E-Commerce Site Expands Into Broader Social Network
Social networking is coming to construction. So far, it is not a Twitter-like feed of 140 characters or less, nor is it free of charge. But it could be a highly useful tool to help firms engage each other more openly, cut risk and ease tension in a time of economic distress. One such innovator, Textura Corp., appropriately derives its name from the Latin words for “build” and “intertwine.” In just three years it has built a base of 38,000 users—and 25% of ENR Top 400 general contractors—into an innovative bill-pay site. Textura has turned the tedious business of bank draws, invoices and lien waivers into a click of a mouse with a widely used, patented electronic signature process. In other words, instead of “rowing harder” to close out draws, transaction have become “a speedboat,” says Kevin McDonnell, CFO of Chicago-based Kenny Construction.
Now, the e-commerce site is about to expand with Facebook-like flair. In October, a new prequalification feature will allow contractors to distribute their resumes, balance sheets and other supporting documents online. Owners and general contractors will be able to browse the information to determine whom to invite to bid on a project, and whom to show the door. Accurate information and data security will be key to Textura’s success here, but it hopes the openness eventually weeds out the bad apples.
The service will cost both GCs and subs to use, but it is expected to bring together the industry in unique, cost-saving ways. General contractors who have used Textura’s payment tool already save an average of $10,000 to $20,000 per project by streamlining the back office. “In the next 12 months, we expect to have 20,000 to 25,000 more users with our prequalification management,” says Patrick Allin, co-founder of the Deerfield, Ill.-based infotech company. “We expect we’ll have about 70,000 subcontractor organizations using this technology within about two to two and a half years.”
Industry players say there is need for more transparency in what is still seen as a secretive industry. Firms are going out of business, banks and insurance companies are pushing contractors to meet new performance metrics, and the recession has piled internal pressure on firms to look more closely at their business partners. “The insurance companies and the underwriters are increasingly pushing GCs to tighten up their prequalification processes,” says William Eichhorn, Textura’s co-founder. “A lot of the GCs also are pushing themselves, because they are self-insuring.”
Contractors eventually would like to see Textura evolve into a quality rating system, but transparency will be a huge challenge in an industry largely made up of small, private companies. “In this economic environment, you are trying to get as much information as you possibly can to select the best contractor for the job,” says Marshall Lightman, vice president and regional controller for Gilbane Inc. in Houston. “A lot of the contractors are reluctant to show you their financials. In some cases, it’s a personal thing.”
Executive VP, Aon Inc., Chicago
Data security also is an issue, and some think transparency should be a two-way street. “I know with the economy everybody is scared, but subcontractors need to know that generals are financially stable also,” says Sharon Riley, accounting manager for Phoenix-based Suntec Concrete. Making prequalification forms standard, as Textura has done with billing, is where she sees potential. “Contractors have their own forms and their own way of doing things,” she says. “Textura helps simplify that. If there were something uniform [for prequalification], that would be super.”
Reducing claims is another hot-button issue. That is why Aon Inc., a leading risk consultant, has taken a 10% stake in Textura. Aon hopes to use the growing database to help it serve the market. “Textura represents the future of what construction needs to be, particularly as it continues to globalize,” explains Geoffrey Heekin, who leads the firm’s construction services group. “It’s an industry that has in large part not traded on facts, and reputation is often just as much fiction.”
