Prescient has built itself on leveraging digitisation to bring order to the traditionally somewhat chaotic process of putting up buildings. A winning combination that includes lightweight construction materials and an innovative digital design-build system yields dramatic savings in time and materials. We met Prescient CEO Magued Eldaief, who explained how it’s all done.
Good day, Mr Eldaief! Thank you for taking the time to speak with us today. I understand you have been in various leadership positions since 2001. Being in high-profile posts must induce some stressful moments. Would you mind telling us how you start your day in preparation?
Good health is key to dealing with both the physical and mental demands that any leadership role entails. Gruelling travel schedules and long days can take a toll on the body and ultimately impacts one’s ability to deal with all the stress that is part and parcel of the role. To that point I like to start my day exercising early morning before getting to work, after a good night’s sleep. While exercising, I also like to catch up on what is going on in the world.
Having worked at GE for almost three decades, leading significant functions across various divisions, you then became the CEO of Prescient in June 2017. How was the transition into your current position? What has been your proudest moment as the chief executive officer of Prescient so far?
Transitioning from a large corporation to a young company that is growing rapidly is quite challenging in many ways, as you need to ensure you are wearing multiple hats on a daily basis and driving a number of fundamental areas at an accelerated pace. It starts with having a great team with all the necessary skill sets that are required to build a driven organisation, one that is adopting a repeatable and consistent process to execute for an expanding customer base, all while continuously driving innovation that differentiates and builds a technology moat.
Our adoption journey in an industry reluctant to change has been a difficult one, so I felt extremely proud the first time a customer publicly highlighted the positive impact our technology delivered for their project, without any prompting from us. This was a genuine validation of our belief in our technology, as well as the tremendous amount of effort that our teams put in to get to this point.
Prescient started out in a humble production site of an old 5,000-square-foot aircraft hangar in 2012. To date, it has completed over 42 buildings totalling 6.9 million square feet. What do you think are the key factors that led to Prescient’s impressive success today?
It’s been quite a journey for this company, for sure. I’d say our success has been driven by a desperate need that’s been addressed with brilliant technology, the determination and ingenuity of our people, and an inspiring vision that resonates with so many people around the world today.
The housing shortage that’s reported daily by the media is a significant challenge around the world. That shortage is driven by a number of factors, but the lack of innovation and the structure of the housing construction industry are two of the key contributors. Our founders understood this and leveraged their experience, ingenuity, and the latest software and hardware technology to develop an integrated system that simply enables multi-unit residential projects to be built more efficiently. That software and hardware system, which we call our “digital thread” and Unified Truss Configuration System (UTCS for short), are the foundation for this company and our success.
Next, I have to give huge credit to our team, many of whom have been with us since day one. They’ve faced and overcome an incredible number of challenges, from customer resistance and scepticism, to regulatory hurdles, to never-ending resource constraints, to challenging technical issues, which all had to be solved in order to move forward. They just get it done. They’re pragmatic problem solvers who are inspired by our vision of “Attainable housing for all”. Our people are arguably the biggest factor that has led to our success.
Prescient is at the forefront of digital innovation, with the company embracing technology-driven methodologies to construction, aiming to “revolutionise the building environment”. Can you tell us about the story behind the pioneering concepts of Prescient’s digital design-build system?
Our two inventing founders are John Vanker, an experienced real estate executive, and Michael Lastowski, a structural engineer and architect. Like so many people in our industry, they understand the many inefficiencies plaguing the construction industry business model, such as a very low level of digitisation, the fact that 40% of project costs are wasted, a remarkable lack of standardisation, high fragmentation, the misaligned interest of project stakeholders, and very little investment in R&D or innovation. John and Michael worked together to design and patent a unique structural system and supporting design software that leverages the light weight, strength and precision of steel, to develop and build multi-unit residences and hotels better than ever before.
Their ambition to “build better” started to become a reality when they met our third founder, Satyen Patel. Satyen is an accomplished global executive and software entrepreneur who had just personally experienced the inefficiencies of design and construction while building his family’s dream vacation home. Satyen met John Vanker on a lake in northern Wisconsin where they both have vacation homes. John explained that the construction inefficiencies that Satyen encountered weren’t unique to his single-family home; they were very similar, in fact, to large, multi-family apartment buildings, student dorms, etc. John then shared his and Michael’s technology and their vision of reshaping the multi-unit residential construction industry. That is how the three founders came together and created Prescient in September 2012.
Further to the previous questions, what are the unique advantages and features of using Prescient’s building platform, compared to the traditional construction process?
What makes Prescient unique is the combination of its digital thread software and Unified Truss Configuration System hardware. Think of an erector set with a standard kit of parts made out of steel, with a software app that allows you to design any bespoke multi-family building. That same app allows you to engineer, manufacture and figure out the optimum way to assemble the chosen design, solving for constructability, cost and schedule in a fraction of the time it takes the industry today to do it.
Our proprietary software system interconnects a project’s components and processes, and enables all stakeholders to have timely information to drive faster and cheaper project execution. Prescient projects begin with very accurate and detailed 3D building information modelling (BIM) drawings. This requires more decisions to be made upfront, but results in far fewer surprises and associated greater costs that typically show up later in a project. Our digital thread also provides a transparent view of a project’s schedule and progress for all project team members. That’s referred to as 4D BIM, with time being the fourth dimension. This supports communication, optimises the schedule and provides alerts about potential risks. Finally, the digital thread delivers 5D BIM, with the fifth dimension being cost, by providing project costs and changes to those costs, as project requirements or decisions change. So, having 3D drawings, plus clear and communicated schedules, together with costs, early in a project is truly a major step forward for construction.
One of the main reasons our digital thread is so accurate in its 3D representation (with the drawings matching the physical building), in its schedule, and in its cost estimate is that our UTCS can be manufactured and assembled so precisely. Our manufacturing plants are driven by that same digital thread, and produce building components which are accurate to 1/32nd of an inch. This means that all of the structural components that arrive in the field have been cut precisely, holes are where they’re supposed to be, rough openings are the exact size they were designed to be and, because we use steel, there is no “settling in” period where dimensions shift. Components arrive on-site in a just-in-time fashion to reduce excess inventory on site. Assembly is done at rates in excess of 20,000 square feet per week (and we get faster every year). And the assembly process requires a crew of only 36 installers. This is a huge advantage that the Prescient system delivers within an industry where labour is in such short supply! Finally, given the accuracy of our designs, manufacturing and assembly, Prescient projects have little to no waste. The bottom line is that Prescient reduces costs, time and risk for every project it helps build.
During March of last year, Prescient pulled off a feat no other US construction company had done before and built the largest student housing development at the University of California, Davis. This historic moment is also notable as it was your first project in a seismic zone. Could you tell us more about this exceptional achievement? What were the challenges you faced and how did you overcome them?
Our system was chosen to be used for the 1.3 million-square-foot student housing project at UC, Davis by CBG Building Company. CBG had used us on three previous student housing projects and one very large apartment building. They knew that using Prescient would reduce the number of workers they’d need to use and, more importantly, that the project would be completed on time.
Of course, since this project was in California, our system had to be approved for use in seismic zones. Our light-gauge steel system is naturally ductile, lightweight, and it’s all reinforced, so it performs exceptionally well to the extreme forces experienced in a seismic event. We’ve collected more than 500 million data points and conducted almost 900 tests to validate the ability of our structures to withstand even the most severe earthquakes ever recorded.
The company vision is to have “attainable housing for all”. From your numerous projects, it is safe to say you have rendered good service towards achieving this mission. How does the company’s continuous focus on digital innovation enable such a vision?
Our vision is a huge motivator for the continued development of our platform. I believe we have barely scratched the surface with what we have accomplished. Our digital thread uses artificial intelligence to analyse the immense amount of data we’re collecting on projects to identify future efficiencies. It allows us to pinpoint where the focus needs to be to impact time, cost and risk and we get smarter with every new project we complete.
To fully deliver on the vision, there are other aspects beyond our control (e.g. regulatory challenges, increasing land prices, etc.) that we must absolutely tackle to provide a satisfactory resolution to housing affordability and, there, Prescient is actively participating with various industry associations and councils to tackle this crisis.
One of your projects, the Renaissance Downtown Lofts, has recently been recognised with two major awards, namely: Urban Land Institute’s (ULI) 2019 Global Awards for Excellence and PCBC Gold Nugget 2019 Award of Merit. I understand that this particular multi-unit housing was established for the aid of the Denver homeless population. How important is corporate and social responsibility for Prescient?
As CEO, talking about ‘corporate and social responsibility’ might sound like I’m just checking a box. Though we didn’t pursue the Renaissance Downtown Lofts project as part of a corporate and social responsibility goal, we did it because it sits squarely in the centre of our vision of providing “attainable housing for all”. As I said earlier, we are extremely motivated by this cause and it drives much of what we do. To this end, we have been active with several chapters of Habitat for Humanity and have worked with veterans’ organisations to help provide them with better and more-affordable housing options.
Our system is also very environmentally friendly and we are very proud of that. Our projects have very little waste, and we use highly recycled steel, which is lightweight, so it’s produced using significantly less carbon than other building materials. Plus, all of our components can be used again at the end of a building’s life cycle. These two areas of corporate social responsibility are very important and relevant to our company and our people.
More and more companies are investing in the green economy, as the situation urges. What are the sustainable strategies and practices the company has utilised to cater to this international demand?
As I described earlier, our system offers a greener approach to developing multi-unit residences. Our initial promise for our company was: faster, better, greener and cheaper. So, being environmentally beneficial to the construction process has been a core promise for our company and our system since its beginning. Our buildings typically weigh 50% to 65% less than their concrete equivalents, which means they require significantly less carbon to produce. Our overall approach of digital design and precision manufacturing means our projects experience significantly less waste. A McKinsey study concluded that most construction projects have 40% waste in their raw material usage. Our projects have 1% to 3% material waste, by comparison. Our steel is highly recycled, and 98% of the water used to produce steel can be filtered and reused. While our buildings are designed for a 100+ year life cycle, when they are ultimately torn down, the steel can be recycled and used again. Finally, our steel-framed buildings are energy-efficient throughout their useful lives.
Technology is continuously changing the world and the way business and industries operate. Can you tell us what are the latest technologies or initiatives that you are currently working on to ensure that your projects and solutions remain cutting-edge and of the highest quality?
I would break our technology initiatives into several buckets, the first one around platforms related to different market segments we serve. These include a seismic offering for serving geographies prone to earthquakes, like California, Mexico, large parts of South America and Asia, and a progressive collapse offering that serves the need for military housing. We are also working on a number of digital solutions that are enhancing our end-to-end digital thread for our core platforms, and a market-facing portal that offers all project stakeholders the ability to interact real-time using our detailed BIM models to evaluate, design and execute projects faster and cheaper.
As the CEO of a dynamically developing company, how do you look after the well-being of your employees? How do you encourage a working culture of continuous innovation and learning?
We really have an outstanding and diverse team of professionals. I can’t say enough positive things about them. One of our corporate belief statements is, “Our employees make the impossible a reality.” To enable that belief, employees need to feel that they have the freedom and support to challenge the status quo and push boundaries, or else how do you transform and reshape an industry?
Having an innovative and naturally curious mindset starts at the top of our organisation, with our leadership team. If you look at their backgrounds, you’ll see that fewer than half of them are from construction. They bring a variety of experiences to the table to help us approach challenges differently. The questions they ask of their teams are probably not as linear as those that would be asked by someone who grew up in in this industry. The members of our leadership team are natural change agents who help their teams continuously strive to learn and improve.
With almost 25 years (and counting) of professional experience, what do you think are the most valuable lessons you have learned? What would be your advice to those who want to venture into this industry?
It is all about surrounding yourself with diverse leaders and teams that have the right attitude and a winning mindset. Even with the best-laid-out vision and detailed strategies, there will always be challenges and obstacles to overcome, so it comes down to how you react and deal with what comes your way. It is about persevering and fighting for what you believe in.
For those venturing into construction technology, be prepared to face a lot of detractors who will find all that is wrong with your approach or product. Ultimately, we have found that we need to be engaging with real-estate owners who will value the outcomes we create using our technology platform. In a fragmented industry where interests are not aligned between stakeholders, the primary outcome that matters is the return being delivered to these owners.
Would you mind telling us about Prescient’s future aspirations for 2020? What do you hope to accomplish or improve in the years to come?
There are so many exciting opportunities in front of us. After growing more than 40% this year, we’re on track to grow more than 90% next year, with most of those contracts already in place.
We’re rolling out our seismic platform for buildings up to 180 feet tall, which will be a big game-changer in markets like California, where the costs of traditional building approaches are high.
We’ve recently been approved by the Army Corps of Engineers for our engineered system to be adopted for all military barracks, dorms and hotels on bases around the world, as it meets the government’s exacting technical requirements. We’ll start our first projects next year and expect a significant ramp-up in federal business in the future.
We are also hard at work in getting our platform certified by the EU and seeding the European market with a finished building mock-up showcasing our technology, as we believe that our value proposition is even more powerful outside the US.
To conclude, what does success mean to Magued Eldaief?
Success for me is about building a global technology housing platform that makes a real dent in solving the housing affordability crisis. Just like Henry Ford industrialised car manufacturing with the Model T, I would like to industrialise and standardise multi-family housing, leveraging our technology platform to standardise the process and methodology of developing and building housing to provide an unlimited choice of housing offerings that are cheaper, faster and greener.
Thank you very much Mr Eldaief. It’s a pleasure speaking with you.
Magued Eldaief joined Prescient as CEO in June 2017. A 27-year GE executive, he most recently led the global commercial operations of the $4B Industrial Solutions business of GE which includes Low Voltage, Medium Voltage, Control & Automation Products & Services. Prior to that role, he was the CEO of GE Industrial Solutions division for the Europe, Middle East & Africa region. A multilingual and multicultural executive with broad experience in the energy industry, Magued held positions of increasing responsibility across five continents in GE’s Power & Energy division. He managed large infrastructure construction projects throughout his tenure at GE and had significant exposure to numerous divisions and functions throughout the organization including: sales and marketing, strategic planning, project structuring, EPC (engineering, procurement, and construction), services, and regional and global business unit leadership. He is an early investor in Prescient and served as a member of Prescient’s advisory board prior to joining as CEO.