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Who’s Winning in 2024? UK Contractor League Table Shakeups
64 Plays1 month ago
This week on the podcast, Jason and Carlos are eagerly joined by Ed Curbison, part of the UK team at Aphex.
The trio sit down to cover the news of a potential alternative to the scrapped second phase of HS2. Next, they tackle the newly released 2024 contractor league table and whether their predictions from last year were accurate. Finally, they weigh in on Doxel, a reality capture solution promising to automate progress tracking completely.
Follow Carlos on Linkedin | Follow Jason on Linkedin | Check out Aphex
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Transcript
Introduction & ISG Contractor News
00:00:00
Speaker
Hey everyone, producer Olu here with a short message about this week's episode. One of the topics covered this week is the 2024 UK Contractor League table in which the contractor ISG was featured. This episode was recorded just prior to the unfortunate news of the company going into administration and so any comments made by Jason, Carlos and Ed in this episode were made without any knowledge of what would transpire after the episode was recorded. Additionally,
00:00:29
Speaker
On the third topic about reality capture, the name of the company in question wasn't mentioned, which is Doxel, a company that aims to automate the process of progress updates. With that being said, thank you for tuning in, and I hope you enjoy the show.
Guest Host: Edward Eddie Kerbertson
00:00:46
Speaker
Eddie, if you were running a job tomorrow, which what would you be doing? Probably not having robots. you've Just keep them at your house. but Keep them in the garden, Jason, so not an animal. I f- I f- I f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f- f Someone for a long time has been petitioning to guest host a podcast episode. They've almost made it on a couple of times and and been foisted right at the last moment. And so today is, I guess, a little bit of all dreams coming true for today's guest host, Edward Eddie Kerbertson. Mate, welcome and thank you very much for for joining us for this important episode, mate.
00:01:55
Speaker
Oh, Chase, thanks very much. It's been a long time coming. um When I got the call up last night, I did phone my mom. She's happy for me as well. I woke up Lily before I left this morning to let her know daddy's on the pod. um Yeah, I'm excited. It's a bit like a Christmas in the Kerbertson household. So ah yeah, thanks for having me.
00:02:13
Speaker
Oh, very good, mate. I'm happy we've we finally managed to get you on. I'm looking for all of the like preparation you would have been done with being eager to get on and all the insights you're going to deliver, mate. Me too. You don't know what they are yet. We'll find out as we go along.
00:02:32
Speaker
I'll wait to find out. yeah ah Awesome. So, for those who don't know, Eddie is part of the team. Hey, folks. So, were we're strictly keeping it in the family. And so, we've got Ed, myself, and Carlos, mate. How are you going?
00:02:50
Speaker
I'm all good. Thanks. um Big news story this
Energy Innovations for Data Centers
00:02:54
Speaker
week. So Oracle are now building or I guess obviously they're not building them themselves, but they are going to need to build small modular reactors. So nuclear reactors to power their new data centers to feed the demands of AI.
00:03:10
Speaker
I don't want to be the guy that's like, did you not see the news story about people's pages blowing up in their pocket and then you're leading with pretty big news story. oracle after build some And the context of the construction and and the hot topic that is data centers. Yeah, the the pages is probably a bit more of a ah a news hitter.
00:03:29
Speaker
but um No, pretty crazy that obviously, if you're building data centers, the amount of energy they consume to then go right, then next, they must have had some sort of first principles exercise when they've gone, Oh, now the power is going to cost loads. So let's just build our own nuclear reactors to to feed them. Yeah, i think you are I think if you look at how like, typically, like, this is this is taking a real serious time real quick. But if you look at how like energy financing typically works, it's they're trying to amortize like committed so like contracts over a long period of time for agreed price of supply, basically so they can lever up as much debt as possible on the on the asset. um And so they what they've got as the need for the data center, whether it's any of the hyperscales, Oracle or Google, cloud whatever they know like what they're... They've got this demand that they know is going to be there.
00:04:21
Speaker
for the energy into the future. And so they're probably fixing the cost of the energy basically by building and owning it yourself. Yeah. And so it works for the supply side in terms of it works for the data center because they've got a they got a known cost of it. But it also in terms of financing the actual energy generation, what they normally want is agreed Long-term contracts for the receiver of it so that you can yeah you can finance with as much I guess debt as possible the the Reactor or the generation asset. So yeah, it works. I think they're like the logic I wouldn't be surprised to see that happening as like the status quo its pretty spicy headline though If you think about it nuclear-powered AI that's gonna get some people going like someone's gonna read that and really that's gonna make that day and
00:05:06
Speaker
but i thought it was a big news headliner to jason rama us getting got over of anything else that happened in the news yeah yeah um The other thing though is so if you look at these small reactors they range from like three or four hundred million to about two billion per unit so the fact that they're building three of them it just shows how much energy these things actually consume in like pounds that they come to the assessment that they need to spend billions to generate energy which means they must consume billions worth of energy over the life of it so
00:05:38
Speaker
And hopefully they're making billions ah from the actual data center asset. yeah that And then hopefully the people that are running their AI applications on top of those data centers are also making billions to pay the billions to pay the bill. It actually feels a little bit like a pyramid scheme.
00:05:56
Speaker
um
00:05:59
Speaker
You're calling out Larry Anderson. No, no, no, no. No, I think there's been a lot of conversation. there There's been a lot of reporting in the news about how like all this money that is being spent on AI and like all of it is going to basically chips and Nvidia and some to like hyperscalers, like cloud providers. And I think I, I think I, um, you know,
00:06:24
Speaker
heard or read the other day that Nvidia are making like 110% of the money in AI at the moment because everyone else is losing. They're making more than 100% of the profit by a long way ah in AI data center build out.
00:06:40
Speaker
I'd love to be the guy doing that report internally. So we're at 110% of the market. No, no. Cool. We've got some topics today. In colors, you'll be a static on the scale of new theory actors for Oracle as we've got some blinding headlines to cover.
HS2 Alternatives & Proposals
00:07:02
Speaker
So first of all,
00:07:03
Speaker
We're going to talk about some ah stuff in the news recently in the UK with an alternative plan um for the scrapped second phase of HS2. So I guess a new alternative to scrapping it. Basically, it's back on boys and it's being spearheaded by the mayors of Greater Manchester and the West Midlands. Next, we're taking a look at the newly released Contractor League table. Again, this is like double UK specific. Um, so this is the list of the largest contractors in the UK. And we're going to talk about things that have moved and things that we'll see in there. We need to do that at some point. I don't think we have, I don't think we have the, uh, don't have the people sitting around at the time. Maybe to I don't know why we don't have one. There's like a lot of productive for league tables.
00:07:52
Speaker
No, there are lists, but like they they're not like an official one to the degree that this one is official. And all of the lists that you look at in Oz have differing results. So it's like, which one do you believe? And then I guess finally, we're going to dive into another piece of software, yet another automated progress tracking scanning a product called Doxel um to see what's different, what's unique, and I guess get people's thoughts on again, the space generally. But let's start by double clicking on the news this week or last week about UK mayors banding together to propose an alternative HS2 route. So yeah, to recap,
00:08:38
Speaker
A private consortium revealed plans for what is meant to be a cheaper alternative to HS2's second ah phase. It's spearheaded by the mayors of Greater Manchester in the West Midlands and outlines a new rail line from Litchfield, which is near Birmingham, which is in the UK, which is in the Northern Hemisphere. ah To High Lee, is that how you pronounce it? Yeah, that's right.
00:09:00
Speaker
Yeah, Lee. And has, it has surprisingly the support of large contractors such as Mace, Skanska and then Designers Arcatus. Wow, who would have thought? um And it calls the government to establish the steering group to study the feasibility, I think they said within the next six months.
00:09:17
Speaker
It's called the Midlands Northwest Rail Link, by the way, and I guess the question for the esteemed panel is, ah how likely is it to to go ahead, do you reckon? and cool I reckon it's better than zero chance. but that's I imagine it's pretty slim.
00:09:34
Speaker
ah that you know It's one of those things, right? They're a government candidate and now it's going to be privately owned and they're going to do that other venture which opens up a whole new can of worms with funding, with all the other good stuff. There's lots more implications with, you know, a privately funded business cracking on and doing it, I think. Is it privately owned or there is some element of private funding? That bit felt unclear to me. Did anyone yeah anyone know?
00:09:59
Speaker
Yeah, so the the line that stuck out was um this, this proposal will save the taxpayers 2 billion. So it's like, how does that work? Is it 2 billion in off the original price, but it's not, it's 2 billion cheaper than canceling it by getting some private investment. So it will be, I don't think it will be like the old peace schemes. yeah no I think the 2 billion, to be clear, so that yeah like what you' what I understand to be true is that it's ah the new proposal will be about 60 to 75% of the overall cost of the cancel section of HS2.
00:10:31
Speaker
There is also this reporting around a two billion pound saving for taxpayers, which I believe is literally the cancellation costs that HS2 phase two is on the hook for, for things like contracts that were let to be built. Yeah. Land that was acquired or in the process of being acquired. And so that's just the two billion is literally the saving for like It's like when you, I don't know, you like cancel a phone subscription three months before the end. It's like, yeah yeah it's it's two billion if we don't do it, or if we do this, the difference is only two billion. I think there's quite a high chance that will happen. So it's the, oh, I'm going to get called out on this. The East coast main line, West coast, man. Anyway, the main line that goes through Manchester at the moment is like massively fantastic.
00:11:19
Speaker
isn't Manchester on the west side of the country which must be the west coast main line so that that's ah at capacity and just running HS2 to Birmingham which saves not that much time alleviates that but it still leaves the north disconnected you've got these very vocal people like Andy Burnham who's the mayor of Manchester We've now got Labour and government and they're all there. Their whole thing is the only way to get out of this black hole is to build the economy and get people working. So it's a little bit of a perfect storm of things that will happen that actually I think this will go ahead. So I'm going to slightly disagree with that and say it's quite a high chance. But I hope it goes ahead. But I just I think it's just it's got like a low chance at the moment because it's going to require a fair amount of work and effort from the government. And they're so stretched at the moment. I don't think they've got the capacity to do that.
00:12:07
Speaker
unless there is a lot more, unless we have like misread what, where the funding is coming from. I don't, I can't see how this is going to work to be totally honest. The odd thing is they, it won't be a modern as modern as the original section or the current section. Yeah. Well, I read, I, this, this is what blew me away. Let me, I'll, I'll tell you the fact, and then I'll, I'll guess I'll ask the question that I was thinking about.
00:12:30
Speaker
It was reported that the in order to keep the cost down, they're limiting the speed on the route. And they're limiting the speed, which you go, oh no, that's terrible. Not ah you know not another slow railway. They're limiting the speed to 300 kilometres an hour.
00:12:47
Speaker
pretty like That seems fast enough for a train. And so that's got me like thinking if it's like 60 to 75% of the cost, 85% of the benefit and the trade-off is like some private investment and like 15 minutes.
00:13:04
Speaker
Why was it not the first plan? It wasn't ambitious enough. Yeah. but Do you remember right at the beginning? it was There was definitely something around like we're going to have the best high speed network in Europe or like link. So they obviously- I think I was like four at the beginning, so I don't know.
00:13:21
Speaker
yeah Something has to be done. the other I drove back from Liverpool the other day on a Sunday and it took eight hours. like That's nuts. We purposely avoided the train because they're always cancelled and they're not great. like There's definite need for it. This is a very good... In theory, if these numbers are right, it seems like good value. We've got backing from not just the political side, but obviously the contractors and the designers. who want to be involved. So yeah, that combined with Labour saying we need to boost the economy, I think it's probably going to happen. um So we'll see.
00:13:55
Speaker
Great call. I also think that if it does get up or even gets like a serious consideration, I take my hat off to the folks that are like pushing and ah trying to make it happen given the turmoil and flip-flopping from like a national government perspective and the obvious issue and the bottleneck and the need for the some form of railing.
00:14:21
Speaker
to go and take a plan, understand what was owned in terms of the assets of HS2, come up with an alternative which which was had private investment and funding and and like put this plan together. if If any version of this kind of reignites it, they've done a pretty stellar service to the to the region. so I think that was one of my big takeaways, actually, as well. as I was like, all credit to the mayor of grad cement Greater Manchester and the West Midlands and then these other contracts. Obviously, they want, you know, they want the work, obviously. But at the same time, they've still afforded resources for this feasibility study to put this argument to government. You know, they were kind of left high and dry when it was cancelled. And for these like local governments to actually still be fighting the corner of the people they represent, I think it's ah
00:15:06
Speaker
That's a wholly positive thing, whether they win or lose, me against Carlos here as to whether it goes ahead. But um yeah, I think it's a wholly good thing for sure. I can't wait to see what the sports betting market puts it out. um Cool. I'll find out for you. You just got a notification.
00:15:23
Speaker
um Cool. let's let's Let's dive into, let's move on.
UK Contractor League Table Changes
00:15:29
Speaker
So um last year in an episode, we dove into the 2023 league tables and made all sorts of wild guesses and bets about what was going to happen. And I think we even guessed who the top five contractors would be ah for this year.
00:15:49
Speaker
With this top 100 construction companies for 2024 list being released in the last week or two. um Yeah, well, I think we dove straight into the list, tried to work out who was right and who was wrong. and um And also probably for the more interesting for anyone listening to this, what insights there are about the changes generally in the list. And so I'm sure Carlos knows the answer as to who was right and who was wrong. So why don't we dive in straight away there, mate?
00:16:19
Speaker
Yeah, I think um to note a few notable movers and shakers, um we had Lang up 12%, Skanska up 24%, like there was some massive growth on some of these contractors. And I think we mentioned those two, but we didn't actually put them in the top five, which they are, but yeah, huge growth.
00:16:38
Speaker
um group, which I know little about, but I think they do a lot of sort of service-based revenue. One thing I'd hate to do is we both, we both put Keller into our top five because of all the work they want on Neom. They're not on the list now. Well, they're not even on the list anymore. I know, I couldn't find them. I don't know what happened. I just, I don't want to disrupt your flow, but I I'm suspect of like a change of the way that they're measuring this list. The reason being is if you saw last year's list, like Balfour's revenue was like seven billion. And then this year it's been reported at four. And yeah so the change is being up seven. So I wonder whether they're bounding it to not include revenue outside of the the country, in which case Keller could be just smashing it down there in Neom and not being rewarded for it on this list.
00:17:32
Speaker
That's a, that's a conspiracy theory. Yeah. I assumed for example, Balfour Beatty, they've got a huge like investment arm of the business. So I assume maybe that's been removed, which would make sense, but it makes more sense where you've just said now that Canada's gone. Maybe it's just UK revenue. Any, you got any wild, wild assumptions you would like throughout there?
00:17:52
Speaker
No, I mean, I thought the same thing. i was That was kind of a question I was going to bring up. Do they track like kind of the global revenue of the business or is it is it just insular to the UK? i I couldn't find any notes on the topic either on the the website. I've wasted far too long trying to work out the actual authenticity of the figures.
00:18:12
Speaker
Anyway, sorry, Carlos, you were talking about whether you or I won. It excludes overseas revenue, just to confirm. Right. Okay. Oh, okay. I guess I could have found that out in two seconds. So that's cool. It actually has the narrative at the top. We have removed Keller because there's no on i straighte to the bottom of the page looking for notes.
00:18:34
Speaker
is it Is it literally saying we've excluded Keller? yeah It does at the top. Okay, cool. Oh my God. I did i didn't read that either. I would change the table and just decided to break it out myself. Okay, cool. Nice. You were right though. I was right. I didn't hit that. First principle thinking. There we go.
00:18:52
Speaker
Yeah, so they those top three, we both agreed they were the top three. um The change is Morg and Sindel up 14%. They've absolutely smashed it. I think I said I'd bet everything I earn on Balfour being top, which is a... Yeah, you did. No, no.
00:19:12
Speaker
Eddie, we're going to have one hell of a Christmas party this year, mate. Oh, mate, you know it. Once once we've got carloss's ah Carlos's, Carlos's salary back in the pot. yeahs Um, so yeah, we, we had Balfour, Keir, Morgan, Sindel, and the, uh, the lead tech, we had Morgan, Sindel, Balfour, Keir. Balfour up 14%, Keir up 7%, like 10%. They are like a very strong three horse kind of race at the top. And then, yeah, fourth and fifth, I had Keller.
00:19:41
Speaker
which is a terrible decision and MACE. It'll be interesting to see what Kenner's international revenue is because obviously we made our bets based on that assumption. But yeah, um the reality was it's ISG up into fourth and weights up into fifth. Weights are up 17% in the year. Big movers, big movers with weights.
00:20:03
Speaker
They're taking on so much of like the localized housing builds across the entire country. I mean, they've got entire divisions almost everywhere doing it. I think, really interestingly, they really sort of invested in kind of the major project space as well. So if you notice, the weights are included in kind of the big prison schemes and all that other good stuff that's cracking on that would normally be like your traditional tier ones. Weights are now stepping up and sort of cracking on with some of those. I'm really taking ownership of those. so kind of big builds. So they carved out the major projects division from the construction division. I think it was the beginning of the year. So they hired some new top brass, won some jobs and yeah, they're flying, absolutely flying. Yeah. Um, Carlos, uh, I just confirmed Keller's revenue is 2.9 billion again, which would put them in four. Um, so we were, Hey, look at that. Nice. That doesn't count though.
00:21:01
Speaker
I'm counting it. I'm going to sleep well tonight, knowing that. And then, yeah, obviously, ISG at fourth. I think they're the only main contractor in the top 10 or top eight that actually revenue down. So um not not a good trend, but yeah, they're still way up at 2.2 billion doing a hell of a lot of work.
00:21:21
Speaker
Yeah. So we actually were pretty good on our predictions. The ones that we get four out of five. Is that, is that what we got? Yeah, we got four out of five. The one that I was wrong about was mace being in the top five. And I actually don't have a note on what your fifth one was. I think it was lying. I think maybe Lang a rock. Yeah. Which was if this excludes overseas revenue. Then your bet was the volume of work they're doing over in Oz. Um, which I think I got it.
00:21:49
Speaker
I think we can claim victory. yeah Yeah, five out of five. Yeah. So actually not too bad considering we don't know much. Yeah, before we get to predictions, just I guess some other observations on as a whole the comparison over the two ah years that we've been looking at it. So first of all, there's just tons of variance in the revenue. You know, one company will be up 20% one year and down 20% the other year, which ah should not be surprising in effectively a project based business.
Profit Margins & Market Analysis
00:22:23
Speaker
What is interesting is what happens with profit margins. On the whole, if you scan down the list, you are seeing some very, very, very, very thin margins across every contractor. Low single digits, you might get the occasional high single, but it is just reinforcing the- Yeah, it's all around the two, 3%.
00:22:49
Speaker
that folks are trying to deliver projects at the best value. And those profit margins are down 40%. The average was 2.7% last year. And now it's 1.7% this year. That's a huge difference in terms of cash in the bank. And then what's really interesting is you've got these contractors and maybe some subcontractors in this spot where they're high competition, low margins.
00:23:18
Speaker
And then if you go above them to developers, you know, that their margins are probably ah double digits heading somewhere between 10 and maybe 20 at the top end um percent. But below them in the supplier market, there's also plenty of money to be made. Tarmac's revenue or profit margins 12 and a bit percent.
00:23:38
Speaker
So yeah, there is just this spot in the middle with the contractors who have a very, very, very high risk, low margin business. And I guess obviously need good software vendors to help them squeeze out as much margin as possible. But yeah, that was interesting. Tom likes to get an example though, because they went through a phase of doing contractor works as like a tier two. And they basically pulled it back to the core thing that they do, which is like provision of materials and those sorts of things. And it's obviously The last year then they they lost they they were a negative 7% profit margin there at 12 and a bit this year. the ah The other trend is like growth usually then precedes pretty bad profit margins. So I guess in anecdotally that looks like try and win a whole bunch of jobs. You don't really you you you but might buy some jobs, you might get a little bit sloppy on the tendering.
00:24:31
Speaker
There's a couple of examples of that through the list as well, where there's like a big jump prior year and then a fairly big haircut on margins the following year. Then also, yeah, there's a couple of examples of people that look like they're possibly yeah not having the greatest time. So like Vinci Construction UK, they're an example of like, yeah, jumping at quite a chunk in the prior year and then basically losing money in the current year. It's a tough old business construction.
00:25:01
Speaker
Yep, ending on a downer. yeah How do we lift the mood? Predictions of 2024. Sorry, 25. I'm going to last because I've not thought about it, so whoever would like to go first, go first. Yeah, I'll jump in. um I reckon it's going to be much of the same other than a couple of movers. I still think Balfour, Kia and Morgan will be in the top five. I think ah Weights will also be in the top five, and then I'm going to hang my hat on the Jay Murphy.
00:25:35
Speaker
ah flying up the ranks um into the top five. That's me, so let me do repeat that. More with Sindel, Balfour, Kia, Waits, and Shay Murphy. And that's the 10 o'clock running out of... ah Where was I? Kempton, 4.10. Yeah. 4.10.
00:25:51
Speaker
car Carlos. Nice. I'm going to have Morgan Sindel keeping first. They keep smashing the quarterly league tables. They're winning so much work. And Balfour have won some huge contracts, but I think the revenue will actually hit next year. So yeah, I would have Balfour if those had started. But so they'll be back very soon. I'm going to have Morgan Sindel for that year. So Balfour beating second. I can't see Keir being anything other than third, potentially jumping up a bit. They have won a lot of projects, but I'll have them at third for now.
00:26:23
Speaker
I had, like, a rocket fourth on the assumption that all of these massive projects in Australia they're winning is going to hit their revenue, but obviously ah this list now excludes that. But I do think that will be strong. And J Murphy two at fifth. I'm going to make another prediction, though, that J Murphy in the next two to three years will be a top three or four. ah They've won some massive contracts and they are growing extremely fast.
00:26:48
Speaker
Yeah. So that's my actions. Here's what I'm going to do. I'm going to copy Ed's prediction. And then if we're right, Ed, we, I'll just, we'll not have Ed on the podcast in a year's time. but And I'll claim, I'll claim victory for it. And then, and then if, if not, we will. So yeah, Ed, what was that again? We're going to go, was it Balfour Morgan Kia? Balfour Morgan Kia.
00:27:13
Speaker
Weights, and Jay Murphy. I like it. I like it. I'll follow that in. I kind of hope I lose because I will come back, you know? so
00:27:26
Speaker
Very good. um no the Some interesting stuff in there, but there's also, yeah there's I guess, a timely reminder of definitely a high risk, low margin business with folks trying to deliver the best service at the lowest price.
00:27:42
Speaker
um Cool, final topic. So La earlier this year, well, maybe not even earlier
Reality Capture Technology Overview
00:27:48
Speaker
this year. We were talking recently over previous podcasts about a whole bunch of different companies that do some form of reality capture. We spent whole episodes talking about reality capture. And a bunch of us were talking prior to the podcast about another one that came across a radar. And and actually surprising for me, I'd not um been super aware of.
00:28:11
Speaker
They had raised over $55 million dollars over time with the latest being a 2021 $40 million US dollar raise from, I guess, fairly top tier generalized venture capital,
00:28:29
Speaker
firms that does essentially this automated progress tracking promise with you walk around with a camera on your head on a whatever document the site and that's going to update that there was I don't know 30 meters of cable tray installed today and then have that update progress and production rate charts and the the schedule. Eddie, Carlos, what do you guys think of this compared to I guess other ones that we talked about at length on previous episodes?
00:28:56
Speaker
Yeah, I was trying to find a big differentiator to some of the other ones that you guys have already discussed. So I mean, I think open space you discussed, was it two or three weeks ago? And I was trying to kind of kind of marry that up in my head as to what the kind of the big difference is. And I suppose it is really the kind of the progress tracking element there and the fact that these guys use like robots and stuff. Yeah, I mean, other than robots, I don't have much to add, to be honest, Jason.
00:29:20
Speaker
Thanks for bringing the roadblocks. ah oh sorry but yeah i have I was as much as I could to find something interesting to say. Like it looks like a good product. It kind of is in that space of it does capture. So we understand progress and then we'd understand what we're spending and we could do payment applications and we have a record.
00:29:46
Speaker
I got really hooked on this pricing page which pissed me off because it has a pricing page with no price and then in the FAQs of the pricing page it says how much does it cost and the answer is it depends on what you got by. So that put me off for a long time. It says it depends on what you got by. Yeah so in the FAQs of the pricing page after it doesn't give you any pricing information the question is like how much does it cost?
00:30:12
Speaker
And it says that depends on what you're getting, like which. Oh, okay. So I thought you what you said was very poor English. And I thought that was a direct quote from um the FAQ page. I was paraphrasing. Yeah. One thing that paraphrasing in more Pigeon English, what do you go by?
00:30:34
Speaker
One thing that they do that looks quite cool, and I've always been a bit unsure as to how it's done, but services inside walls, I've always assumed like if you're scanning, if the walls app and it's watertight, does it assume that everything behind is at 100% complete? um But this app claims to do some sort of X-ray, which actually checks the services that have it been installed within the walls, which is pretty cool. But it's really hard to find a differentiator,
00:31:02
Speaker
Like it looks like a good app after the open space chat. Is there anything that's wildly different? I'm not sure. Yeah, I'm going to be a little bit sanguine and say there's there's a there's a lot of similarity in all of the things in this space. And I think everyone is immediately straight on top of the you know potential and obvious benefits of reporting back schedule and production automatically from scanning. It's just none of them can actually do that yet.
00:31:34
Speaker
Whether or not you're doing it on Ed's robots or someone's walking around taking the pictures is probably not actually the biggest problem to solve. Like people walking around the site a all the time. ah Getting the actual capture is probably not so much the harder problem. The harder problem is getting the actual progress recorded. And there are a lot of people experimenting with AI. There's yeah, there are a lot of competitors, right? Build.ott to do basically the same thing. Qpix does almost the same thing. OpenSpace, there's like a long list and they've all got like A lot of them have got a lot of money. A lot of them have got a lot more money than the 50 million from a few years ago here. So that makes it kind of like a tough space. What's interesting is they're all trying some form of this AI recognition thing. And in any example I've seen, it doesn't yet work to the degree that it's like production ready across multiple trades and finishes. um you think Do you think it'll ever be ready?
00:32:29
Speaker
Do you think there will be a time when that's going to be kind of the goals as a basic standard, like on every job? Yeah. Like ever, ever implies forever and forever is a very long time. So i i you can kind of imagine the pieces you have to stick together for it to work. So I would say yes, at some point it possibly will, probably will, but it's, there's a lot of things to solve. There's just like recognition of what progress is, what actual tasks that relates to.
00:32:55
Speaker
you know, you you can recognize there's just so much detail, right? There's like, I recognize that's cable tray. Do I recognize exactly what type of cable tray the production rates for cable tray by two different subcon? You know, there's just so much detail beyond just working out that this is a door or wall or a pipe or something.
Future of Construction Progress Tracking
00:33:12
Speaker
Because if you get kind of like approximate data, it's probably almost as bad as as doing it the old manual way because someone just goes, I don't believe any of this shit.
00:33:21
Speaker
um Yeah. You need to know that whatever is done is like to spec and was delivered by X. Like if you've got that weird in between ground, which is, it's probably done because it looks like it's been installed. Like, is it really that? So that's kind of my thought is like, no matter what happens, there's always going to be a ah manual process. There's always going to be someone has to actually spot check this. There's, you know, someone needs to double check this stuff always.
00:33:46
Speaker
yeah Yeah, I would say that's less of the problem because you can definitely imagine a workflow of like this copar thing where it's saying here's a bunch of, there's ah there's so many examples of tools that even we use where it's like, maybe it's 90% right. You go, these all look fine. You manually adjust things, some things that are wrong. You can imagine if they could get to like 90% accuracy, that you could build an interface ah around that. But I just, my gut feel is it's like,
00:34:13
Speaker
4%, you know, it's like a really low capacity at the moment. And what a lot of them are doing, which is why I think these folks are doing, which ah isn't bad. I think it's a services business as well. So people are sending, um if you look at the like workflow that they're describing is you essentially send them your BIM model or the scan data. So someone is doing this kind of attribution thing in place of the not exist in AI, like where the AI can't do it. So you're buying not only like a software product, but like a service that's doing this progress tracking attribution thing from your scanning. And I think i think a bunch of them are doing that at the moment, which is fine. Like that's on the path to the what they're trying to get to. It's just a question of how long that'll take. Yeah, fair enough.
Balancing Traditional & New Methods
00:35:06
Speaker
That's why there's no pricing information.
00:35:07
Speaker
Well, yeah, I think, I think it depends on things like frequency that you, yeah, when it's services like that, it depends on how frequently, you know, yeah to what level of detail. Do you want to do walls pipe? You know, what is the extent of the like, um, production that you're trying to track? Eddie, if you were running a job tomorrow, which, uh, what would you be doing? Probably not having robots. you Just keep them at your house. but Keep them in the garden, Jason, so not an animal. I fully hate inside robots as well. leave hair Yeah, I don't know. I think I think there's ah there's a fine balance that's between all of the exciting new tools that are available. um You know, to which you know, it's exciting to see all this development investment actually people willing to give it a go. I think that's, that's a good thing, right? That's that's not inherently negative. But sometimes I think people get a little bit too excited. The traditional methods or
00:36:03
Speaker
you know some of the there's There's a fine balance to be made, and the AI robots, you know where they might be in 10, 20, 30 years' time, that could be exceptional. But where they are right now, and if I was running a job tomorrow, I would try and strike that balance to make sure that we've got the right tools for the right job, and then employing good people to do the rest.
Market Consolidation in Reality Capture
00:36:22
Speaker
And not robots, because I'll keep them in my garden.
00:36:25
Speaker
It'll be interesting to see which one our Autodesk buys. I'd imagine that there'll be some sort of consolidation at some point. Yeah, you'd imagine Autodesk wanting to be in that space.
00:36:37
Speaker
Yeah, I think like in a lot of markets, there's a lot of them that raised a lot of money in peak like zerp period of 2020, 2021 and have not raised, you know, have not been able to like grow into the valuation that they had and haven't raised money since. A bunch of them raised so much money, they could keep going for a very long time. But at some point, if you're not winning, you're starting to lose your power as you kind of like eat into the cash you've got.
00:37:05
Speaker
And so at some point, it makes sense to angle for some consolidation, which, yeah, I actually, I probably wouldn't be surprised to see that in the next sort of six to nine months happen. A couple of these bigger ones pull together. um Even like an open space buying someone, but that, yeah, theyre maybe like them in ah another market. Anyway, I'm not gonna, I'll think about it before making some hypothetical.
00:37:33
Speaker
guesses. Final prediction of the day, yeah. so So Eddie, before we wrap this your first episode, what was what's the verdict, mate? Everything that you've hoped it would be? Mate, it really was. I set my expectations so high for this, and I've got to say, it's it's hit every it's hit every bar so far. So yeah, thanks for having me on. um Yeah, christmas Christmas was a good one this year so far. So thanks a bunch, guys. Appreciate it.
00:38:00
Speaker
i taket get christians russian you call us do it over but Thank you very much for taking time for getting up early yeah um so but and Carlos do you want to read us out mate? Yeah, Eddie, thank you very much for coming on. I really enjoyed that. And thank you very much, everyone, for tuning into today's show. um If you did enjoy today's episode, please do think about liking the video or following us on your chosen podcast platform. and We really do appreciate your support. And we'll see you all next week. Bye bye. Cheers, guys.