December 17, 2012

Is construction ready for electronic procurement?

Canada is ready for electronic procurement, though the construction industry has to work together to ensure a smooth transition, concluded a panel of industry leaders at the recent Construct Canada conference.

“We should just get over it and get into electronic procurement and do it well because it has the capabilities, if done well, to have a lot more checks and balances than the manual way does,” said Gordon Stratford, director of design for HOK, a global design, architecture, engineering and planning firm.

Canada is making headway in the realm of e-procurement, but there needs to be one way of doing it to really penetrate the market, said Stratford.

“If it continues the way it is right now, it’s going to be even more confusing because we’re bridging between two systems and two approaches. I don’t know how many times we’ll receive a notification or gather information...and it’s electronic, but in the end, you have to submit a paper copy,” he said. “These are all in bits and pieces. We’re learning that there is a real need to connect the dots.”

All the panelists said there should not be a hybrid of electronic and paper-based bidding — it just makes things too complicated.

Stephen Bauld, president of Purchasing Consultants International Inc., said true e-procurement, picking up and submitting the document electronically, is going to be a game changer and has the ability to remove geographic barriers.

“If you could sit in your office, fill out the documents and then press send, from a contractor’s side it eliminates so many different issues,” he said, pointing to worrying about delivering the bids by hand.

It would also eliminate improperly completed documents. The electronic program would not allow a bidder to move on to the next page if there were mistakes.

“Instead of receiving three bids...and you’re going to disqualify two of them, you could get 10 solid bids that won’t be disqualified,” he said.

Construction lawyer Glenn Ackerley, a partner at WeirFoulds LLP, recognized the pros of e-procurement and the problems with the traditional method. Though he said technical problems can still arise in e-procurement and there is a need for training.

He pointed to a United States example where a contractor was responding to a bid.

“(He) filled out the form, it got transferred to the recipient, but he never formally clicked submit, so he thought he was done, but it just hung there. He missed out,” he said. “You have to be careful with the system you’re working with.”

Many in the industry are skeptical of the security of electronic documents. Lorice Haig, president of Xenex Enterprises Inc., assuaged some of those concerns, pointing to the Electronic Commerce Act requirements.

In working with the construction industry, the surety industry recognized problems like electronic signatures, that the document was not altered after it was signed and that the individual who signed it had the authority to do so.

“The bottom line is that we came up with a solution working in collaboration with the industry to generate a document...that we can claim has covered almost every single possible angle of the security of the concerns that were brought forward to us,” he said.

Defence Construction Canada (DCC) was an early adopter of e-procurement and Melinda Nycholat, DCC vice-president of operations-procurement, said it’s important to collaborate with the industry to get feedback.

DCC has partnered with the British Columbia Construction Association (BCCA) and is using their bid depositories. On most of their tenders in B.C., DCC will close the subtrades through the BCCA bid depository, which they do electronically.

Nycholat said on one tender a subtrade company was upset because its bid would not go through.

Shortly after closing, the service provider submitted a diagnosis of the electronic transactions.

“You could see clearly they were using the wrong password and that’s why it couldn’t go through. That gave me some comfort that the systems are really able to diagnose clearly what’s happening there and we can see our way through disputes like that. The subtrade was satisfied that their concerns had been addressed,” she recalled.

For those who are thinking of making the move to e-procurement, Ackerley advised starting with simple responses.

“(Responses) that are more commodity based rather than these proposals, even design proposals that are much more complicated, really don’t lend themselves easily to electronic bidding type of content,” he said.

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