By switching to online tenders, Laing Homes saved a cool £200,000… so why are most firms still stuck in a paper jam?

Imagine a world where all transactions take place digitally. Go on, take a moment to picture the smooth efficiency; the money, time and effort saved; the tidy desk. Well, it’s a nice dream – sadly, it’s proving mighty elusive for the construction industry.

While domestic consumers have revelled in the internet revolution, the pace of change in the construction industry has been nothing short of snail-like. Take, for instance, the tedious business of tender administrations. Reams of paper pieced together over hundreds of man-hours; couriers galore… and the same all over again when the client changes their mind. Sound familiar?

The benefits of paperless tendering are obvious. It takes less time, reduces printing, copying and courier costs and also reduces the chance of miscommunication. It’s better all round, as some firms have found to their benefit.

Construction IT firm BuildOnline reports that, by using its online tendering system, Laing Homes saved over £200,000 in running tender costs. That’s a whopping 73% reduction. So, why isn’t tendering online the norm?

Steve Pittard, development director at Elstree Computing – digital estimating and tendering solutions providers – has direct experience of the industry’s reluctance to change. “We are not selling a lot of systems for tendering electronically,” he confirms. “We’re still asked, ‘Will it print out? How nicely?’”

CDs could provide halfway house

Elstree came up with a solution after consulting with industry practitioners 18 months ago. Instead of a full jump to the internet, the firm decided to offer a CD-based tender system as a more gradual step towards online tendering. “CDs are an accepted medium,” he says. Yet, despite the logic, Pittard concedes there has been just “a handful of takers” in the last year. “The system isn’t rocket science, we tried to keep it very simple,” he says. “But there’s always a bit of mystique with something new.”

There are a host of other reasons. Lack of IT investment, incompatible computer systems throughout the supply chain, fear of the unknown, security and legal concerns – all explain why the sector has failed to jump on the e-tendering bandwagon. Pittard also points to the bad press e-auctioning received as a factor.

Recent industry research backs this up: a National Federation of Builders’ survey of small and medium sized contractors found that electronic communication was at best patchy - less than a third of builders are using it to send data other than email – and just 3% of those polled use collaboration software over the internet. And a straw poll of delegates at the RICS IT conference last October revealed a gulf between consultants and contractors – while the former claimed they nearly always send out electronic tenders, most contractors said they generally received paper tenders.

Also to blame is the failure of companies such as Arrideo, Bidcom and Mercadium, which offered us the earth – in the form of digital processes for materials purchase, contract tenders and project management – a few short years ago. Unfortunately, just as the tech bubble burst in 2000, so the downturn hit our industry providers, leading to many closures and mergers.

How hard can it be?

As Peter Dampier, IT head at Gleeds, points out, you can’t run before you walk (see box, above). He argues that the glut of collaborative software for running live projects online was far too ambitious. “We need to focus on what we can do now, rather than something too confusing.”

If nothing else, the lack of take-up has mustered a collective drive from IT and industry experts to engage the sector’s interest. One conclusion taken from the RICS IT conference was a need for basic guidance on moving from paper to digital. As a result, Davis Langdon partner, Peter Sell, is heading up a group that will draw up a 25-page guide to all things

e-tendering for publication later this summer. Sell agrees with Pittard’s logic that those unfamiliar with the environment could start with CDs. “We want to encourage people to have a go,” he says. Connectivity between different computer programmes is essential, in his view, but he is optimistic about the future.

The IT providers also acknowledge that a return to basics is probably in order. James Atkinson. of IT provider Causeway Technologies, reckons more work is needed from suppliers. “IT companies need to understand the primary drivers for construction firms.”

So, despite the gloom about non-connectivity and backwards thinking, there are some encouraging signs. Elstree Computing’s Pittard points to the almost universal use of electronic drawings in the sector – a trend that has emerged in the last 18 months – as a significant driver of change. “ Davis Langdon’s Fall is also hopeful that momentum could build significantly once understanding is spread around the sector. “Once people start to do it, I think it will start to blossom,” he predicts.