An industry falling behind
The construction industry is acutely challenging to operate in. It is characterised by aggressive procurement, low workflow visibility, a limited supply of high quality talent, and low margins.
These combined factors have led to a lack of investment and hence a productivity gap. 74% of industry professionals believe that productivity growth is a challenge requiring changes in behaviour of all industry stakeholders[i]. Exhibit 1 shows us that this concern has materialised through construction productivity lagging behind the rest of the economy, and Exhibit 2 shows the fallout of this in driving extensive time and cost overruns.
Exhibit 1: Construction versus total economy productivity over time[ii]
Exhibit 2: Cost and time over-runs are the norm in the construction industry[iii]
One particular feature of this lack of investment has been the limited uptake of technology in construction. Spending on information technology accounts for less than 1% of the industry’s revenues, such that across 22 industries by digitization, construction ranks 21st [iv]. This presents an enormous opportunity – BCG estimates that through full-scale digitalisation, savings of 13 – 21% or $21bn per year globally could be materialised in non-residential construction[v].
Technology companies are just starting to respond to this. Amongst the expected highest impact and likelihood technologies to enter construction is real-time mobile collaboration[vi]. Until now, the industry has relied on paper processes for project management responsibilities such as procurement, cost coding, and time card allocation. As a result, information sharing is delayed, incomplete, and may not be delivered to the correct stakeholder.
Time for change – Rhumbix’s value proposition
Rhumbix, a workforce telematics company, is attempting to solve this problem through a digitised platform. Rhumbix hopes that through digitising project management, collecting, aggregating and analysing project data in real-time, it will be able to solve cost and time overruns that for so long have bogged the industry down. Rhumbix differentiates primarily through its platform, advance use of analytics including machine learning, and simple user interface. The role of Rhumbix can be depicted below in Exhibit 2.
Exhibit 3: Rhumbix collects, aggregates and analyses data for better project management[vii]
For project managers, Rhumbix creates value in three areas[viii]:
- Reduced and improved administration: Rhumbix does the legwork on data collection and analysis and improves accuracy through simplifying data inputting
- Improved project decision making: Rhumbix supports daily updates on project profitability facilitating corrective action (see Appendix 1), and automated time and motion studies support improving site layout (see Appendix 2)
- Greater collaboration with the workforce: Managers can motivate their workforce through mobile dashboards, whilst delays can be identified immediately and obstacles removed
For workers, value is created in two ways[ix]:
- Improved site safety: Workers can input site safety observations for immediate response by managers
- Ease of reporting: Workers have instant access to cost codes and can report through a simple mobile interface
In order to capture some of this value, Rhumbix offers three differentiated tiers, each priced per craft worker / day, the lowest and middle tiers priced at 50¢ and $1 respectively, with the highest full service tier negotiated, and including full service analytics, and time and motion tracking.
Using digital to deliver value not before possible
Without a digital interface, Rhumbix’s operating model would not have been viable. Rhumbix has seized on the technological opportunity to deliver services including real time and accurate data, and a simple method for incorporating advanced analytics into project management, not previously possible.
Rhumbix ensures that workers do not reject this offering by anonymising worker level data and providing it in aggregate only at the crew level.
Cementing their market position
For Rhumbix to secure their position in the market, there are a number of next steps that Rhumbix should focus on:
- Scale rapidly: Rhumbix needs to become the number one provider in its field. Construction is a field in which workers regularly change company. As such there will be scale effects as with more workers using the app, more companies will want to use it to minimise worker learning/ramp-up costs
- Ensure cross-platform compatibility: As technology and its applications become more prevalent in construction, a critical component of Rhumbix’s success will be ensuring that it can integrate its functionality and data across platforms
- Expand functionality whilst maintaining simplicity: In order to take greater control over the market, Rhumbix should actively seek to expand its functionality, so that it becomes the ‘go-to’ app for project management
Through aggressive scaling and thoughtful design, Rhumbix will support it’s likelihood of succeeding in what is soon to become a highly competitive market. The hope for everyone is that accompanying the increase in technology adoption in construction will be a reduction in cost and time over-runs once and for all.
Appendix 1: Rhumbix application – Project profitability overview
Appendix 2: Time and motion studies can identify opportunities for site layout improvement
[i] Economist Intelligence Unit, (2015), Rethinking productivity across the construction industry: The Challenge of change, <http://damassets.autodesk.net/content/dam/autodesk/www/solutions/bim/images/stories/EIU_Autodesk_Construction_WEB.pdf>
[ii] Agarwal, R., Sridhar, M., Chandrasekaran, S., (2016), Imagining Construction’s Digital Future, <http://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/imagining-constructions-digital-future>
[v] Stewart, R. (2016), The Construction Business Goes Digital, <http://www.wsj.com/articles/the-construction-business-goes-digital-1474250580>
[vi] R de Almeida, P., Solas, M. Z., (2016), Shaping the Future of Construction: A Breakthrough in Mindset and Technology, < http://www3.weforum.org/docs/WEF_Shaping_the_Future_of_Construction_full_report__.pdf>
[vii] Rhumbix, (2016), Rhumbix is Workforce Telematics, <https://www.rhumbix.com/>