Traditional values

Among the flurry of dotcom companies that flooded the construction market in late 1999, there were those who promised to provide savings through e-procurement. The huge cost of sending out tender packages on paper alone could be saved through using electronic methods.

So the e-companies hurried to create electronic links between contractors, sub-contractors and suppliers for tendering and purchasing, even advancing into reverse auctions and other complicated procurement procedures.

And in late 2001? Well the result has been mixed. Some e-procurement companies, such as eu-supply.com, are still going strong. Its user base consists of 50 of the top 107 construction companies in Europe, putting thousands of transactions through the site. Portal Asite.com has 33 companies using the procurement section of its services that also includes collaboration and logistics. Others, such as e-marketplace Mercadium have fallen by the wayside.

But is the reality of paperless procurement any nearer? Is construction ready to do all its tendering online, or is it cutting out the essential human part of purchasing?

Traditional software companies have decided it is time to get in on the act and try and step into the gap left by the collapse of dotcom companies, and the industry's suspicion of them. Construction software suppliers Ramesys and Masterbill have both announced their intentions to provide e-procurement services.

Ramseys Xchange
Ramesys Xchange aims to cut the costs involved in sending purchase orders to suppliers. A contractor using Ramesys software clicks a button to send its purchase order to the Xchange internet transaction hub, instead of, or as well as, sending a paper copy. A confirmation is sent back to the contractor and the order shows up automatically on their accounts system.

Suppliers that are connected to the hub receive an email letting them know there is an order for them, which they can then download, and feed into their system.

Even if suppliers aren't connected to Xchange, they can receive orders by fax. Contractors who aren't using a Ramesys product can also use Xchange, by dialling into it through their own system, but the order won't show up automatically on their accounts package. There are 16 suppliers signed up to use the system, including merchants Travis Perkins and Jewson.

No additional software is needed for Ramesys' customers, the training required is minimal and is pay-as-you-go, so you only pay for each order sent to the hub. It costs between 20-26p per transaction for existing Ramesys users, with a variable cost for others, depending on what is required to hook-up their existing system to the hub.

Ramesys marketing director Julian Barlow says it was forced to take e-procurement seriously by its user base.

"At the height of the dotcom boom, a lot of our customers were interested in signing up to the services provided by internet companies, and in truth we were a bit scared because at the time it looked as though software companies were old news. Since then, a lot of these companies have gone out of business, but it has made us consult our user base and from their comments we have developed Xchange."

Barlow says Ramseys is willing to be led by the industry, something the dotcom companies failed to take into account.

"Our research shows that the industry is sick of being led by internet companies and wants something that fits in with their existing methods. They do not want to change their processes to fit in with technology."

Six Ramesys customers have been trialling the system since July. Roy Wilding, a senior buyer for Hertfordshire-based contractor Lengard and is one of those and says the simplicity of the system is its chief benefit. "We use Ramesys software already, so there is no additional cost and it is very user friendly. You just create the order as normal and press a button."

Over the course of a year, Wilding expects to raise approximately 2000 purchase orders through Xchange to all its suppliers.

Wilding adds that it saves time through improved processes, and cost by cutting down on the amount of paper the company will use.

Masterbill 3
Supplier of quantity surveyor software Masterbill is set to release its E-tender package this month, for exchanging bills of quantities over the web.

A QS using Masterbill 3 creates a bill of quantities, then posts it to a secure website. This sends an email to selected contractors and gives them a unique password to access the information on the website. Contractors can then price the bill themselves or package it into bits and send it out to subcontractors. Once the pricing is complete, the bill is posted back up to the website and can be accessed by the QS, who can read the information directly into Masterbill 3.

It isn't necessary for contractors or subcontractors to have the Masterbill QS software to use the system. But they will have to purchase, as a one-off cost, the E-tender package, which costs just under £100.

Masterbill is running two pilots in January. One, a local authority, said its contractors would have to use the system if they wanted to work on the £5m project.

The inspiration behind E-tender was complaints from Masterbill customers of problems with Construction Industry Trading Electronically's (CITE) standard for exchanging tender documents. It has been trying to establish a standard for years, but without success, according to Paul Watkins, sales and marketing director at Masterbill.

"Our customers have expressed three main frustrations with using CITE," says Watkins. "Firstly it's an opt-in standard, which means that some software houses have written it into their code but others haven't, particularly estimating software providers. So QSs can export a bill of quantities to a contractor using the CITE format, but can't get it back. Which leads to the second point that contractors aren't that willing to take up the standard, or to return bills electronically. QSs still have to key tenders in manually, so no one really benefits from electronic tendering."

"The third problem is that the standard is ambiguous and doesn't always work properly. The CITE manual gives out two places you can put page numbers in your code, which doesn't create a consistent standard. There is also an extra column that you can use if you want. Most software houses don't use it, but one bill of quantities system did, meaning that the estimating system it exported to couldn't read what was in that column."