FinTech targeting the construction arena is a blossoming industry. With so many moving parts in a single construction project and with parties operating both in the field and in the office, streamlining the flow of funds between contractors and subcontractors, and everyone else on the peripherals, is an area ripe for optimization.
Or Lakritz, co-founder and chief product and strategy officer at StructShare, said the construction arena is accelerating its digitization drive to promote productivity and efficiency. But there remains a key area along the lifespan of a product that continues to create plenty of friction: materials procurement.
In a recent interview with PYMNTS, Lakritz discussed the importance of streamlining materials purchasing and payments to kick off a project on the right foot — and on budget.
While there has been a recent boom in technological adoption throughout the construction space, Lakritz noted that businesses and professionals across the specialty trade market have been historically underserved from gaining access to tools that can optimize their workflows.
The result has been a materials purchasing process that relies on paper and spreadsheets, with information on products and suppliers stored across platforms and systems.
“The entire communication process is being done in multiple channels that are not related to one another,” he said. “And in the construction space, there are a lot of stakeholders within the process — the foremen and superintendents in the field, the project manager, the officer or purchasing agent, and then the supplier side — it’s a long cycle.”
The material supplier management process can be particularly troublesome, he noted. Because projects can often rely on dozens or even hundreds of vendors, procurement teams can struggle to collect information across those business partners and purchases and unite it in a single place.
This convergence of a confusing ecosystem of suppliers and a disarray of data can inject challenges in a variety of ways. Most notably, Lakritz said, the opportunity for wasted spend can grow — not only is it difficult to ascertain whether supplier quotes and material purchases are aligned with a project’s overall budgetary goals but an inability to aggregate supplier data makes it far more difficult to choose new vendors with potentially more competitive pricing.
“Currently, contractors work with a very closed group of suppliers,” said Lakritz. “It’s only because they don’t have the resources to manage too many relationships, so they just work with the fleet they already trust.”
In the end, executing a project is has three factors — budget, time, and quality.
Building On A Budget
Such a scenario is a missed opportunity for cost savings that can throw a project off-course, from a budget standpoint, early on.
But plenty of other points in the materials procurement workflow exist that can have similar consequences, particularly when it comes to the B2B payment of those products.
“Like in most aspects of construction, the payment process is also a laggard in technology,” said Lakritz, adding that manual workflows and paper checks remain common.
It’s one of the many pain points that StructShare aims to address as it looks to collaborate with payment technology firms that will be able to integrate payment capabilities directly on the company’s portal.
Industry collaboration is a key focus for the company, which also took to mitigating the friction of disparate data through an integration with construction management software provider Procore. Through automation of workflows like purchasing, purchase order and invoice management, looped directly into the overall project management platform, contractors have the opportunity to bring visibility into complex workflows that can not only enhance efficiency but ensure purchases remain on budget.
As StructShare works to deliver that transparency by consolidating data, it will keep a focus on the process of procuring and managing materials. As an early step in the construction process, this area has the potential to make or break a project with ensuring material quality and cost key to its success.
“In the end, executing a project has three factors,” said Lakritz. “It’s doing the process on budget, on time, and in quality. Materials purchasing and management are a factor in each and every one of those three main goals within project management.”
Selected by EFXA