Week of June 5, 2000
  Editor's Choice Web Pick
   of the Week

A Major Contender for Construction-Industry Critical Mass

No, the 20 pounds (nine kg.) in this site's name aren't an obscure allusion to a lyric from Bob Dylan's salad days. (If you're wondering, the Dylan song and the lyrical snippet are listed at the end of this column.) Instead, twentypounds.com (www.twentypounds.com) is a reference to the 20-pound critical mass of uranium.

And critical mass is just what this site is all about - specifically, online critical mass in the construction industry.

The site represents a consortium of more than 20 commercial general contractors that was formed during the fourth quarter of 1999. There are some very big names in the bunch, including:

  • Austin Industries;
  • BE&K;
  • The Beck Group;
  • Beers/Skanska;
  • Brasfield and Gorrie;
  • Centex Construction;
  • Clark Construction Group;
  • DPR Construction, Inc.;
  • The Faulkner Group;
  • FMI Corp.;
  • Hardin Construction;
  • Hoffman Construction;
  • Huber, Hunt & Nichols;
  • J. A. Jones;
  • Linbeck Construction;
  • Manhattan Construction Co.;
  • McCarthy Construction;
  • Morse Diesel International;
  • Mortenson Construction;
  • The Pepper Cos.; and
  • Turner Corp.
For the moment, though, the Twentypounds Web site is basically merely a shell. To shamelessly borrow from Gertrude Stein, there's very little there there: a list of participating companies, a description of what Twentypounds plans to do and a link to an ENR story that profiled the site.

Alliance Represents $25 Billion to $30 Billion
Of Global Commercial Construction Industry

So why this review? Potential, pure and simple - major-league potential. The key words for this site are ones we just used a paragraph ago: "for the moment."

Many observers think the construction industry has room for only one dominant system for Web-based bid management and procurement. So "the moment" has major consequences, not just for this site, but likely for the construction industry in general as well.

Loads of contenders are similarly angling to latch capture the online bid-management and procurement market. Linbeck Construction President and CEO Leo Linbeck III is among those who see one dominant player emerging. "And the first one that cracks the critical mass [of users] will be the winner," Linbeck says.

And critical mass is one area where the Twentypounds consortium looks to have a significant leg up. One online magazine (buzzsaw.com), in fact, has already labeled the combined players "an instant power broker" - even with the Web site's current shell-like structure.

That's because current Twentypounds alliance members represent a combined US$25 billion to $30 billion of the $260 billion global commercial construction industry, according to Eric Lamb, manager of Twentypounds and executive vice president of DPR Construction (which, like Twentypounds, is based in Redwood City, Calif.).

And that's a highly significant share of the construction biz. As another song lyric put it, this could be the start of something big.

Twentypounds Still Picking Its Internet Partner

But Twentypounds must still add another significant piece to the puzzle before it moves from potent idea to present-day reality.

As of this writing, the consortium had not committed to an Internet partner. Twentypounds officials, however, have disclosed that they've narrowed their choices to four business-to-business e-commerce operations. All are California-headquartered: Bidcom and Buzzsaw.com, both based in San Francisco; BuildPoint Corp., based in Redwood City; and Cephren, based in Palo Alto.

Whenever that Net partner is picked, the full-blown Twentypounds site will likely come online far more quickly than is the norm.

A lot of that speed will stem from the consortium's considerable clout. With its constellation of heavyweights, and their immense buying power, Twentypounds has infinitely more pull that your average individual contractor that's fielding offers from Internet firms. Instead, Twentypounds can pick the platform it prefers.

What's more, the consortium plans to take an equity position in the Internet operation that it selects. That means that system development will likely run on a very fast track. And with its equity stake, Twentypounds will have a huge say in the system's functionality. In all likelihood, that scenario will yield a site designed by and for the construction industry -- almost certainly giving Twentypounds a major edge in cornering its coveted niche.

Mega-Site's Impact Could Send
Broad Ripples through Real Estate Industry

A lot of construction management, of course, has already migrated to the online realm. And the Net, with its power to keep all the players instantaneously on the same page, is providing clear advantages in terms of cost, time and effectiveness.

That's been a major change. But we may be in for an even bigger change if Twentypounds hits what its backers see as the high side of its potential. If that happens, it could create substantial ripples that are felt in much the real estate industry, including not only construction-sector players, but also executives managing projects for corporate space users.

There's certainly enough potential leverage here to make that happen. Twentypounds officials, for example, say the consortium intends to move all its members' supply chains online. Having that much business consolidated at one site could draw a huge online community - in short, a critical mass.

Benefits for Some,
Dis-intermediation for Others?

Such a construction industry mega-site for bid management and procurement could yield a number of benefits.

One of those obvious potential benefits would be substantially improved information sharing - and from a single source -- among all the players involved on a project.

Some distributors, though, may not be too crazy about the new online reality that could develop. Some of them could conceivably face dis-intermediation, with manufacturers instead converting to direct sales in some cases. That blade, though, cuts both ways. The good-news cut: With the middlemen's markups eliminated, costs should drop for the affected projects. And direct online sales will yield faster delivery cycles for equipment and materials, some observers think.

All that, of course, remains to be seen. But with the sheer scope of the partnership that's behind the Twentypounds' site, that shakeout may coming much sooner than later.

The Dylan ditty in question: The 20-pound reference comes from "(Stuck inside of Mobile with the) Memphis Blues Again," one of Mr. Zimmerman's more enduringly enigmatic tunes from "Blonde on Blonde." The lyrical snippet goes:

"When the preacher looked so baffled
When I asked him why he dressed
With 20 pounds of headlines
Stapled to his chest . . . "



©2000 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.