14 March 2002 | David Arminas
Suppliers in the UK construction industry are threatening to boycott online auctions.
Trade and professional bodies are warning that e-auctions are a return to the days of lowest-price contracts and threaten stable long-term relationships based on performance and quality.
The Electrical Contractors Association is advising its members to boycott e-tendering in protest at the use of e-auctions.
Rod Pettigrew, head of legal advice for the Heating and Ventilating Contractors Association, said there was a "groundswell" of anti-auction feeling among specialist sub-contractors because clients are using it for buying more than commodities.
"I don't want e-auctions to continue, certainly not for mechanical services and complicated engineering systems. Online tendering encourages companies to take inefficiencies and waste out of processes. But reverse auctions focus on bidding on the basis of lowest price, which is really gambling."
Alan Crane, chairman of the Movement for Innovation, a supply chain improvement umbrella body, said construction is facing a problem with potentially disastrous consequences.
"There is the potential for a tidal wave of protest," said Crane, whose organisation has been getting more complaints in the past three or four months.
The construction industry has been trying to improve its record of delivering projects to budget and on time through the better supply chain relations, first put forward in Sir Michael Latham's 1994 report Constructing the Team.
Crane said boycotts of e-tendering and other forms of e-commerce would deter many firms from e-commerce.
The industry has a mixed reaction to e-auctions. Balfour Beatty, which this month launches its own e-procurement system, will not be conducting e-auctions, said Mel Zuydam, its financial officer, e-commerce.
"Reverse auctioning conflicts with Balfour's preferred supplier approach," he told SM.
However, Bovis Lend Lease uses reverse auctions "where appropriate", said Graham Jelly, global procurement director.
But he questioned their long-term effectiveness, saying that first-time savings were unlikely to be repeated.