Wednesday, August 17, 2016
How Prescient Is Joining Software And Steel To Remake Multi Unit Housing
Traditionally, building a large multi-unit building--such as an apartment, dorm, or hotel--was a very time consuming, expensive process. However, Denver-based Prescient (www.prescientco.com) has figured out how to combine software, highly automated manufacturing, and other technology with steel, to create a rapid, low cost way to build those structures in far less time than possible before. We spoke with Satyen Patel, Chairman and CEO of the company, to learn more about what the company's software and system is all about, and how it is hoping to remake the process of building multi-unit housing.
Tell us about exactly what your product is, for those who aren't familiar with your products?
Satyen Patel: We're a technology platform. We're a software development company that designs, engineers, manufactures, and installs light gauge, steel structures, to make buildings up to sixteen stories high. We're three parts in one, and really a company with a split personality. One third of the company is software development and technology, another third is a high tech manufacturing company, and the last third is where we actually go and assemble a building on site. We do all of this through what we call a digital thread. That digital thread runs from design through manufacturing and installation on site. We attack a segment of the industry called multi-unit housing, and within that segment, the categories we focus on are apartments, student housing, senior living, hotels, and Army housing, such as barracks and things of that sort.
For those not familiar with the building industry, help us understand the advantage of what you are doing, versus traditional wood framing?
Satyen Patel: Compared to wood, light gauge steel structures are able to go up to sixteen floors. With wood, you can go no higher than five or six stories, with two stories in concrete. We are non-combustible, termite resistant, have a very high resistance to wind—we can handle Category 5 wind—and starting next year, we'll have seismic certification for seismic loading. That will allow us to move into areas like California, St. Louis, South Carolina, and other places where there are earthquakes. In many ways, we're much more durable, much longer lasting, and a better product. We have some attributes which can lead to a green LEED certification, and by using our system, you already get 9 LEED points. In most cases, our customers can get Silver Leed Certification, and with some improvements they can get Gold. It's much faster in the way we construct our buildings compared to wood and concrete, plus we can go much taller than wood, and be much more cost effective.
Why haven't people used these techniques and steel in the past?
Satyen Patel: People do use steel. Skyscrapers, for example, are made of steel, and other people do use a combination of concrete and steel in buildings right now. However, what's unique about what we are doing, is our technology, engineering, and software. We have proprietary technology, with over thirteen patents granted for our software, product, and processes, and even some of our manufacturing know-how. We have almost fifty patents on file, across 30 countries, and we'll continue to file patents as we develop new things. It's not a question of metal or steel buildings, or some hybrid of steel and concrete, it's the uniqueness and manner we've put this system together. There is no competition to our product, our technology, or solution we offer.
Explain what that software does?
Satyen Patel: The integration is what we provide in that digital thread, where we provide no only the design, engineering, manufacturing, and installation as a one stop solution. What our software does, is it algorithmically calculates the load factors on the structure and building, once an architect designs something. We automatically create what is known as a building integrated model, where we throw out a detailed bill of materials (BOM), which effectively gives you a very tight control on pricing and costing. Then, those same, digital files are used to manufacture the structure, through the CAD/CAM process, and actually transfers those to the manufacturing files. Our software builds the manufacturing lines in our plant, which turns out the product which is supplied to the site, and which we then assemble on site. Our manufacturing plants are highly automated, and are almost akin to an automotive plant. We use robots, which are the same robots used on the Ford Focus manufacturing line, and we use CNC machines for precision manufacturing to very tight tolerances. We deliver three components to the site—a post, a panel, and a truss. By assembling those three together, we can essentially build any kind of building an architect can design in the categories we are penetrating. The installation speed is very fast. We can install 20,000 square feet per week, with a limited crew of only 29 people. We recently installed 100,000 square feet in Belmar, where we were able to put together the whole building and structure in six weeks. We finished a 350,000 square foot building here in downtown Denver, which we finished in fifteen weeks, where it normally would have taken nine months to a year. We shaved six months off the timeline of finishing that building, which provides a much faster time to revenue for a developer, and obviously, a much stronger internal rate of return. That helps the industry turn their money much faster, and the time to market is much faster.
So what's your background, and how did you get into this?
Satyen Patel: I am actually in private equity, and have been since 2002. Both of my funds are Singapore based, and I'm both a U.S. and British citizen. My education and background is as a mechanical engineer, and I also did my MBA. I spent eighteen years in the corporate world, at Pillsbury in Minneapolis and PepsiCo in New York, before I went into private equity. The concept here was actually nurtured for something like five or six years by the two founders, John and Michael, who had been builders and developers for twenty years. When the downturn hit in 2007, they took a step back, and put some resources in developing this model. I invested in the company and created the company in September of 2012. I came in with growth capital, and we took this from a PowerPoint project with some technology that had not been tested, and with a patent applied for but not yet granted, into a real product. We've since grown from 18 to 270 employees, with 200 in Colorado and 70 in Poland, where we have a large software engineering group. We're about to open up a second plant, in December, in the Southeast, and we're debating between Georgia, South Carolina, and North Carolina. We'll be opening up and operational by January on the East Coast. For now, we're servicing the nation from Colorado. Our first few years in business, we were just a Colorado based company, servicing Colorado. But, starting this year, in 2016, we've been delivering product and finishing buildings in Texas, Florida, Nebraska, Arkansas, North Carolina, and by the end of the year we'll be in Illinois and Indianapolis. We'll be in ten states by the end of the year, and starting in January we will have those two plants, with a third plant in Texas by the middle of next year. Our current facility is 120,000 square feet, and includes a 10 are storage site for our finished products. We can make 450,000 square feet of buildings a month from our plant here. For some perspective, that's 4.5 of the Hyatt's we built in Belmar per month, which means we could build 54 Hyatts a year out of this plant alone. Between this year and next year, we'll have thirteen buildings either already built or as a work-in-process. We have 250,000 square feet at a senior living project for Morningstar Hazelton in Lone Tree, and we built a student dorm for Colorado Christian University in Belmar and The Hyatt, also in Belmar. We're rapidly becoming the choice for urban infill for buildings up to sixteen stories high in Downtown Denver. The challenge is to take this national.
Thanks, and good luck!