Market Networks and the Future of Construction

Industries Ripe for Change #3: Market Networks and the Future of Construction

Recent research by Gartner suggests that by 2020, 40% of field service work will be done by engineers or technicians who are not directly employed by their organisation. The world of work is changing and it is requiring industries to radically rethink their business models. The construction sector is no exception.

By nature, construction projects almost always involve a number of different organisations and individual consultants working towards a common goal. These different entities are tied together by different types of contract. Often, this chain of work can become fragmented, which is not only inefficient but also leads to errors. In recent years, productivity in the UK construction sector has flatlined with projects frequently running overtime and over-budget.

The call for better communication and better trust is unanimous. Many leaders are already making changes towards a more efficient industry-wide way of working. The question is: How exactly will this be achieved? We take a look at the ‘Market Network’ model and explore how it offers up a potential solution.

Introducing Market Networks

What Are Market Networks?

The term ‘Market Network’ was coined by James Currier, a Silicon Valley investor and technology evangelist, to describe an emerging type of business model aiming to make working life fairer and easier for everybody. Market Networks are software-as-a-service (SaaS) tools that combine the benefits of a social network with a walled marketplace to improve communication and the profile of a particular industry.  

“Market Networks will... impact how millions of service professionals work and earn their living.” - James Currier, Silicon Valley Investor and Technology Evangelist.

How do Market Networks Work?

Market Networks connect businesses with their customers and subcontractors. In this respect, they are similar to on-demand smartphone apps such as Uber and Deliveroo that connect their gig workers with customers - except that the users of Market Networks are not anonymous, nor are they particularly disposable to one another either. In fact, Market Networks are used to improve transparency and build long-term relationships.

Market Networks are typically created within a specific industry or around a particular area of expertise. Examples of Market Networks already operating within the UK include Houzz for home designers, Eventerprise for event planners, and for those in the trade industries, there is Okappy.

Mobilising Businesses Through a Cloud-based Network

By mobilising business communications and securing them on a cloud-based digital platform, Market Networks enable businesses to connect with professional contacts like friends on a social network. As with previous innovations in office applications and telecommunications, Market Networks are set to transform existing job management systems.

Accessible using various internet-connected devices, Market Networks allow their users to communicate with one another while on-the-go, accepting or updating jobs wherever they may be. Job signatures can be collected electronically on-site, and documents such as job sheets and invoices can be safely created using specialised internal formats.

For some industries, the e-job management revolution has already begun. As an industry ripe for change, the construction sector is likely to be the next big uptake.

“I see the Market Network model definitely helping to improve the construction industry, but you’d have to be very considerate of procurement rules and tender processes; ensuring you adhere to them first and foremost.” - Laurence Peberdy, Project Manager.

Implementation In The Construction Sector

Procurement Rules

Most of the time when any one stakeholder employs a contractor or organisation as part of the work that they agreed to do, they have to adhere to procurement rules. These would be dependent on the situation and organisation they are working for. Usually, one company will take the liability from a client and then outsource the work, breaking up the liability as they do.

When they’re allowed to, companies often end up using contractors they already know. This takes into consideration procurement rules to minimise the perceived risk, but this does not always mean they have chosen the best person or organisation for the job.

By using a Market Network system, the construction industry would formalise a practice they already follow into a software system. This is dependent on the Market Network allowing them to track who they got quotes from and who they went to get a quote from.

This way, companies are able to be more considerate of who they work with; likely improving their ability to control cost, quality and time by ensuring the people they use are as good as they can be. It would also improve accountability, by giving companies a bigger pool of potential contractors, instead of just the ones they know.

The RIBA Plan of Work

The RIBA Plan of Work organises the process of briefing, designing, constructing and operating building projects into 8 stages and details the tasks and outputs required at each stage. Stages 0-4 oversee the design, and stages 5-8 cover the construction. Construction project goals and contractual obligations are usually defined by the RIBA stages, which allow the construction industry to formalise the progress of a construction project through from inception to completion.

Tender Processes Vs. Market Networks

A Market Network could be used to manage all of the work up until stage 4 of the RIBA process. For example, a Market Network could be used to find a mechanical engineer for the design. Then, traditionally, a company would have to go out to tender with those designs. Often, the tender process is under a European or National tender process which can be quite formal. This usually involves a portal regulated by the government where companies put their project up and other people will bid for it. After the tender is won, the construction company that takes the project forward would then be able to use a Market Network again to manage the rest of the project.

Market Networks In Practice (The Outcome)

While the use of Market Networks is not yet widespread within the Construction industry, there are nevertheless several success stories of companies and individuals implementing Market Network systems already.

Convert Water Ltd offer an all-round service to their customers, providing all elements of treatment and pumping of wastewater and sewage. They provide services as installers, subcontractors or main contractors, offering a total service package using only products from top quality manufacturers. They started using the Okappy Market Network to manage their workforce.

Following implementation, Convert Water Ltd and their customers have a lot more visibility and control over the work they do. Information is updated in real-time and instantly available to all stakeholders, resulting in fewer calls from customers wondering about the status of a job and less chasing for information from their technicians. This extra time enabled Convert Water Ltd to focus on the areas of the business that really needed attention; resulting in growing the company approximately 40% year-on-year.

“It frees up our time and allows me to spend more of it visiting sites and bringing in more work. This wouldn't have been possible without Okappy! My engineers can add jobs for themselves so, if additional work needs to be done while on site, they can quickly add it on. Alternatively, if they need to go back to do further work, they can schedule it straight away without having to chase me.” - Anthony, Director of Convert Water.

The Future...

Market Networks are set to transform the working lives of all stakeholders in the construction industry and for all the right reasons. The Market Network model actively encourages collaboration and speeds up the sharing of information, bringing each project up-to-date. Industry relationships are solidified with better levels of trust between stakeholders. In every sense of the word, they connect.

As more leaders in the industry begin to implement the Market Network model into their workforce management processes, the productivity gap could close sooner than we think.

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