Brian Moran and Mark Suster reckon e-commerce can cut building cost 20%, and they’ve set up a web site to prove it. Will they be construction’s first Internet millionaires?
If you are one year away from becoming a partner in Andersen Consulting, you might think about leaving if you were offered a better job – say, chief executive of Microsoft. But what on earth persuaded Mark Suster to chuck it in to start a small construction business? Well, the persuasion came from his friend, architect Brian Moran. The way Moran talked about the business in question, the more leaving Andersen looked like the smart move.

Moran envisaged a web site where it was possible to find details of suppliers’ products at the click of a mouse. Suster, an e-commerce expert at Andersen, knew that everyone in other sectors was starting to do business electronically. He also knew that nobody in the UK construction industry was offering such a service. Their research suggested that electronic trading could save £14bn a year in construction costs – about 20% of total industry turnover – and project completion times could be cut 15%. Clients would practically demand that architects and contractors use their service. Suster gave up his job and was born.

The two men make a good team. Moran, who is the company’s president, has more than 13 years in the construction sector, most recently working with US developer Hines. Chief executive Suster has worked as an e-commerce strategist for clients such as Sony, BT and Marconi. Moran can talk to the construction industry in its language, and Suster can talk to the investors in theirs.

Last year, the site started up in Ireland. The results seemed to bear out Moran’s optimism: in its first six months, 50% of suppliers operating in the Irish market, including international firm British Gypsum, signed up to the service. By the end of this year, the firm expects £3bn of e-commerce transactions to go though its site.

So, how does it work? The site is essentially a virtual builders merchant. Suppliers register their products and then contractors, architects and engineers can examine what they have to offer by logging on to the site and accessing the products section. If a user wants plasterboard, he or she clicks on the plasterboard icon. The site throws up a list of suppliers’ products, complete with specifications and prices, and the user e-mails his requirements to the chosen suppliers. From the information that comes back, the user can then decide where to place his order.

To ensure that the suppliers pick up the enquiry, the firm has set up a message service that tells suppliers they have an e-mail waiting by calling them on a mobile phone. “It’s very quick because these sales guys are just going to one spot on the web instead of relying on Post-it notes and faxes,” says Moran.

The only downside is that, at the moment, you can’t pay for the goods over the web. The buyer still has to send the supplier a purchase order. But Moran and Suster aim to have on-line payment operational by the end of the year. They want to examine how the system is used before investing in transaction applications. “As the system grows, we will introduce more sophisticated layers of IT,” says Suster. Build-Online is not just a builders merchant.

It also offers a project extranet service for collaborative working; this combines the accessibility of the Internet with increased security. Build-Online holds project documents in a password-protected central directory where they can be accessed by authorised parties in different locations. Build-Online will manage the extranet’s security, control document authenticity and keep information on where the documents are stored. Project teams using the extranet site can also access the suppliers’ data.

Moran and Suster may see their service as saving the industry money, but how much will it cost users? Suppliers can register free for a three-month trial period. After that, it will cost about £2500 a year to register as a supplier. But Moran and Suster are keen to point out that the fee will depend on the company’s size. The cost of the extranet service has yet to be decided.

The Irish product has already been a hit. It is up for the best business-to-business initiative award at the Marketing Institute of Ireland’s Internet awards. It also won the “Spider” award from magazine Web Ireland for best use of the Internet for business. As for the future, Moran and Suster intend to use their £6m of venture capital to turn the site into a European player.

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