LeChase Construction Services, a private construction company, is trying something new—online purchasing, project engineering supervision and overall supply chain monitoring—on a $200 million construction project that will keep procurement specialist Bill Schrouder on his toes.

Since the 62-year-old Rochester, N.Y.-based general contracting firm has built hundreds of buildings, purchasing project supervisors are comfortable with long-established pen-and-paper bidding, sourcing and subcontractor-management procedures. Schrouder admits he initially was skeptical about adopting innovative on-demand Internet-based methods.

But, by using on-demand software provided by Procuri, he was able "to save a bundle" just on preparing documents needed for sourcing direct materials and services. And now, he says, the software firm's Internet-based supply chain systems are helping him find numerous occasions almost daily to reduce costs further.

In a major construction project, "the first buy is sourcing the skilled tradesmen, the specialized contractors who provide materials." The typical approach was to blueprint architectural documents, which can run up to 1,000 pages of specifications, and have them printed, bound and shipped (at costs up to 10¢/page) to potential specialized subcontractors.

By having the blueprints, corporate terms and conditions, and other bid documents prepared for online presentation and download, Schrouder was able to expand the project's potential bidders at a much lower total cost. "Everything is online and available whenever and wherever it's needed," he says. This allowed him to standardize the bid package and allow for reverse-auction bidding on some materials and services and sealed bids on others. It also allowed the project to have a single procurement specialist instead of six, as in the past.

The other big benefit for a construction project manager of online communication is "the ability to expand my communications with subcontractors and suppliers," he says. "Just being able to manage those suppliers makes it a huge advantage. We have increased supplier participation in bids to lower costs."

Since the materials and construction system award were made, the subcontractors and often their suppliers have been in daily contact with Schrouder via the Internet. There's a lot that goes into construction that isn't obvious—ranging from personnel staffing, construction staging, delivery scheduling, mechanical and electrical systems integration—but is under the aegis of the procurement specialist. "The fact is that the project procurement manager is married to the project engineers, estimators and procurement managers, accountants and even the subcontractors and their suppliers for the three-to-five years the construction project takes to complete," Schrouder says.

And that's what he likes about the consistent nature of the on-demand supply chain management system. "There is standardized flow of information through all stages of the construction project to date, and I see no reason it won't continue to completion," he says. "So, when communication happens faster, we can expand our universe of suppliers outside our geographies and collaborate with those suppliers all over the globe." That's why he'd like to see on-demand supplier management system as a company standard.