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TABLE OF CONTENTS
PART 1_ Procurement Software Robust Enough for EPC Contractors
PART 2_ Spares and Repairs Procurement Solutions
PART 3_ Procurement Software for Trade and Specialty Contractors
PART 1_ Procurement Software Robust Enough for EPC Contractors
From large EPC to trade and specialty, SaaS construction software is bringing answers to manage spend.
Why Contractors Need Good Procurement Software
- Price fluctuations mean better spend management
- Consolidating purchases across multiple projects or buying ahead gives the ability to handle larger buy-outs
- Streamlined workflows and collaborative environments with suppliers lean out the purchasing process, reducing indirect costs and timelines
- Multi-supplier catalogs, ordering help identifying optimal pricing, and advanced features like vendor scorecards will help contractors consider past performance timely and efficiently
Construction software is evolving for procurement and supply chain management, and while constrained inventory in the wake of the COVID-19 pandemic may have given the product category a boost, this trend has been a long time coming.
Construction ERP for Purchasing
The omnipresent project management product Procore has, apart from a general ledger, become construction enterprise resource planning (ERP) that plays in procurement. This includes functionality for submittal logs and tools to manage long lead time items and the flow of materials on site, while reporting on performance against delivery dates.
Procore App Marketplace Partners like LeadTime enable additional capabilities. In LeadTime, users can create a shared online procurement log in Procore and collect procurement updates for subcontractors and suppliers.
Multi-industry ERP software and designated construction ERP has included purchasing capabilities for decades, and in more project-centric software applications, purchasing can be tied gracefully to the project, uniting in the case of products like IFS, Viewpoint, Deltek or Foundation. It is not just materials and discrete items ordered from a vendor, but every cost driver for a project including subcontractors and equipment for a clear real-time view of product cost ideally placed in context with payroll and other internally-realized expenses.
Top-tier ERP products like Oracle may also address construction procurement, sometimes with help from its owned Aconex platform or construction-specific extensions from independent software vendor (ISV) partners. Microsoft Dyanamics ERP products will also play here, but will also come in oftentimes with an ISV partner.
As software has moved to a software-as-a-service (SaaS) model in the cloud and application programming interfaces have eased integrations between products, stand-alone procurement software is emerging that may create a collaborative environment in the supply chain and subcontractor community.
Players like Sitesense Intelliwave, Xpedeon or Kahua have been in portions of the market since 1993 and 2009 respectively, but a spate of new entrants are giving contractors new and more collaborative solutions that will grow in market footprint, influence the direction of incumbent software companies or both.
Contruent: Reimagined Procurement Software for EPC Contractors
One software vendor, Contruent, is not emerging per se but a new name and new architecture makes this mature company look and feel pretty new. Contruent also shoots further up market than many of the emerging procurement solutions outlined here, targeting engineer-procure-construct (EPC) contractors involved in complex projects in the hundreds, millions or billions of dollars.
EPC contracting as a project delivery method is attractive for owners with large, complex and high-risk projects. Owners like ECP contracts because they limit their exposure to risk, but to a large extent, that risk shifts to the contractor. EPC differs from other forms of design-build contracting in that the owner is less involved, and from the time they sign a contract until handover, the owner will not be very involved. The contractor must design and execute against a plan to deliver a finished asset for a fixed price, often targeting specific performance requirements for the finished structure.
This means risks associated with procurement— changing prices for instance—rest firmly on their shoulders.
After an acquisition by private equity firm M33 Growth, ARES PRISM rebranded in 2022 as Contruent. But the brand change was paired with serious changes under the hood as the 25-year-old application was in February of 2023 reimagined as a software-as-a-service (SaaS) solution, improving performance and making it more affordable to develop and reside in the cloud.
The product is more comprehensive than many procurement solutions coming to market for construction, encompassing full spend management from materials to subcontractors. The proven tools within what is now Contruent Enterprise have been augmented by add-on tools that help control spend over the project lifecycle and bundle multiple projects into a single view of spend.
In a discovery call with IRONPROS, Contruent Principal Consultant Costa Bitar said the transition to SaaS was long-considered. “We started exploring in 2010 the idea of moving to cloud,” Bitar said. “Our customers were not ready for it yet. We had an on-premise solution. We had a strong solution for mega-projects in a couple hundred million to a billion range.
“We started with development of a web portal—a browser-based app that would allow light access for review and approval. By 2016 or 2017, we had a pseudo-SaaS solution through hosting to eliminate Citrix for our customers connecting from outside the office. And then in the last year and a half, we switched to a proper SaaS solution.”
This move placed Contruent on Amazon Web Services and eliminated the need for customers with standalone installations on cloud servers or on-premise to struggle with customizations, upgrade management and other sunk costs associated with legacy software models. SaaS also drastically lowers compute resource costs, energy consumption and other cost drivers.
The current architecture has the power to deliver the software as multi-tenant software-as-a-service, where all users access a centralized instance of the software with segregated data and full security. But the software is currently sold as single-tenant, where multiple identical instance of the software are installed in the cloud with updates managed efficiently across the portfolio of instances.
“Major projects like HS2 (the British high speed rail project) and other government programs have not been willing to go that route,” Bitas said of multi-tenant SaaS.
Other tech stack initiatives include a planned mobile app, although Bitas said the current interface renders well on a small screen for field work.
Under M33, the company has also focused on building its presence in the United States, adding reps and customers. Contruent made investments in processes not just for sales but for customer success, moving up the introduction to the customer success team earlier so they facilitate professional services involved with onboarding and then stay with the customer. Larger customers and those with more growth opportunity get a designated customer success person, while smaller contractors still get regular contact if not the near-daily interactions larger ones do.
Contruent has also simplified its pricing, creating a standard single-price subscription for its core offerings under Contruent Enterprise to optimize spend and performance, manage contractors, account for change and project visibility and decision support tools. In addition, the SaaS provides add-ons for project portfolio spend management and end-to-end cost control.
There is a one-year minimum subscription term that is priced by full or light users, with light users primarily viewing data. Contruent offers standard integrations with other products, with a partial list including Procore, Quickbooks, Sage 300 Construction and Real Estate and CMiC.
PaperTrl Takes Contractors from Procure to Pay
While procurement software is important, additional business workflows follow, extending to a billing process that will liquidate the cost of purchased items and expenses, hopefully with margin on top of that.
This is what PaperTrl delivers with its construction accounts payable automation application. PaperTrl enables a team to create purchase orders, track purchase order receipts, process bills and issue payments from the office or the field. PaperTrl automates time-consuming tasks like approvals, purchase order-bill matching, and reconciliations. Integrations to a contractor’s accounting product helps maintain a single version of the truth.
With PaperTrl, a contractor can:
- Automate purchase orders, receipts, bills, and payments
- Create standardized approval workflows that incorporate business rules so only authorized purchases and payments are processed
- Reconciliate purchase orders to receipts, and bills with automatic matching
- Avoid late payment fees and manages discounts
- Reports on purchasing activity
PaperTrl may be found by most of its contractor prospects when they are looking for accounts payable software, according to PaperTrl President and CEO Steve Weber on a discovery call. In June 2023, the company announced it had been added to the Visa FinTech Fast Track program, which will be beneficial as it builds its partner and customer base. The product also integrates with Quickbooks. Microsoft Dynamics Business Center, including the on-premise version which had been Microsoft Dynamics NAV.
Other integrations are with Financial Edge, and Deltek, but many net new PaperTrl customers lack a consistent system of record.
“In so many cases, we are working with customers who were in Excel or in email,” Weber said. “They have no processes and need to begin to define what the hierarchies are for purchase orders. We help them codify themselves.”
Digitization of the purchasing and the accounts payable process is something the PaperTrl customer success team may do gradually.
“Our customers will often begin with the low hanging fruit—for some it has been expense management and reimbursements,” Weber said. “For others it may be invoice process.”
But PaperTrl functionality kicks in not at accounts payable or invoicing, but procurement. And unlike some competitors, this means it can make its money on software subscriptions and not by holding onto payments.
“You look at some of our competitor’s websites, and you’ll see right in their FAQs, they say it takes three to five days to send an automated clearing house ACH transaction,” Weber said. “It does not take three days to send an ACH, it goes in one day. So the other days, they are holding onto customers cash to earn interest. And this we know from just reading their financial statements. They have a section in their income statement for interest earned on customer funds.”
The strength at the beginning of the cycle with purchasing and procurement means following steps like receiving and reconciliation are easier.
“Most of our competitors don’t have a detailed capability to handle purchase orders,” Weber said. “They can handle what purchase order vouchers, which means they know that a PO was issued and who it was issued for and what the PO number is, but they don’t necessarily know what the line items were on the purchase order.”
This means that a contractor on the job site receiving a shipment of lighting that comes in from the local vendor faces manual processes to check if this is a full or partial order, whether the right SKUs are included and whether they should approve payment. They also may struggle to determine if specific items in the shipment are committed so specific projects.
PaperTrl Pricing and Market
Weber said PaperTrl shoots relatively far up market, aiming at tier one contractors, including generals that have inventory and large subcontractors with heavy inventory, materials and parts requirements.
The target market starts around $100 million in revenue and goes up from there.
Apart from appropriate software functionality, PaperTrl takes into consideration the ERP software each segment of their market may be on.
“That large contractor may be on Trimble Viewpoint Vista,” Weber said. “Whereas the guys in the middle market, oftentimes, the tier one plumbers, and HVAC contractors and electricians may be on a Microsoft ERP product or Sage or something with an open API that we can connect to. So typically, if you’re getting disqualified out from us, it’s because you’re running something that we can’t integrate with, easily and, or without creating a bad experience where you’re going to have to shuttle data via CSV into and out of it.”
The software is priced on a combination of modules and transaction volumes.
“We don’t do any per-user pricing or anything like that, because companies don’t think of that structure in their cost model,” Weber said. “But they think of how many transactions they have to do per month, and how many people are needed to support that? We dovetail very nicely into that thought process. In our starter package, we may give you about 1,000 transactions per month, and you can use those in any way you want for POS invoices bills, and lock into a block of transactions. And then as you grow you, you move up to a different tier of transaction volume.”
Weber said customers can get a discount from PaperTrl at about 3,000 transactions per month.
PART 2_ Spares and Repairs Procurement Solutions
This new partnership can reduce down time and non-value-added work for fleet owners even as they get the best price on replacement parts.
While many of these construction procurement software products are focused on materials and consumables, equipment-intensive companies that rely on yellow iron to deliver value need to manage not just the cost but the availability of spares and repair parts. While part cost is important, eliminating dropped balls between users of a computerized maintenance management system (CMMS) where demand for a part is realized is equally valuable. No to mention mitigating problems between users and business software where a procurement process kicks off.
That is why the team at heavy construction software vendor HCSS was intrigued when they met Gearflow co-founder Ben Preston at CONEXPO-CON/AGG 2023.
“He said they’ve got this really cool solution that helps shop managers, equipment managers and mechanics who need a part find out who can get it to them the cheapest and most efficiently from a network of vendors,” HCSS Technical Product Manager Hayden Price said. “The idea there obviously is to eliminate downtime for equipment because before I had to make calls and send emails.
“It is a standalone fully blown parts ordering and parts procurement system. We are going to bolt that in so when I am looking at a work order and find parts not in stock, you push a Gearflow button that will bring them to Gearflow’s platform. It will populate that equipment ID we’re ordering parts for, the work order number, the serial, the VIN. We open up that order in Gearflow, find those parts, locate the right dealer and get them shipped to us as soon as possible. When they submit that order, we’ll create a purchase. Integration users will need to have an existing Gearflow account.”
HCSS Equipment360 is partnering with Gearflow’s Parts Hub Pro platform to automate your parts ordering process from request to delivery with your dealers. Users will also get instant oversight into all their team’s parts transactions across their mixed fleet.
This integration will essentially close the loop from the time a workorder is created to when an invoice is processed, eliminating duplicate data entry and 70% of the parts procurement steps for users.
Gearflow’s Parts Hub Pro cuts calls in half for fleet teams and their dealers by tying all communication to every parts request and order, making it easy to track order details and statuses.
The HCSS has shared customers with Gearflow already, and the availability of the integration may make the HCSS/Gearflow combo formidable for larger and smaller contractors, albeit for different reasons.
“We talked with some mid- to large-sized customers who said it would make sense just for gathering the initial parts requirements,” Price said. “It also will be really good for the small shop that does not have a refined process for picking and locating parts. Seeing that Gearflow button in Equipment360 may induce them to use a more modern approach."
READ THE IRONPROS HCSS PRODUCT DEEP DIVE >> Click Here
PART 3_ Procurement Software for Trade and Specialty Contractors
New construction procurement software options from Field Materials, Structshare, Kojo, provide choice for HVAC, floor and ceiling, concrete contractors and others.
Construction Procurement Software for Wall and Floor
A few emerging procurement software vendors are also verticalized for specific trade contracting disciplines. This enables a software company to go deep in inventory, specifications and conventions in a discipline where a broader solution would not be able to go.
An early pioneer of this approach is Kojo, the San Francisco startup born in 2018. Kojo supports construction procurement processes from takeoff to closeout.
“Today, foremen across our customer base use the Kojo mobile app to create their requisitions—it gives them tools like pre-approved materials lists if a project has a spec or specific list of approved items,” Kojo CEO Maria Davidson said in our IRONPROS Product Deep Dive. “Also, we have a catalog of 400,000 parts that is categorized to make it easier to find what they need.
“Project managers use Kojo desktop to request a quote, making it easier and seamless to add multiple vendors, and so those vendors can upload availability and prices. Field teams also use us for delivery, to make sure what they ordered arrived. If not, they can use Kojo to notify the purchasing agent to fix it.”
Kojo also supports trade contractors in the planning of larger buyouts that help reduce unit prices and save money in the intermediate term.
"Many contractors are constantly buying materials but are not sure if they are getting the best deal,” Davidson said. “They are concerned about the cost of building inventory to support growth, and a lack of standardized process across projects … if we can help them save 10% on each buy-out of $200,000, that adds up.”
LEARN MORE WITH THE KOJO IRONPROS DEEP DIVE >> Click Here
Kojo got its start in software for MEP contractors, but in a pattern, we will see from other vendors, has expanded into additional trades including concrete contractors. IRONPROS caught up with Kojo Director of Partnerships Michael Lau at CONEXPO-CON/AGG 2023 and discovered the problems the software is solving and what kind of contractors it is solving it for.
“We’ve heard a lot of pain from a lot of our customers with processes for managing material procurement,” Lau said. “There’s lots of phone calls, emails, and Excel spreadsheets, none of them are speaking together. And in general, it’s a really disparate process.
“And what we do is we bring it all onto one platform. No longer do you overspend on materials, because you didn’t realize that you had something in the warehouse, and no longer are you paying hours upon hours upon hours of labor, because people are manually going line by line and matching items on the invoice and being right, correct. Prices are matching invoices, and purchase orders, and delivery receipts. So, we bring it all to one place with an application in the field that makes it so much easier for the people on the ground, to place requests, whether it’s to the office or directly to a vendor.”
Because procurement is one part of a larger financial value stream, Kojo has prioritized building integrations to construction ERP software products, to such an extent they are used as an example in our IRONPROS research on construction software interoperability.
“Transactions automatically go directly to your ERP system,” Lau said. “So, you no longer are manually doing that, and potentially having errors along the way.”
Integrations with products like Trimble Viewpoint Vista, Trimble Viewpoint Spectrum, Quickbooks Desktop, Procore ComputerEase, Coins and other ERP products make Kojo a strong fit for contractors using those products. An expanded reach into the trades will make it a better fit for contractors outside of MEP.
“We cut our teeth with MEP,” Lau said. “And we realized that we have a really good system and workflow for anyone who’s constantly ordering materials, whether it’s from the site or in an office. Since then, we’ve actually expanded out to really any contractor that has kind of self-performed and manages and orders all their own materials. So, a lot of roofing, concrete, tile, wall, insulation and more.”
Field Materials Brings Procurement Tech to Interior Buildouts
Another construction procurement software company starting in one set of disciplines with the potential to expand outward is Field Materials, the San Jose-based construction procurement software for wall and ceiling contractors.
The software addresses:
- Drywall and taping
- Metal and wood framing
- Lathework and plaster
- Insulation and firestop contractors
With $4.65 million from an April 2023 funding round, the company is building out its team, adding to a complement of 13 onboarded during an IRONPROS debriefing session with Field Materials Co-Founder and CEO Eldar Sadikov and Co-founder Victor Gane, the company was prioritizing building out partnership, sales functions and a customer success team.
Already, the Field Materials products has standard integrations with estimating software products like OnCenter from Construct Connect and estimating specialist Estimating Edge, owned by Foundation Software. The team is currently working on a Procore integration.
Adding integrations, functionality and customers is important, and already Field Materials is seeing growth in the number and volume of orders going across the platform. While the platform is aimed solidly at trade contractors and viable for smaller organizations, it also travels further up market.
“We actually aim to work with contractors of different sizes,” Gane said. “Historically, our customers were specialty subs. A lot of them were in drywall and metal framing and installation. We are now aiming at self-performing general contractors. That is very encouraging. We believe that all the specialty contractors and general contractors will benefit tremendously, especially with a high volume of material purchases.”
Field Materials is targeting a niche not addressed by some other vertically focused construction procurement software. Many emerging procurement or purchasing products focus on mechanical, electrical and plumbing (MEP) contractors. Specialization helps a software vendor build out not only functionality but parts and materials catalogs appropriate for a trade.
“We have not expanded as much into the MEP space yet,” Gane said. “We are still focusing on more traction with our existing market because we started from specialty subs in wall and ceiling type of trades. We also are likely to put concrete, lumber or windows as a top priority before we try to attack the MEP, which is highly specialized.”
One thing Field Materials has in common with other construction procurement products is the support for the larger buyouts that help contractors take advantage of volume discounts.
“We do have the capability of consolidating materials purchases across different projects,” Gane said. “If we keep ordering the same material, can we buy in bulk and store it or negotiate to have a buyout for this. We do have a way to pull in aggregate lists for every material, and how much is ordered through a certain period of time.”
One thing the product does not have yet is a migration tool to bring in historical orders prior to a contractors’ implementation of Field Materials. This means that building a procurement transaction history will be important to help users unlock the power of the software.
Field Materials resides on AWS, and is one of a few highly verticalized software products IRONPROS is seeing coming to market that relies on Google’s Go programming language. New product, with fixes and enhancements, is shipped to the cloud weekly.
StructShare Addresses Broad Trade Disciplines
Casting a wider net than Field Materials is StructShare, which does encompass the MEP disciplines plus concrete framing, drywall and roofing. The product has integrations with Procore, Sage 100 Contractor, Sage 300 Construction and Real Estate, Quickbooks Online and Quickbooks Desktop. There’s also integration to an ecosystem of construction finance vendors through Built Technologies.
On a March 2023 discovery call with IRONPROS, Structshare Founder and CEO Or Lakritz said the company, which at the time of the debriefing had a team of 25, was focused on deepening their understanding of the customer and focusing on building out even more performant product.
“We are also focused on figuring out what kind of products and solutions we can build around the solution. That is our real mission—helping our customers ace the procurement process and material management challenges,” Lakritz said.
"We are also building strategic partnerships with leaders in the space around supply chain and procurement, so we are working with project management software leaders and materials and product suppliers.”
Construction Procurement with WMS
Structshare addresses a broad spectrum of construction trades, and also goes fairly deep and wide into a contracting business, from purchasing all the way to core warehouse management system (WMS) functionality to ease inventory management, picking, shipping and receiving.
The value stream starts with cloud-based, collaborative purchasing and procurement for self-performing general contractors and trade contractors.
“StructShare empowers the customer to manage the material hosting internally in warehouses or offices,” Lakritz said, adding that the product also supports mobile warehousing and storage units on site. This is important for trade contractors who need to manage inventory on trucks to handle service calls and those storing inventory in multiple locations.
“What our system empowers our customers to do is connect catalogs with an in-house structured item database,” Laktitz said. “It can not only track initial catalog prices, but update prices given quotes—what was the last price, time stamped with the time of day. It can show how prices have changed over time and run analyses on these price hikes on a month by month basis increase.”
Once a product is ordered, StructShare generates a purchase order from these requests or quotes elevated prices to the purchasing team. A mobile app meanwhile enables workers in the field to indicate they have received an order in full or in part. Accounts payables department can use StructShare to match purchase orders to invoices with native parsing technology. On the StructShare roadmap are vendor scorecards which will help with evaluation of vendors based on their fill rate and on-time shipment of past orders.
In a project-centric environment like construction, there can be complex rules regarding inventory, and the WMS tools in StructShare supports division of inventory between material held in stock, available and allocated to a project.
While StructShare does not delve into subcontractor management and leaves that to its Procore integration, it does support equipment rental equipment orders.
The application resides on AWS, and relies on a modern stack of REACT Native for the front end mobile and desktop interfaces and NodeJS on the back end. Current integrations are custom builds, but the StructShare team is working on exposing an application programming interface (API) that will ease additional integrations.
The technology and the functionality it delivers starts to make sense for contractors with about $5 million in revenue, and the sweet spot extends up to about $50 million. The segment of customers in the enterprise space is growing however, according to Laktitz. Pricing is based on annual construction volume, with a minimum subscription of $400 per month. Contractors at about $50 million in construction revenue can get a discount with enterprise pricing. A discount is also possible if paying for the year in advance after a three-month onboarding period.
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