Why a Construction Market Network is Probably Coming
Why a Construction Market Network is Probably Coming
In every industry, more connections are happening online every day as businesses resort to digital tools to find what they need. They look online to find other businesses, suppliers, consultants, or freelancers, and whether it’s using a search engine, networking on Linkedin, or utilizing marketplace platforms, business owners and managers are increasingly turning to their phones and laptops to seek them out.
The online tools we currently have at our disposal are very helpful, but they do have their shortcomings. When you conduct a search on Google, it shows you what its algorithm believes to be the “most relevant” search results, when in fact, the biggest factor in what it shows you is how hard website owners worked to rank up their search engine rankings, and not how good they are at providing their services (it’s no conspiracy, it’s just how search engines work). If a business owner is seeking a freelancer, she might use Upwork or Fiverr, platforms where she can post her job and wait for random applicants from all over the world to bid, but with that comes a randomness factor, and she gets to pick only from whoever happened to see her job at the time.
The fact is, every industry has its own unique complexities and ways that can’t be addressed by all-encompassing platforms and tools. So much of business is still being done offline, and personal networking, word of mouth, and credibility still matter more than anything. So what might be the next digital tools and platforms that would take more of the business world online? James Currier, managing partner at NFX, thinks that market networks are the next step, and although I may not know much about other industries, when it comes to engineering, architecture, and construction, a market network makes sense.
Before explaining why the AEC industry needs a market network, let’s explain what a market network is first.
What are market networks?
You are certainly aware of market networks – even if you may not know the term. Essentially they are the combination of two terms; marketplaces and networks. Marketplaces provide transactions among multiple buyers and sellers — consider Poshmark, eBay, Uber, and Upwork. Meanwhile, networks, like Facebook, Linkedin, or Twitter, provide profiles which represent real identities and facilitate communication with anyone else in them.
Market networks bring the elements of the two together. They use SaaS workflow software to focus action around longer-term projects and promote the service provider as a differentiated individual, helping to build long-term relationships. In an ideal sense, these platforms enable collaboration and transactions around a project. Let’s unpack what this means for the AEC industry.
Why a Market Network for the Construction Industry?
A construction project is the center of hundreds of transactions, contracts, and collaborations between engineers, architects, suppliers, contractors, sub-contractors, consultants, owners, and other stakeholders. Everything is done mostly offline now, from the pre-construction process to construction and handover. Having a market network with all stakeholders working under a single SaaS platform would certainly make things more streamlined and efficient.
Some startups have already made headway in this direction, such as Building Connected, which is used at pre-construction stages by contractors, subs, and real estate owners to send invitations to bid, qualify vendors, and track opportunities. Handiss is also used by contractors, subs, consultants, and designers to find and hire qualified individual engineers and architects with needed skills.
But they and others are still a long way from becoming fully-fledged market networks for the industry, serving only parts of the industry and only certain stages of a construction project. A whole market network would be ideal, and seems to be the next logical step. Moving these connections and transactions into software, a market network makes it significantly easier for professionals in the industry to operate their businesses and clients to get better service.
The Next Decade
Some would wonder though that the construction industry is simply too complex, diverse, or old-fashioned for this to work. For one, construction is among the least digitized sectors in the world, according to MGI’s digitization index. In the United States, construction comes second to last, and in Europe it is in last position on the index. So it seems that it would be naive to expect the industry to take a leap anytime soon and adopt new technologies and tools, let alone a market network.
And with the complex stages of a construction project and the various types of vendors and service providers, is it possible to make a unified platform that serves every aspect of a project while also being user-friendly enough for everyone at once?
These facts pose important questions about the potential for a market network in the industry. It remains to be seen if the sector will evolve enough, get digitized, and adopt such a platform in the future.
The good news though is that a lot of venture capital investment has started lately in construction tech, so this could be the time when the construction sector starts to catch up to other industries in digitization. And with the more tech-savvy and open generation Y taking over the workforce, the next decade could have a few surprises in store for us. It certainly is going to be interesting to sit back and watch as the industry undergoes changes, whether it’s augmented reality or drones on the construction site, SaaS connecting the site to the office, or a market network connecting stakeholders.