Platform economy has gained great attention through companies such as Uber and Airbnb, that are disrupting traditional industries. The construction industry has not been affected by this disruption yet, as the first disruption – digitalization - is still on its way. Disruption in traditional industries is inevitable, but two dinosaurs have been fighting against it: agriculture and construction. However, agriculture has already been affected by digitalization through globalization, which leaves construction as the only industry unaffected. Research and experts predict a wave of digitalization to hit the construction industry soon, which will lead to the first disruption and the long-awaited shift in productivity development. The digitalization in construction is also necessary in enabling platform economy, as well as enabling the disruption that will change the architecture of the industry.
For a construction company, the initiation of this shift in productivity development is crucial for the value of companies in an ecosystem, as well as for the well-being of society. The evolution of construction industry has been modest for decades despite BIM, and the operations in construction have fallen behind the pace of digitalization. This becomes very evident when comparing the performance of procurement and supply chain management with those of other industries. What makes the indifference towards digitalization extremely significant, is the magnitude of construction industry and thus its effect on national productivity and the economy.
When thinking about the evolution of productivity and business models, the role of procurement is substantial. Nevertheless, a great amount of issues and uncertainty can be found in the operations of procurement, leading to a waste of time and resources. The sourcing itself and the plethora of information, along with negotiations and preparing contracts, as well as executing them, all hinder the progress of procurement, resulting in overlapping of activities and lack of collecting data. The procurement is often short-sighted, branded with sub-optimization, focusing on the cost of labor and materials.
In this research, the maturity of digitalization in the construction industry is compared with that of the transportation industry, focusing on the imperative areas to digitalize regarding procurement. The research also presents how to exploit platform economy in project-based procurement of construction, while creating value for the suppliers, contractors and the client. The research is based on a literature review, case interviews of suppliers and contractors, as well as using a prototype of a platform business model to model the advantages of disruption in a construction ecosystem.
The goal is to better understand the basis for creating a platform business and on the other hand, to better understand the terminology of it. Digitalization is not the same as platform economy, but the pre-requisition for platform business and for disruption. Digitalizing information offers – especially for the contractor and its procurement – a great opportunity to improve the functionality of a platform, to sell gathered information and to use information in targeted marketing and services. The greater the role occupied by the company through the platform, the greater the potential to create value.
