SXSW is always an exciting event to attend. We were fortunate to be there, however briefly, so Rhumbix Co-founder and CEO, Zach Scheel, could present as one of 15 startups in a pitch competition. The competition was held to showcase the potential to bring disruptive technology to the industrial space, and each participant was given 3 minutes to present. HOLT Ventures teamed up with Caterpillar Ventures, Brick & Mortar Ventures and Cottonwood Technology Fund to host this popular Industrial Technology Pitch Competition.
[TRANSCRIPT] Good afternoon everyone. My name is Zach Scheel, co-founder and CEO of Rhumbix and I am here today to talk to you about how Rhumbix is helping solve the construction industry’s productivity problem.
So what is Rhumbix?
Rhumbix is a labor productivity platform. We collect information both passively and actively through smartphones and sensors, and use that information to drive actual, real-time feedback to workers and crews in the field.
It’s no secret that the construction industry has a productivity problem. We have lagged behind every other industry save agricultural for the last 60 years and that gap was widening.
But why is labor productivity so important to construction?
Labor is the largest and least understood cost of a construction project. On average typically, labor costs about 50% of the total project costs, and that labor is on average 35% productive. That 35% productivity mark is what we are increasing at Rhumbix, and we are doing it using data. But not just any data. The data that matters the most to a project.
At Rhumbix we believe the most valuable data on a project comes from the hands of the men and women physically doing the work. Today that information is relayed in a very manual, time-intensive once-a-week process—on paper. We’ve developed a mobile-first app solution that digitizes the last-mile data collection on projects.
So the information we collect is your time card information and daily reports, quantities installed, notes, and compliance. All that stuff is collected digitally by foremen in crews in the field every day, and immediately viewable by the project managers and field supervision from our web-based application. They’re able to see daily whether or not they made or lost money on every cost throughout every project.
This allows them to dive down into crew-based labor productivity and really understand what is driving gains or losses. Ultimately we share that information with the foreman. We give him that performance feedback, and see that across the board what is driving behavioral change to higher production outcome levels.
So, we are seeing great results in the field. Let me tell you a little bit about the project we did on a hospital in southern California with Skanska. The values seen here is data that was collected by the Rhumbix platform and shared with workers every day. This is super important. When the workers had this information, it started conversations that didn’t otherwise happen. It led to a carpenter saying, “Hey, if you move the chop saw in those hollowed-out frames closer to the work face, it could eliminate a lot of unnecessary trips.”
So at the end of it, what we did is we took a task that once took 4 workers 58 hours, and we were able to reduce it to 2 workers in 7 hours and 15 minutes. That represented a 50% reduction in head count and an 88% reduction in task duration. On that project alone we were saving 95 minutes a day per worker.
In southern California it was about $200 a day per worker on that project. So at Rhumbix my customers are seeing about a 5-10% improvement in labor productivity, as well as saving in production and administrative. These savings hit the bottom line. So over here what we are going to do is see a double and tripling of profit margin on projects. This is super important because the construction industry’s IT budgets are constrained by low margins on projects.
If we improve the productivity we improve operating margins and we free up more capital that can be reinvested into many of the technologies you heard today.
So when we’re looking at process improvement in the construction industry, it’s very tempting to look at a lot of advanced technologies, but let’s not overlook the tremendous value that we have in our human capital. At Rhumbix we look at workers from the shoulders up, not just what they can do with their hands.
Good job, everyone!
Special shout-out to fellow participants, who included: Addibots Roadways, Genesis Dimension, Passive Eye, PermitZone, Williams Robotics, Dynamo-Micropower, Eyrus, Rufus Labs, SoundEnergy BV, Yan Engines, 5D Robotics, Arevo, Bractlet Inc, and Viloc NV.