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How Can Projects Successfully Tackle Procurement?
66 Plays1 year ago
This week, Jason and Carlos are joined by Alastair Blenkin, CEO of procurement solution ProcurePro.
The trio outline who is best placed to lead a project's procurement process, how construction is communicating around procurement as well how to go about sourcing reliable subcontractors.
Follow Carlos on Linkedin | Follow Jason on Linkedin | Check out Aphex
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Transcript
Internet Woes: UK's Infrastructure Issues
00:00:00
Speaker
How's my connection? I got a new internet in yesterday, which they claim is faster. I've gone from 40 to 60 meg.
00:00:15
Speaker
Blocks of flats are terrible in the UK though. It's the dwindling UK info. Are we recording while I'm bagging out the UK? It's the crumbling infrastructure of the motherland. It's the conservative outlook. It's the apologising for everything, mate. There's a few things. Chuck them on the list.
Podcast Introduction: Jason & Carlos
00:00:39
Speaker
You're listening to the Offsite Podcast with Jason and Carlos, where we talk all things construction and technology. Join us for discussions with industry leaders and insights into latest trends in construction. Welcome back to the Offsite Podcast. Carlos joining me again today, mate. This time with a bit of hay fever and sounding a little nasally, mate.
00:01:02
Speaker
Yeah, Five Week Old Baby plus Hey Vava and a 7am podcast is a yeah, interesting combo but should be okay. Sorry, pushing you to the limit.
00:01:12
Speaker
Well, hopefully I've got a super engaging topic to discuss today, which will draw you out of your hay fever haze and lack of sleep haze.
Project Scope Changes & Procurement
00:01:23
Speaker
This topic came about because in the last few weeks, we've been talking a bunch about projects getting pushed or descoped or changed and some projects getting canned. A lot of our discussions went into this world of the impact on the supply chain of all this change.
00:01:39
Speaker
And then that kind of led us down this path of a can of worms talking about procurement and how those contracts were let. I guess I'm covered a really interesting topic that I feel like doesn't get talked about anywhere near enough, which is procurement.
00:01:53
Speaker
As an engineer, like in my background, I always felt like times when I'd set up a scope of work, I let the contracts, I knew what was in
Procurement Leadership: Who Should Lead?
00:02:03
Speaker
them. I'd written the scope perfectly is where it was like totally nailed. And then where it wasn't like that was where the scope of work was effed. Yeah. Procurement is a super important topic and a thing that sets a project up for success. Carlos, I'm guessing this is a topic close to your heart being a QS.
00:02:21
Speaker
Yeah, for sure. I particularly remember some pretty strong frustrations when running procurement on projects. I appreciate it's been a few years, but it's all coming back to me now. So yeah, looking forward to this one. I can never remember. Is procurement in the job description of QS or is there like another procurement team? We have procurement teams. There's not in the job description.
00:02:48
Speaker
There's a line. So if it was like you're procuring like a big materials package or like an organization to come in and provide labor and things like that, that would be the procurement team. If it's like a subcontract package, it was typically the QS of the engineer owning that and reporting back to the procurement team.
00:03:07
Speaker
Okay, and taking advice from them when there's a bit of a split. So I guess what I wanted to dive into today is a topic is a discussion about procurement, what's best practice, what works, what doesn't work from, I guess, both perspectives and
Meet Al: CEO of ProcurePro
00:03:25
Speaker
Today I've invited along a guest who actually knows way more about the topic than both of us combined. So I'll introduce Al. Al's the blanket and from procure Pro. Al is the CEO and one of the co-founders. For those that don't know, oh, by the way, thanks for joining us, mate. Ha ha. Pleasure. Thanks for having me, Jayce Carlos.
00:03:47
Speaker
But for those that don't know, I guess Peculopro is probably one of Australia's fastest growing context startups. Why I like Al is he's based in Brizzy. And Al, did I work with your cousin back in the day? Was Sam your cousin? Yeah, I think that was some connection there.
00:04:03
Speaker
Yeah, so we go, let's say, way somewhat back. Al, for those that are listening that don't know Percure Pro, give us the classic overview, I guess, the summary of what you and Percure Pro do.
00:04:18
Speaker
Yeah,
ProcurePro's Digital Solutions
00:04:19
Speaker
absolutely. So ProcurePro is a specialist procurement platform for main contractors in the construction industry. We're a few years old, we've grown really quickly in Australia, and we're now expanding into the UK and Ireland. So myself and a co-founder have relocated over here late last year, just in time for the winter, which was lovely, and I'm pretty keen for the summer.
00:04:39
Speaker
We solve a problem which is procurement typically for QS as project teams and then commercial managers sort of sitting above across multiple projects. It's a really fragmented problem space that's typically solved by Excel spreadsheets and Word documents. People might
00:04:54
Speaker
sort of think they've got procurement handled with a tendering system or confusing it with estimating tech upfront. But really, if you sort of break it down, there's a lot of spreadsheets, a lot of documents, a lot of manual labor, and it's really hard to get insights out of it, which is part of the challenges of the day-to-day in procurement and exactly what we solve when you consolidate that into a digital system. The main thing I heard, mate, was that QS is do-do procurement from what you covered. So it sounds like except for Carlos.
00:05:20
Speaker
Yeah, no, absolutely. When you procure in packages and the QS knows the details of the projects, right? So this is less about sort of centralised materials, procurement or labour and more around, hey, if we got a project, we just signed a head contract, we need 50 trades on site, we need them on these dates. How do we
00:05:38
Speaker
plan that out. How do we go through the procurement process for each package? Go out to market, get quotes, come back in, compare them, select a subby and put it into a contract and get that done 50 times over.
Leading Procurement Processes
00:05:51
Speaker
As you put it, Jase, how do we get the right subbies on board and set our projects up for success?
00:05:56
Speaker
Yeah, because I think that's like, yeah, that's if I reflect on my own experience and think through scopes and projects and packages that I looked after and the ones that I felt went well were the ones where I knew that scope of work, I'd written it or I'd walked through it. I was confident in what was included, not excluded. So as things change, things happened, I knew rights and obligations. And I felt like that
00:06:25
Speaker
Procurement step is what sets my scope up or the project up for hold to make money, lose money, be successful, not successful.
00:06:33
Speaker
I guess we've probably touched on it a couple of times already around like, does a QS do procurement? I think the first thing that would be interesting to dive into is like, who is best placed to lead the procurement process? I guess in Oz, especially on infrastructure jobs, engineers do a lot of that legwork. It varies around the world from procurement teams to QS's. In your experience, mate, what do you reckon would be best practice? What would you do if you started a construction company tomorrow?
00:07:01
Speaker
Oh, it sort of depends on your sector a little bit and your region. So if you do look at those infrastructure jobs, much bigger, a few more bums on seats, you're going to get some of that procurement workload split across multiple roles. So whether that's engineers, whether there's particular technical experts in different trades. We operate a lot in the commercial sector where you do see QS's in the UK or contract administrators
00:07:25
Speaker
in Australia might be a couple on a job or one and a half or one. And then if you go sort of down further in the market down to a fit out or a refurb company, you might not have those necessarily roles and you might have project managers who are doing jobs in six or eight weeks or doing a couple of jobs at a time doing all themselves. So it naturally sort of varies by sector, but I suppose that the common thematic to it all is
00:07:53
Speaker
is construction is delivered by its supply chain. You've got to not just get the right subbies on board, but make sure that everyone's got a really good and clear understanding of the job. And one of the funny challenges about procurement is because typically it all happens in a rush at the start of the job.
00:08:08
Speaker
the actual sort of curve of the workload is really steep at the start, and then sort of tails off a bit through the job. So it's a tough challenge to resource around because you've got this problem where you need the actual understanding of the job and to look at the drawings and really understand, you know, what the obligations are sort of on each side. And that's not just something where you can go, okay, let's throw 5, 10, 15 people at this, get it all done. And then, you know,
00:08:35
Speaker
70% of them walk away. You've got this, you need this understanding of the job and you also sort of need the time in your day to do it, to make sure that the scopes are right, to create value, to create margin, you know, within the trade as well and ultimately, you know, ideally a more profitable job.
00:08:50
Speaker
There's this interesting tension in the discussion around who should do it, where I imagine there's an argument for, say, a procurement or a QS team that have probably a broader understanding of all the other contracts, the contracting strategy on the project, possibly what's in the head
Impact of Procurement on Timelines
00:09:08
Speaker
contract.
00:09:08
Speaker
And then on the other side, you've got kind of this project manager, engineer type person who is going to have to live with and deliver that scope. And there's kind of like an eating your own dog food incentive to make sure it's right. So I don't know if you, I don't know if that's a dynamic that you see is true, like of like people doing the procurement and not having to be the person that sits with that contract through to completion.
00:09:33
Speaker
Yeah, I mean, it's something when even if you sort of break down, so how like our tech works, you start to see different people interact with different parts of the system a little bit. So you will have sort of your more technical experts looking at the scope or you'd get a scope out to your site team, as is sort of like ordinary
00:09:52
Speaker
business practice, right? Yeah, you're going to make sure that everyone's got an understanding of that. You might have a particular person, whether it's the same or different, running the tender. And then in some of our bigger customers as well, we sort of see there's this difference between engineers running or particular people drafting the scopes, project engineers running the tenders, and then they have particular contract administrators who have sort of a smaller scope in terms of the procurement, but they're sort of purely focused on the contracts and getting them through.
00:10:20
Speaker
I think the other point to note, it's sort of interesting when you look at, okay, sort of almost project team responsible or based procurement versus that centralized procurement model. And it makes sense as Carlos, as you put it around, hey, we're doing a bulk purchase of a lot of materials or labor and we want to
00:10:38
Speaker
aggregate demand and be able to obviously apply purchasing power to drive better commercials, right? One of the things that we actually see a demand coming from the industry and our customer base is not just to have that sort of bulk purchasing power from a volume of materials perspective, but just generally having visibility across, hey, we're procuring the same trade across seven different jobs in the next six months.
00:11:06
Speaker
can we sort of democratize that information across our project team so they can put their heads together and go, hey, I know I can see Carlos and Jason, you guys are both running procurement on these projects. You're operating in silos, you're not talking to each other. How can we actually give you that information that you guys can put your heads together and work smarter without your manager on top having to do it? So it's interesting some of those almost people dynamics within the organization that are starting to be solved, I suppose, in 2024.
Scheduling & Information Sharing
00:11:35
Speaker
I think the information part is quite interesting because if you split a couple of the aspects that we've just spoken about, should the person that is procuring the package be the person that sits with the package because they have this very detailed knowledge of what we procured, how we procured it, the contract mechanism?
00:11:53
Speaker
assumptions and everything that comes with it. But then there's the trade off is, do you want people buying things that they actually have a very good understanding of? So like steel and things with a lot of fluctuations in the market and you want someone that's repetitively buying the same thing, which means they then can't deliver these package because on a major job packages could last for years, you're never going to gain that experience of doing it all the time. There is a trade off there.
00:12:16
Speaker
And that does really drive who should be delivering that package. So if you go super specialist subcontractor, it makes sense that the person that's going to be sort of procuring it is the person that runs with it. So I think there was that balance. But you mentioned democratizing information then. There's this huge, horrible sort of communication piece that I think we need to dig into. Yeah, how are customers doing that at the moment?
00:12:37
Speaker
to actually keep everyone sort of in the loop because if i remember back there's this beast of a schedule no one's actually in sync with it and everything's managed on email and it's very sort of slow so it made it really hard to work as a team and engineer with qs maybe a buyer
00:12:52
Speaker
Yeah, it's interesting sort of this like, this where are things up to or where is information, we sort of see it playing out across a couple of different domains. One is scopes, which we can come back to, two is just like procurement schedules around like progress where things up to.
00:13:09
Speaker
there's this almost really rich data source of procurement around when things need to be procured, which is what we're just talking about around going, how do we get visibility between projects rather than an individual project? Carlos just directly touched on the first one that you're talking about there on a procurement schedule. We've heard that described in a few different ways. It's an underutilized resource. It's frustrating that to get visibility on status, you need to basically phone around and call
00:13:35
Speaker
around where things are up to or the ordinary problem is to go, hey, I get a status at the end of the month. Do I even trust? Do I trust that status? Is someone sort of covering their tracks a little bit because things aren't as rosy as they might seem? And that's one of the big problems that we solve that when you put it in a centralized software platform, the system updates itself as work is completed so that basically everyone knows where it is.
00:14:02
Speaker
that can almost scare some people sometimes in this view that our management knows exactly where things are up to. But it's actually, it's not just sort of top down visibility, it's actually collaboration amongst project teams as well. So it is that piece around, I'm not having a call, the guy next to me to go, hey, have you sent this tender out? Or it has this recommendation going through? Or where's that contract at? It's that speed of information sharing that actually creates velocity, you know, amongst the project team as well.
00:14:30
Speaker
So you're, I'm having flashbacks to the procurement manager. This kind of goes back to the eating your own dog food and being master your own destiny
Vendor Management & Quality Assurance
00:14:38
Speaker
thing. I'm having flashbacks to like the procurement manager for a certain package in the UK for something else working on sitting on what they were supposed to do for two months because it was like the date was in the procurement schedule. And then like four days before it's supposed to be submitted coming to me like, I need you to approve this entire scope and you've got
00:14:56
Speaker
12 hours to do it sort of thing. It goes back to like, if that's the dynamic of how it's working, then you're going to get terrible scopes. You're going to have giant gaps in the process, I'd imagine.
00:15:09
Speaker
Or the other classic one is recommendations for award, right? That you go, hey, we've project teams done all this work, and they've selected this subby, and they go, right, let's pull together 200 pages worth of compliance documentation and vetting, and let's send that up the chain for seven people to sign off. And then what we typically see is that could be literally 200 pages in a bulldog clip sitting on someone's desk worth
00:15:34
Speaker
15 million bucks. That's an incredible amount of risk just sitting in paperwork that no one knows where it's up to when someone's needed on site. And if that's going through two, three, four sets of hands from site to head off as potentially multi-location, that's really complex. Then people graduate from hard copies, still exists, to emails or some people send around with DocuSign, but it can be really hard to track. And again, from a project team perspective, that's going
00:16:00
Speaker
Hey, I actually now know when my commercial manager or my regional manager is sitting on stuff, and they got a lot coming into their inbox, and they got a lot of risk sitting in their inbox. So it makes it kind of easy to drive that, again, just performance and velocity through to get your procurement done, and obviously then be able to focus on the project.
00:16:18
Speaker
So I guess, obviously, everything we sort of spoke about is like the schedule side of things. So how do we actually manage what we need to procure, who's going to own it, and the process back and forth to get to a vendor selection. In terms of a pool of vendors, key to understand maybe about your experience in Australia and how contractors manage this, because in the UK, and this might have changed since I left, but there's this tool that pretty much all government jobs had to use, which is like a pool of supply chain members who have a profile.
00:16:48
Speaker
It looks like my five-week-old son designed it and I built it. It's awful. But because this government mandated everyone's force to use it, how has that typically dealt with contractors in Oz to make sure that we actually have this live and accurate and up-to-date pool of organizations that we can actually go to to secure work with?
00:17:09
Speaker
Yeah, I mean, approach to, approach to engaging with the supply chain again, various sectors, even kind of government versus non-government work. If you then think about a lot of government work can be infrastructure as well. And you do have this sort of hard requirement to only go out to pre-qualified vendors. And if it's so hard to get someone pre-qualified because it takes months, then you just, you might not even bother going out and actually testing the rest of the supply chain around, can you get a better project outcome? Can you get better commercials?
00:17:37
Speaker
As you go down in scale, and you still might be talking about a commercial job that's 100 or 200 mil, you start to get this behavior of, hey, I know my guys as a QSCA project manager, let's give them a call. They might not be on the supply chain register, whichever one has, but we'll go out, get a price, and if they're within striking distance, then we'll clean up the paperwork and get them pushed through their pre-qual, and then down into the
00:18:03
Speaker
the lower end of the commercial sector or the fit out sector, no one does pre calls, right? It's a lot more speed and price driven as opposed to compliance driven just as a thematic based on the project sizes and sort of the level of risk that's kind of associated naturally based on those sort of jobs. So you see this sort of variance in approach, I think the
00:18:23
Speaker
The commonality between the whole lot is access to information and usability, right? People want to know when they're making procurement decisions or when they're going out to tender, Hey, who is this person? Who are the contacts? Are they pre-qualified slash, you know, what projects have they worked on us previously? Are they tendering on multiple jobs with us at the moment? Are they working with jobs on us at the moment? And then if you can provide that, all that information easily, not in some spreadsheet or database that's as you put Carl super, like not user friendly.
00:18:53
Speaker
or maybe on a server drive that people don't look at or on your internal intranet or on an Excel spreadsheet, that's how many thousand rows long. Do people use that information? Maybe not if it's not at their fingertips, whereas if you then get that information, you can start to have better conversations, basically procure smarter and ideally faster.
00:19:13
Speaker
How much though are they actually looking at performance? So you mentioned there, like they might already be working on a bunch of jobs within your organization. That could actually be a bad thing because of capacity. They could be screwing up every job that they have for you, but no one at HQ knows because people don't report it back from site. So our contractors better now are actually actively monitoring performance. Because if I think back to the companies I worked out, there were these
00:19:36
Speaker
league tables of vendors with a score. I don't know how they updated them and on site you had to do those subby performance reviews which is like how you're getting on is once a quarter and you're already working with someone for six months so you're pretty generous in feedback anyway because you don't want to be too hard on the guy that you're working with. So yeah, how's that managed? Do they actually use actual performance like contract growth and how delayed they were and those sorts of things?
00:20:04
Speaker
Yeah, so it's a pretty interesting problem space. So one sort of aspect of this is performance, i.e. ratings. Are we rating someone? Then the other one is the transferring of that information. Does it actually get transferred? Does it go anywhere? Do people
Subcontractor Performance Ratings
00:20:18
Speaker
use it? And then there's almost like the sort of decision point around, okay, well, people talk about these blacklists or brand lists, sort of the unofficial blacklist around, hey, they've screwed up their jobs. And the amount of times, honestly, I've heard a main contractor say to us,
00:20:33
Speaker
hey, we were having a Barney with this Sabi on one job, or we're having issues with them, performance issues, whatever it is. And we've got another team 100 kilometers down the road who's literally just awarded them a package on the same day. And the mechanism to transfer that information can be email. And it's like, OK, here's the list of people. Go and look at the list. Is it? And it comes back to controls. So what is the process that you're putting in place around?
00:21:01
Speaker
a controller blocker or at least a surfacing of information at the right time that's really easy when everyone's got a thousand things to do that allows you to sort of take note of that sort of red flag or amber flag going off. So in terms of the rating side of things, it's pretty interesting. So I've seen a lot of rating systems in my travels over the last few years. We're designing one at the moment, which we think is going to be way better.
00:21:24
Speaker
for the industry, so where I've seen it in a lot of different forms in Excel spreadsheets is probably a big one. I've seen main contractors try to build their own internal system. It doesn't typically link then to the procurement system, so you gotta go and look for it. I think a lot of it actually does fall down in terms of usability.
00:21:41
Speaker
One of the really common things that we see as main contractor goes to build a rating system, you have to sort of go out of your way to rate and therefore you don't get that much critical mass of ratings, therefore the ratings aren't particularly reliable. You get these huge biases towards if someone, as you put Carlos, mates with a sub-E versus had issues, what time in the job did they rate them? Was it consistently on the way through? And you do see these natural fluctuations or did they rate them just after they woke up on the wrong side of bed or had an issue?
00:22:10
Speaker
or whatever that was. So you see these sort of natural imperfections in the information, which is natural, right? It's going to happen. Just construction.
00:22:19
Speaker
Yeah, exactly. And so, and then you kind of go, okay, well, that's part of the problem. So we see people trying to rate them, as you've said, Carlos, say consistently or periodically over a job, we've seen builders actually bring in like outsiders, external consultants to work with teams to go, Hey, can we, can we take some of the emotion out of this? And can we help sort of coach and normalize some of these ratings? But that's sort of effort in itself. And
00:22:46
Speaker
I know I've gone on a little bit here. One of the best ones I've actually seen is that these ratings can, again, sound a little bit scary, but the jam of one of our customers are really, and they said they implemented rating systems and they were a little bit sort of scared or gone shy around implementing it.
00:23:02
Speaker
And then the GM said the next week he had 10 meetings with the directors, the subcontractors coming in to talk about these ratings because it was a really positive sort of step for the relationship because they could talk about the ratings, they could talk about performance, here's how we've actually gone, here's where you could improve, but also some of the directors of these subbies didn't actually know how the project teams were performing. So there's lots of little bits of complexity around problems and sort of
00:23:27
Speaker
tying the information together and the usability piece is sort of pretty critical around solving it and having meaningful impact for projects. Awesome. Yeah, I'm going to drag this conversation back up to the perspective of the project manager for a second. Otherwise, Carlos will keep us in the weeds of procurement process and get into supply chain risk. But before we do that, design and construct.
00:23:53
Speaker
And I go back and forward on this through conversations with people, and I don't even know where I land in what the way to solve this problem of.
Design & Construct Contracts Challenges
00:24:03
Speaker
We start with some sort of scope that is loosely defined at the start. The client might lead to the main contractor, this build a bridge or build a building with some parameters. And then at some point, we then commence this design process.
00:24:19
Speaker
And oftentimes, through that design process, we're needing to procure in order to hit dates that we've signed up to in a contract. And so we're letting contracts, based on a bunch of assumptions, design still progressing, things change. That can create some weird dynamics where you just have dogshit contracts that don't represent reality of what actually gets delivered a year later or two years later. You can also get a situation where
00:24:44
Speaker
head contractors start stuffing risks to subbies because there's a whole bunch of unknown assumptions. Instead of properly addressing those assumptions, they just try and jam them all down to the subbie. What is best practice around design and construct and how to let contracts in your experience out? Because I don't know what to do.
00:25:01
Speaker
Oh, I mean, there's a lot of challenge in dealing with change, right? Like it says it in the name, like when the design is still happening, there is naturally going to be change through the process. We see a lot more constructor only talking to folks out of the US as well. But that comes with its own challenge that do you fully optimise the design? If you have these really sort of clear distinct phases, do you have to do it all up front?
00:25:25
Speaker
and then build it all and that takes longer and there's obviously like the time cost of money when you're trying to finance this thing. So again, there's sort of natural trade-offs wherever you go. In terms of, is there a silver bullet to solve it in procurement? No, there's not. I mean, our sort of big philosophy and-
00:25:46
Speaker
Our big philosophy around what we're trying to do at Procure Pro is just take the admin away so you've actually got more time to focus on the details of what's being procured to focus on the scope. One of the features that we've got in the system is around the Scope Works library and so that's all around centralization of basically really good scope content and know-how so you can access the best practices of the organization
00:26:11
Speaker
so that when you do your next scope, you're not making the same mistakes of projects gone by. The soundbite that you hear from the industry is we always make the same mistakes over and over. When we were originally building this product, we had our co-founder
00:26:27
Speaker
who spent a decade at Harchus in, you know, as a commercial builder building high-rise residential towers, hotels, et cetera. And he's going, look, I had this scope gap that I learned a lesson, and the guy literally sitting right next to me,
00:26:43
Speaker
made the same mistake and he lost 50 grand on his job because we're sitting next to each other but we hadn't shared every single lesson that we could over my sort of construction experience. So there's ways that you can say improve scopes or improve clarity of pricing. The risk transfer side of things is obviously a harder one and maybe the better way to solve that is at a head contract level rather than at a subcontract level and make them more collaborative rather than fixed-price contracts. So
00:27:12
Speaker
That's a whole other podcast that is. If we double click into our like, cause I guess in my experience, when I let a contract that had a bunch of unknowns into it,
00:27:28
Speaker
The subbies that would tend to it had this really annoying habit of asking good questions that I didn't know the answer to. And they would each ask them in the classic spreadsheet or Word doc where they'd ask an answer and then they'd get it. They'd ask a question and then they'd get an answer. And the pattern then was you'd answer each one independently, which I don't know if that's industry standard.
00:27:49
Speaker
But yeah, is there a better solution in like, you know, flagging those things as unknowns or assumptions, putting them as pots to the side? Like, is there a better way through that back and forth and assumption management? Carlos and I spoke to a project director at Kilnbridge, maybe in the UK the other day on the pod a few weeks ago.
00:28:10
Speaker
Rupert. And we're talking about assumption management through design and construct. Do you see any pathway? Is there a better way to do it, Al? Or is it just part of the beast?
00:28:22
Speaker
No, it's like, it's interesting, right? And it's all solvable. Like the assumption management stuff sounds great. And then it's kind of like, okay, how does it get done? Who does it? When does it get done? Do people have the bandwidth, you know, and the time of the day to make it happen? What number do you stick on it when you don't know what it is and all that sort of stuff?
00:28:41
Speaker
And maybe, again, you don't get to the land of silver bullets out of the gate, but you sort of go, hey, if we could start doing assumption management and we do it as an individual organization, or you can start to open source that, democratize it for the industry and go, hey, here's sort of a standardized set of assumptions and risks that we need to consider. Maybe that improves the conversation around risk and people find smart ways to
00:29:09
Speaker
either price the risk or manage the risk. So there's ways that you can do that. We've sort of spoken about it in our own senses or through our own lens of going, hey, could we build an industry standard scope of works library? That's a really hard problem to solve.
00:29:24
Speaker
And the answer right now is like we've got one that comes with our system. Could we build one for the industry? Probably not yet. We've got a lot of scope data flowing through our system. Can we start to run AI over that and sort of extract stuff out in time once you get this real sort of critical mass?
00:29:40
Speaker
varies pretty significantly by sector. We've also got structured pricing information around those pricing schedules, inclusions, and exclusions flowing through our system. So is there a way that, again, with critical mass of data, you can start to go, hey, system has seen all this stuff before. And we can actually tell you to go, there's missing scope from a contract scope perspective.
Tender Process & Question Management
00:30:03
Speaker
There's missing line item.
00:30:04
Speaker
here does that need to actually go and look back at the drawings or release prompting stuff or there's an assumption here that you need to consider and sort of prompting users hey have you thought about x y z and then instead of just on a one-to-one basis can you sort of flip that around and open source it for the industry like there are industry standards in many many things how do you start to get that you know more from a contracting perspective as well
00:30:27
Speaker
So before I take the bait and go down the AI path, and I could see Carlos was about to ask a question, but really quickly, just out of my own interest, the idea of that back and forth questioning process on a tender, and the idea that multiple parties can be asking the question, is the default behavior that you see that answers to one is an answer to all, or are people getting questions answered independently through a tender process?
00:30:52
Speaker
I mean, we see a bit of variance. We solve the problem that you can push messages pretty easily out to all these subbies if you get one. We don't automate it. So we give the user control around, do you want to share all that information? The RFI registers can be, again, a little bit project-insected dependent on whether a question and answer to one is a question and answer to all. We see it vary a fair bit, though.
00:31:20
Speaker
Before we jump into this AI, Jay is going to take us down. One more thing that I think if I'm the project manager and I get given this package, this sub contract package recommendation that whether the QS or the engineer has done it.
00:31:36
Speaker
The thing that they look at or you would assume they look at is the comparison between three bids. If you want a major scheme, those bids are going to be probably inflated. So it's really hard to know is it actually value for money rather than it's value for money because it's better than these other two bids that we have from the same sort of project with the same scope. And you mentioned prompts there. Do many contractors provide like prompts on actually that steel, that element of steel is awful compared to market rate?
00:32:02
Speaker
by the ton. Are there those sorts of things that you can build in and say, actually, none of these are good value based on some key aspects? So that's all where this is heading, right? So just to take a step back before that question, the practical day-to-day of commercial managers, QSes, project teams is like, I've got my head in spreadsheets and Word documents. And how do I save time? How do I focus on the job? How do I get visibility?
Real-time Market Pricing via Data
00:32:26
Speaker
And that's almost the right now problems.
00:32:29
Speaker
As customers then start to get going in the system, they're like, wow, there's all this amazing procurement data that we can utilize where we want to take this platform. And again, we've got a lot, we've got one of the richest sources, if not the richest source of construction pricing information, detailed construction pricing information flowing through our databases, right?
00:32:46
Speaker
where this is all coming to is benchmarking and basically rates. So can we go, hey, I'm sitting in London, we're procuring steel right now and I can see across 17 other jobs in the last month, what the rates for steel was and is this, are my pants being pulled down here? Is that kosher or is it not? And that's not just a product for a builder and a sub you do interact on, it's
00:33:11
Speaker
It's about driving cost certainty for the industry based on real time market pricing, as opposed to what got written in the rates book 12 months ago, and then COVID turns the world upside down. So it's about having that dynamic access to information. And if you could do that and solve, again, no silver bullets, but increase pricing certainty for the industry, maybe that starts to trickle back up to the estimating side of things around what
00:33:40
Speaker
you know, had contracts and estimates are priced out and budgets become more accurate in the first place. I think you kind of said that, and I'm glad you did kind of said the like quiet thing out loud of this idea of the data is flowing through the system that can be used for like a, I guess, a democratized benefit for the industry.
00:34:01
Speaker
We've seen similar patterns be attempted and be done for schedule with a lot of the AI analytics platforms for schedule, and they have a lot of pushback around data sharing from customers.
00:34:19
Speaker
Is that a thing? Because I imagine mid-market building contractor doing fit-outs doesn't have enough data in their own database to properly benchmark. The real benefit is industry benchmarks, which requires some amount of I'm giving over data to get a benefit.
00:34:37
Speaker
Yeah. I mean, we haven't done it yet, right? So the proof can be pretty good. I think it's pretty easy to solve that it's opt-in only. So if you want the data, you give your data. If you don't want it, you don't give. That's fine. The Zoom info model.
00:34:51
Speaker
Yeah, and then once people see the value of it, they're like, okay, I'm going to give it. And it's democratizing, not giving away state secrets. And again, like without trying to talk to more practical examples, you've got this sort of, you know, Nirvana type vision around, we can tell you what anything costs, you know, anywhere in construction and things are accurate. And people would be super skeptical around that going, you can't tell me that there's so many complexities, if that's a maybe 100%.
00:35:19
Speaker
What we're actually starting to look at with a few of our customers like Mount Anvil here in London in the short term is how do we even just apply based on what procurement data is in our system, how do we apply some rates or basically some extra properties on a project or a trade to go
00:35:35
Speaker
hey, if we're building residential developments and we want to benchmark based on price per box or unit that we're building, how can we start to do that and compare that to historical projects and averages so that we can have at least a little bit of a sniff test kind of quickly and easily and surface without having to crunch a whole lot of data and spreadsheets that people might not have time to do. So again, there's this sort of pathway along the continuum to get there. And obviously, step one is get out of spreadsheets, step two is start looking at the data and then the world draws to be on that.
00:36:06
Speaker
I'm imagining some really funny paywall feature in the app where it's like, oh, this number's shit. I'm not going to tell you why, or by how much. If you need to opt in and then you can see. Sorry, Jason. No, I'm just conscious of time and I really wanted to take that angle and go down the AI path really briefly. Al, as you would know with your background as a lawyer,
00:36:29
Speaker
The world of lawyers is being tipped on its head through some of the things that can be done through language
AI in Procurement Document Management
00:36:36
Speaker
models. The scopes and contracts and stuff in procurement is basically the same problem to a degree. I can think of a million things. I'm picturing myself as a 25 or six-year-old project engineer sat on a project.
00:36:51
Speaker
trying to work out or solve a problem of getting something done without spending more money. And we've got a head contract that's like six documents, totaling a thousand pages, subcontracts that are hundreds of pages, trying to understand, for example, like rights and obligations under each. There's just a million use cases for summarization across those documents.
00:37:13
Speaker
What do you see as the biggest lift that can be delivered? Do you see that as a similar opportunity for the contracts and documents set in the platform? What do you see as the biggest lift?
00:37:26
Speaker
Yeah, I think Scopes is super interesting. I was sitting at Edinburgh on Friday talking to an Irish contractor who's talking about the image of our platform and there's like 10 different parts on a flyer and he just goes, see all those nine things. I don't care about any of them apart from Scopes. That's basically where you make or you lose your money. It's your bread and butter. You get that really right. You can make money. You get that wrong. You're just going to lose it hand over foot.
00:37:55
Speaker
And so, obviously on the contractual side of things, just for a second, Document Crunch is a great tool that's out there out of the US that already does a lot of that contract interrogation. You can ask the system questions on what's in this little directory there, as well as a bunch of other features. So that stuff's like right here and now it exists. I think coming back to Skype, that's a really interesting thing.
00:38:18
Speaker
it's it's is it a what's in this scope that should be easy enough to do is it can you write my scope well that's a lot harder without harder to do drawings and then you get this sort of fear even when you're when you're generating content out of a scope library particularly from management going i want my i want my team to focus on the details of the project 110 but if it's kind of and then we say well
00:38:41
Speaker
If you're copying and pasting from an old Word document scope, you still might not be reading that anyway, except now once you're in a centralized system, you've got the ability to actually track and understand how they actually customize this to the project. So again, there's a bit of a pathway there. There's an ability to add value incrementally, but you're never going to replace that human element either of all of a sudden now a computer can draft scope. So I get to work, press the big red button, then put my feet up and go to the beach all day. I don't think we're quite
00:39:10
Speaker
Quite there yet Yeah, it's definitely like the generative side is really hard because it's messy and you don't have a lot of control over it and yeah, but the on the summarization side there's
00:39:23
Speaker
Is there, are there clear workflows that you see where like the second people get to a, yeah, I just think like risk and obligate, like rights and obligations in contracts was like just that, that used to do my head in the, like not knowing, I'm thinking of Crossrail Carlos, there were, it's like thousands and thousands of pages of contracts to even keep track of. Yeah, no, no, it reads them. They scatter the important sections, right?
00:39:49
Speaker
And you've got that data in the platform, Al. Even if there is a, let's say, product doing it now, surely it's a... That way they don't have to port their data to two SaaS providers. No one likes more apps. Yeah. And look, we were talking to the document coach team a month or so ago about Simile.
00:40:10
Speaker
And there's kind of some really nice synergies between that, whether we did it with them, whether we sort of look at ourselves as sort of opportunity there. And then there's also kind of the listening to your customers piece as well, right? So it's sort of that, like, AI is nice, shiny, do sort of pivot your whole strategy versus
Future of Procurement Technology
00:40:28
Speaker
versus kind of what people are genuinely asking for. So we've talked about ratings before as well. It's an interesting one that touches on a few things we've spoken about. Firstly, we launched it or launched the designs at our conferences. We did a tri-series of events around Australia a couple of months ago, and we got cheers in the audience. There's this huge demand and want and desire for it. There's then discussion coming from the audience around, okay,
00:40:56
Speaker
Can you turn ratings into a Google review style public ratings system? And then also, can you do some other stuff on the AI front? So there's so many problems. It's construction, right? There's so many problems to solve. There's so much complexity with jobs increasing and size complexity with regulation increasing and complexity. There's lots to do. And obviously, from a tech vendor perspective, it's about executing quickly and obviously knocking things off in the right order.
00:41:25
Speaker
Mate, we're going to run out of time. I could probably go for another hour, but I won't. As I said at the start, procurement is something that I don't think gets covered enough on, especially on the large-scale projects in the background from the engineer's perspective. It definitely gets talked about, obviously, in the procurement and the executive level. But yeah, that was a super interesting conversation. Thank you very much for your time, mate, and enjoy London.
00:41:50
Speaker
Yeah, a pleasure, mate. I will. And obviously, if anyone listening for this peeks your interest, my details will be in and around. So Flick is an ad on LinkedIn. Love talking about this stuff. So we'd love to have a chat. Yeah, I'd vouch for that.