Industrialized construction still rare on Brazilian job sites
Ana Castelo
Keiny Andrade/Valor
Nearly half of construction companies already use industrialized methods at some stage of construction, but modern processes are present in only 15.7% of the sector’s projects, up nearly one percentage point from 14.8% in June last year. That is one of the findings of the new Construction Industrialization Index (IGIC) to be released this week by the Brazilian Institute of Economics at Fundação Getulio Vargas (FGV Ibre).
In June, 33.6% of companies said they used industrialized systems in their projects, while 14.6% said they used them in some projects, bringing the share of companies with some degree of adoption to 48.2%, according to data obtained exclusively by Valor. However, the combination of the two subindexes that make up the IGIC—one measuring adoption and the other intensity—shows that only 15.7% of projects can be classified as industrialized.
Ana Castelo, FGV Ibre’s construction project coordinator, explains that for a project to be considered partly or fully industrialized, it must use construction systems such as precast structures—including concrete walls delivered ready-made to the job site—steel framing, drywall, prefabricated plumbing kits and other factory-made components.
“There are several stages. Partial use involves one or more phases of construction, while the process can extend to prefabricating an entire building and assembling it at its final location. The use of these systems is growing in Brazil, and now we will have an index to track that development,” Castelo said. According to her, the IGIC will be updated annually.
The lack of historical benchmarks in Brazil—and even of industrialized construction indexes in other countries—makes it difficult to determine whether Brazil’s level of adoption is satisfactory. Still, Castelo notes that modern construction systems have considerable room to expand in the country. The IGIC will also help assess whether the tax reform will drive the sector’s modernization, which tends to raise productivity in an activity that has historically relied on manual methods and posted low productivity in Brazil.
Castelo explains that a longstanding tax imbalance has constrained the growth of industrialized construction in Brazil in recent decades. Conventional on-site construction is taxed predominantly as a service under ISS. By contrast, manufacturing steel-frame panels or concrete walls in factories and transporting them to a job site, for example, adds industrial taxes such as ICMS and IPI to the cost, frequently making the industrialized option more expensive before it even reaches the site.
“If you produce at the job site, you pay ISS. If you produce at a factory and take it to the job site, you pay ICMS, which is much higher,” Castelo said. “Our indicator will now track whether this dynamic changes with the tax reform,” she added.
Although uncertainty remains over whether the new tax conditions will actually help expand industrialization in the sector, Castelo said labor shortages are already the main factor influencing companies’ willingness to adopt modern construction methods.
“The construction industry faces a shortage of skilled labor, and a more industrialized sector needs fewer workers. That is why industrializing construction increasingly makes sense,” Castelo said. “These are also modern processes that offer better working conditions and could even help attract women and young people, who have not been drawn to construction jobs.”
Against this backdrop, the IGIC found that drywall is the most widely used industrialized product in building projects, at 65.8%, followed by precast concrete at 61.2% and steel structures at 51%. However, some less widespread technologies posted more pronounced gains. Between 2025 and 2026, the use of cement panels in buildings rose to 34.3% from 18.1%, while steel framing increased to 32% from 15.6%, according to the IGIC. The use of prefabricated façades also climbed to 28% from 12.9%.
“The figures show that industrialization is beginning to gain ground within companies. However, there is an important difference between adopting these methods and industrializing at scale,” Castelo cautioned.
According to FGV Ibre’s construction project coordinator, industrializing construction is not simply a technological issue. “It is directly related to some of the sector’s main economic challenges: productivity, labor availability and skills, costs, completion times, and the capacity to expand housing and infrastructure production.”
Translation: Todd Harkin
