Postponed construction exchange to rethink plans

1 March 2001
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01 March 2001 | David Arminas

Arrideo, the construction trading exchange, still has a future despite last month's decision to postpone its launch indefinitely amid financial worries, according to Mel Zuydam, its chief financial officer.

Zuydam will call a meeting of Arrideo's five backers - Balfour Beatty, Bovis Lend Lease, Skanska, Amec and Laing - in a month or so to discuss further e-commerce strategies, he told SM. They pulled the plug on Arrideo because of concerns over the cost of implementing the exchange.

"There will definitely be some type of [marketplace] within the sector," added Zuydam, who is Balfour Beatty's chief financial officer, e-commerce.

Initiatives in the sector are split between industry consortia and pure dotcoms backed by venture capitalists. The big corporations in consortia can bring their suppliers along to create a business critical mass, while the dotcoms' strength lay in their venture capital backing, Zuydam said. He predicted that the models would converge, eventually enabling a large exchange to take off financially.

Tim Cole, community manager for Construction in Trading Electronically (Cite), an industry-owned think tank, agreed that construction will still eventually see corporation-driven exchanges. But it would be a case of "evolution not revolution", said Cole. "Many companies are still not sure where the real benefits of e-commerce lie."

Zuydam and Cole believe that exchanges have not damaged the non-combative relationships advocated by the Latham and Egan reports. Cole dismissed the idea that suppliers were sceptical about Arrideo and saw it as a way for corporations to hammer down prices.

Alan Parfitt, head of e-procurement at building company Taylor Woodrow Group and a member of the CIPS construction committee, believes that e-commerce will improve relationships. But construction was not like the automotive industry where Covisint's launch last year is expected to herald a new era in supply chain relationships and efficiencies.

"The big players don't account for as much of construction's overall spend," Parfitt said. "So critical mass for an exchange is harder to achieve."

He envisaged more specialised exchanges. "We are very interested in portals that offer specific services, rather than all-singing, all-dancing affairs," said Parfitt.

SMmar2001

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