communal housing, modular construction, utilisation of renewable and distributed energy and new software supporting working and the customers’ choices.

As a trailblazer, we will continue to question customary habits, launch new alternatives and build a better society. An operating model based strongly on information can also be better scaled internationally. We cooperate transparently, build trust across borders and always care for people.

The motivation and well-being of Fira’s personnel and developing their competence are key cornerstones of our success. By strengthening our appeal as an employer and partner, we are able to meet the increasingly diverse recruitment needs of our growing business and new business areas.

New technologies, user-oriented applications, digitalisation and attitude change make construction more democratic, serving people, society and built-up environment. At Fira, we are taking this change forward and call it the Building Movement.


Towards the realization of dreams

Fira suuntaa kohti ihmistä
Emma had an idea of a dream home. However, she did not have the means to make her dream come true. Why couldn’t housing-related matters be as easy as ordering food from Wolt or a ride with Uber, Emma thought. She was longing for a personalised floor plan, a bathroom and a kitchen that felt like her own, and a good location at a price she could afford. This felt impossible as a whole.

Yet, here she is four years later in 2023. She is living in an almost perfect one bedroom apartment in New York.

Towards smarter work

While Emma was wrestling with her housing dreams, Antti the developer was thinking about ways to make customers’ wishes come true in a better way. It was so often that he settled for standard solutions due to financial constraints set by the owner. As an enthusiastic renovator and interior decorator, he understood the residents’ pain. Why did you have to wait so long for a new home to be completed? Why was the freedom of choice limited? Antti wanted smarter construction.

There were already signs of something better. He saw advertisements of Fira’s two-week pipeline renovation on Facebook. He made his own work more efficient with digital tools. If only he could boost all operations the same way, Antti thought.

Live wherever you want

The starting signal for the realisation of Emma’s dreams was when she was sent a link by a friend working in a software company. On the site, “Powered by Fira”, Emma was able to view vacant apartments all over the world. She quickly chose New York as her favorite location, zoomed in, looked at the neighborhoods and devoured information about communities forming up in different areas.

Next, the site guided her to financing solutions. She was quickly advised by the correct Fira employee via chat. A community comprising of a couple of city blocks, which Emma was looking at, would be self-sufficient in energy, thanks to Qheat. Any surplus would be sold, which would decrease Emma’s housing costs. Soon, Emma was already making choices concerning the floor plan, surface materials and kitchen. Too good to be true, Emma cheered with her New York friends.

Antti’s situation had also improved over the couple of years. He had boldly encouraged his employer to grasp the new tools, and operations steamed forward with the help of digital management systems. He was posted as a supervisor in New York where a new modular block community was being built. The concept had been created by Fira. The work was organised more efficiently than before, even though the apartments were highly customised.

Comeback of the village community

Year 2023, a bright September afternoon. Antti steps into the courtyard of a new residential area in New York. When listening to the stories of the residents who have settled there, he cannot help but feel that with his work he has genuinely helped people achieve what they want.

Emma meets Antti in the yard. She, too, was able to make her dream come true, even though she did not know how she would be able to do it. When Emma was recently ill for a week, staying home, she got to experience the greatness of the community in full. Thanks to the platform linking the block community, information about the patient was also passed to the retired chef on the second floor, who brought her tea and soup to make her feel better. Health care services were available in the same block, and her two-year-old found family daycare downstairs. The community took care of its own in the same way as a traditional village community, only this time it was made possible by modern technology.


Construction business

Construction is growing and its management is evolving

 

Fira’s year 2017 reached a grand conclusion when the company’s biggest contract agreement of all time was signed in December. Work is about to commence on the Raitinkartano residential and commercial property in Tapiola, Espoo. Its project development was carried out using Fira’s Verstas model.

“This is yet another good example of trust built in the project development phase also resulting in production agreements,” Topi Laine says of the EUR 50 million contract. Laine was previously business director for construction at Fira Oy; in September 2017, he was appointed as CEO of the
company.”

Reforms in organisation and management

Fira Oy’s net sales for 2017 were EUR 187 million. The growth on the previous year was over one-fifth, while profitability remained at the previous year’s good level.

Last year, Fira decided to centralise all construction under Fira Oy, including the pipeline renovation production of Fira Palvelut. At the same time, operations were re-organised to better serve future growth and development opportunities.

“We decided to divide construction into four administrative categories as of 2018. Above all, this change is linked to sharing management responsibility and developing operations. People can work under one or more categories, and synergies are pursued in processes and procurement,” Laine says.

A new management system for construction was also deployed for all projects in 2017. Its idea is to continuously monitor one’s own activities and learn from them.

“Project planning and construction contracts are divided into smaller sub-entities, and afterwards each stage is reviewed together,” Laine describes. “The best lessons learned are deployed as quickly as possible at the next site. In addition, feedback relating to the achievement of qualitative and commercial objectives is reviewed at the management group level.”

All site information in digital format

A very significant development project is the digitalisation of all data moving on sites with 5D technology and the iTWO application. A major objective is to provide the sites with a 360-degree view for use by all site parties. Data stored in a digital format facilitates stronger business intelligence by removing discontinuities between project development and production, making cost estimates more accurate and eliminating inaccuracies from scheduling and procurement. This makes it possible to improve the cooperation between the project parties and the productivity of the project, as well as risk prevention.

Now, we have even better tools for this through an international system partner. The new digital system was piloted in three projects in 2017, and
this year, it is used at the majority of sites.

“Fira has been building a culture of business intelligence for several years, which makes the reform considerably easier. The results of this project will be visible in the form of a clearly better service level for stakeholders already during 2018,” Laine says.


Categories of construction

Modernisation

Rakentaminen - modernisointii

Specialty: Conversion of existing office buildings into modern businesspremises
Interesting right now: With the Fira service model, modernisation projects can be optimised according to the customer’s individual wishes and preconditions. This way, customer value and satisfaction are at the top level.
Example project from 2017: Modernisation of the Iso Paja premises owned by Yle Pension Fund into VR Group’s head office. The project was carried out in tight cooperation with the client, resulting in workplace solutions that support VR Group’s goals and corporate culture.

Business premises

Specialty: New office buildings, parking facilities, industrial premises, care homes, etc.
Interesting right now: Fira’s industrial and logistics concept secured its first international customer in 2017.
Example project from 2017: Lidl’s logistics center in Järvenpää, spanning over 60 000 square meters, has kickstarted Fira in logistics construction.


Homes

Specialty: New owner-occupied and rental homes
Interesting right now: Green tech residential construction solutions are already being tested, and the first concept will be launched during 2018.
Example project from 2017: A-Kruunu’s rental housing project on Tarutie in Kirkkonummi is the first multi-storey building project utilising Fira’s in-house bathroom modules.

Pipeline renovations

Rakentaminen - putkiremontit

Specialty: Pipeline renovations of residential multi-storey buildings
Interesting right now: Improving the customer experience, productivity and process of pipeline renovations continues. For example, there is untapped potential in pre-manufacturing and development of logistics.
Example project from 2017:  The pipeline renovation on Porvoonkatu in Helsinki was scheduled smartly with Fira’s own Sitedrive scheduling software. It took only 6 weeks to renovate 24 apartments, and the inconvenience in habitability to the residents was only for four weeks per apartment.


Fira Modules – From idea to product within a year


The modular construction start-up Tilatra was one of the companies in Fira’s Starters programme in 2016. In 2017, the company changed its name to Fira Modules, and a stackable bathroom module including building services system element that transfers heat, water, air and electricity was elected as its product.

Production and test installations commenced during the autumn, and the first modules were installed in an apartment on Tarutie in Kirkkonummi, Finland, in January 2018.

“We proceeded from idea to production during the first year. The aim is that in 2018, 400 modules will already be completed at the Hämeenlinna plant,” says Sami Purtola, Operations Director at Fira Modules.

Smart homes and future visions

The actual module production and its development are, however, only part of the operations of Fira modules. After all, the aim is to also investigate other concepts associated with the renewal of the construction industry through modules.

The first research object is associated with the technical building systemshaft of the bathroom module. Through this, smart living technology could also be provided to the residents of multistorey buildings. Perhaps in the future a construction company could offer a platform for all smart home services, thereby providing added value to the residents throughout the life cycle of the building?

Another object of research concerns the decentralisation and globalisation of production.

“Cars and planes are manufactured as small components across the world. Why not buildings, too? In order to make it possible to globally decentralise modular construction, shared interfaces and form libraries are needed. Developing and protecting these can generate interesting opportunities for us,” says Ville Wikström, who is in charge of Modules Business.

In general, the aim is to offer modular construction products and services also outside Fira.

“The market has already shown great interest,” Wikström says.


Service concepts

Fira Palvelut will focus on concepts and digitalization

 

“The biggest success of Fira Palvelut in 2017 was the establishment and commercial breakthrough of Fira Ketterä,” says Sami Kokkonen, CEO of Fira Palvelut Oy.

Piloted the previous year, Fira Ketterä is a pipeline renovation product that revolutionises the planning and implementation of piping repairs. The outcome is a smarter renovation for all parties concerned.

Sales were good, and Ketterä’s success helped to return the profitability of Fira Palvelut to the right track. The company took a clear turn to the black after the losses caused by the development investments in 2016.

“Turning the result positive was the key must-win battle of the year. The work proceeded as planned, and the successes boosted our activities further. We can be very satisfied,” Kokkonen comments.

New corporate structure opens doors to international markets

Alongside Ketterä, a single important insight was characteristic of the year for Fira Palvelut. What if other builders were not competitors but potential customers?

The insight resulted in a change in the corporate structure that will separate construction concepts from production. As of the beginning of 2018, the contracting business of Fira Palvelut is being transferred to Fira Oy, and Fira Palvelut Oy will focus on developing new service concepts and digitalising the construction industry.

“The idea was to offer Fira’s best ideas and tools for use by the entire construction industry, and to do it in such a way that Fira will not need to be involved in the practical contracting in all cases. This gives us opportunities for nationwide and even international business,” Kokkonen describes.

The first evidence of this operating method has already been obtained, as distributing the Fira Ketterä project model with local implementation partners throughout Finland began in autumn 2017.

Systematically testing new business ideas

With the change in the corporate structure, Fira Palvelut will enter the year 2018 from a start-up setting. Its net sales will drop to one-tenth of the previous, and with development investments, it will aim at a breakeven result.

Fira Palvelut has an idea bank of dozens of concepts, and systematic testing of its content in the market will now begin.

”The testing process has been carefully considered, pilots have already been sold and the business models are being planned. In the service business, individual value-adding ideas can be very small, even worth just a thousand euros. What is essential is that they can be scaled and replicated,” Kokkonen sums up.


Fira Ketterä expands nationwide

Fira Ketterä is a pipeline renovation product that crystallises eight years of innovation and development work by Fira Palvelut. It revolutionises the project model, scheduling, logistics, customer service and information flows in pipeline renovation. The outcome is a renovation that better meets the residents’ needs with predictable costs and a shorter inconvenience to habitability.

“Fira’s own Ketterä projects are located in the Helsinki metropolitan area, but we get a lot of inquiries from other parts of Finland as well. To respond to the demand, we began to develop a version of Ketterä in which a suitable local partner takes care of the practical implementation,” says Marko Niskanen, the manager in charge of Fira Ketterä.

The project proceeded at a rapid rate: the first Fira Ketterä project using the partner model commenced in Turku at the end of 2017, and projects will begin in Oulu and Rauma in early 2018. The aim is to expand into Sweden in 2019.

Different alternatives are still being tested for the large-scale commercialisation of the concept. In its simplest form, a pipeline renovation contractor could deploy the planning, information work and logistics blocks included in Fira Ketterä, and use these to perform their work more efficiently and with a higher quality.

“A vision at the other extreme is that a housing company carries out the entire pipeline renovation from beginning to end independently with the Ketterä package, hiring suitable parties for the different phases,” Niskanen describes.

Regardless of the implementation method, the goals are set high. The vision is that one half of pipeline renovations in Finland will be carried out using the Ketterä model in 2022.


Fira Kotyo develops housing services for the entire construction industry

A top-level service experience is Fira’s selling point and source of pride. This trump card was taken to a new level in spring 2017, when the operations of Fira Group’s service engineers were centralised in a subsidiary called Fira Kotyo.

Kotyo’s task is to develop the customer experience of construction and investigate new business opportunities relating to housing services.

“Fira’s service engineers deal with the residents of approximately one thousand homes each year,” says Anni Tölli, who is in charge of Kotyo’s business operations. “These contacts should be utilised in the design and sales of user-oriented housing services and service platforms.”

In addition to this, the details of construction-time information models can be applied in the subsequent phases of the building.

“One example of an added-value service could be an electronic apartment maintenance log. It could be customised to remind the user of the need for cleaning, maintenance and repairs, and to assist in procuring these services,” Tölli describes.

A few experiments associated with the new life cycle services were already carried out in 2017. At the same time, Kotyo is productising its current service work.

“When customer service is understood as easily purchased service packages instead of working hours, it is easier to both improve and sell it,” Tölli says. “The aim is that Kotyo’s service expertise could also be offered to the construction industry outside Fira Group as well.”


Smart Solutions

Scalable starups and new development models

 

Fira’s Smart Solutions Business completed the Starters round in 2017, giving four teams an opportunity to reform the construction industry in an agile way as Fira’s independent subsidiaries. The aim was to find new scalable business ideas that could continue as independent companies.

“Two genuine gems were born in the first Starters round, and they will continue as independent companies with big growth expectations. Fira Sitedrive offers a dynamic solution to scheduling problem in construction business. Fira Modules, in turn, represents future way of construction. As for the other two, their expertise and the fruits of their development work have and will be transferred into the group’s other business,” says Henry Salo, who was in charge of the Starters program.

“In the longer term, however, the further acceleration of Fira’s innovation culture may turn out to be the best outcome of the year. We also obtained concrete lessons of how innovations need to be managed and funded.”

Sitedrive grows and has targets abroad

Of the Starters program companies, Fira Sitedrive, a site scheduling and production management system, is the second Starters company to continue business independently. The growth and internationalisation targets are considerable.

Fira Flow developed a service in which construction work providers and workers meet in a new way. Parts of it will be transferred to Fira Ketterä, where they will be utilized to streamline pipeline renovations.

Fira Hive, on the other hand, launched a service that makes sharing an apartment functional by connecting housing and suitable communities. Its yields will be utilized in the further development of consumer services.

A fourth company, Tilatra, was established later as part of the Starters program. It has progressed convincingly in its concept, and the expectations of its development are high. Tilatra will continue to operate as an independent business under the name Fira Modules.

Construction needs business model innovations

Fira wants to reform the operating methods of the construction industry, and the Starters program was perhaps the most visible indication of this in 2017. The key words are digitalisation and platform economy.

“The construction industry needs innovations especially in operating methods and business models, and we at Fira want to be involved in giving birth to them,” says Salo.

“Digital operating models and the platform economy facilitate completely novel operating models in the industry as a whole: interaction between builders and future residents can be closer and genuinely bidirectional, construction companies can consider other construction companies their customers instead of competitors, and so on.”


Fira Sitedrive: Smarter scheduling quickly gains popularity in the construction industry

 

Sitedrive turned out to be the gem of Fira’s Starters program: a functional and scalable solution to customers’ critical needs.

Sitedrive was established in 2016 to develop the software with the same name. Originating in Fira’s Starters program, Sitedrive was initially only used by Fira, but in 2017, we also began to offer it to other builders as planned. At the end of 2017, there were eight customers, 14 projects in progress and approximately 200 registered users.

Sitedrive will now continue as an independent growth company with ambitious goals. The plans also include internationalisation: already now, one of the customers is a Swedish construction company.

Site scheduling: Easier said than done

“In construction, one of the most important individual matters enhancing flow efficiency is doing things at the right time. However, this is easier said than done. A continuously updated schedule is needed, but maintaining one has been considered difficult, especially in construction, where the situation can change rather quickly and the schedule can include thousands of tasks,” says Sitedrive founder Andreas Bergenwall.

”The market lacked a product that would solve this problem well. Sitedrive was created to address this shortcoming. We wanted to offer the construction industry a dynamic scheduling tool that employees, supervisors and business managers could easily use.”

With Sitedrive, the scheduling of construction sites is detailed from the level of weeks or days all the way down to hours. Supervisors are provided with a real-time, updated view of the site situation. The employees can focus on the right task without interference and interruptions, and decision-making by business managers is easier thanks to the follow-up information and transparent overview.

New kinds of value chains in the construction industry

Sitedrive also crystallises Fira’s desire to reform the operating methods and value networks of the construction industry. In the old world, a productivity enhancing tool like Sitedrive might be reserved strictly for in-house use. In the new world, however, a construction company can also be a software provider and consider other construction companies its customers.

According to Bergenwall, in the further development of the product, the aim is to consider new user groups and integration with other software platforms in particular.

“Sitedrive in its current form is primarily used by the main contractor, focusing on a single site as a whole. However, there could, for example, be a version for subcontractors who need to schedule several parallel sites at the same time,” Bergenwall says.

He adds that integrations with other software used in the construction industry would provide many kinds of added value.


Recognitions and awards

We are pleased to note that Fira’s work to reform the industry and build a better society has been noticed. Here are the main recognitions and
awards we received in 2017.

SABRE Awards
Real Estate and Construction -kategoria
Fira Ketterä – two-week pipeline renovation by Fira Palvelut
”It feels outright unbelievable that the renovation of a multi-storey building in Roihuvuori, Helsinki could beat the world’s tallest building in Dubai and the Panama Canal in the finals.”

European Business Awards 2017
Ones to Watch
Fira
”In the 2016/2017 Awards, the EBAs engaged with over 33,000 organisations in 34 countries.”

Housing market innovation award
Fira Ketterä
”The two-week pipeline renovation concept, Fira Ketterä, is the result of long development work at Fira Palvelut, in which the entire personnel has
been involved. The project is realised using the alliance model.”
Fira also won the housing market innovation award in 2015 for its renovation development method in which all parties are engaged in project planning.

Tekla BIM Awards
Honorary mention for information modelling
Karavaanikuja 2-4
”Information modelling was an essential part of the project’s BIG Room work innovating revolutionary solutions.”
Due to this honorary mention, Fira will take part in 2018 in the international Tekla Global BIM Awards 2018.

Dun & Bradstreet
Certificate
Fira
“Lowest Credit Risk in the Dun & Bradstreet Credit Risk Classification.”

Gold medal of merit
Jussi Aho for his work in preventing corruption and the black economy.
”The medal is rarely awarded to civilians, and it is unique among business executives.””

Finnish association
M.Sc.(Eng.) in the construction industry
Jussi Aho
”A positive promoter of the industry whose strengths include innovation and bold risk-taking ability.”

Strategic management society of Finland (SSJS)
Strategy act of the year 2017

MTL Communications Awards
Communications Act of the Year 2017

ProCom – The finnish association of communication professionals
Jussi Aho
Director of the year 2017