Kylie Davis

Welcome to the Proptech podcast. It's Kylie Davis here and I'm delighted to be your host as we explore the brave new world where technology and real estate collide. It's so great to have you here and to share stories of innovation and opportunity across real estate, property and building services. And the aim of each episode is to introduce listeners to a Proptech innovator who is pushing the boundaries of what's possible across how we design, build, buy, sell, rent, and invest in property and all of the associated behaviour and activities around that. Now, none of this would be possible without our sponsors. So a big shout out to the Direct Connect team, making moving, easy, dynamic methods the innovators behind the forms, live and RealWorks forms, and the Proptech Association of Australia. Thank you for your support of the podcast.

Kylie Davis

In this episode, we meet Andy McColgan, CEO and Director of Procuracon.

Kylie Davis

Proptech.

Kylie Davis

Procuracon. Andy's 15 years combined experience as a Site Inspector at Ogilvy Construction and Project Manager and Project Director at App construction gave him firsthand experience into the pain and inefficiencies around construction tendering processes. And Procuracon is working to remove the pain points and even the inherent bias that exists in the traditional ways of trying to find the right suppliers and contractors. The Perth based startup came through the Curtin University accelerator program and was recently the winner of the Proptech Hub WA Emerging Technology of the Year. So, here to tell us all about it, Andy McColgan. Welcome to the Proptech podcast.

Andy McColgan

Thanks for having me.

Kylie Davis

Thank you so much. I'm really curious about your tech because I'm really fascinated by what's going on in the Procuracon space. But the first question is always the hardest. Andy. What's procure? Procuracon's elevator pitch?

Andy McColgan

Have you got a stopwatch ready?

Kylie Davis

I have, yep. Do it in as few applause as possible.

Andy McColgan

So it can be a nightmare for clients to find suppliers that they can trust to deliver their commercial construction projects. The process is fragmented, time consuming, and costly. That's why we've created Procuracon, australia's fastest and most intuitive expert two sided construction marketplace. Clients can now find and pre qualify the right suppliers for their projects instantly.

Kylie Davis

Awesome.

Kylie Davis

Okay, so Procuracon is a proptech that's specializing in the construction space and solving problems around trustworthy suppliers.

Andy McColgan

Is that correct?

Kylie Davis

Awesome. Okay, fantastic. And so how big a problem is that for the construction industry? Help us get a handle on that.

Andy McColgan

Yeah, it's pretty significant. I've seen a few recent stats that were quite surprising that construction productivity in Australia is actually at its lowest since 1990. So that means that we are still procuring our suppliers and building our projects at rates were over 30 years ago. That's amazing stat. So that demonstrates the scale of the issue. And procurement is something that leads to a lack of productivity as well because the procurement process can actually waste up to 40% of a construction program.

Kylie Davis

Wow.

Kylie Davis

Okay.

Andy McColgan

Any efficiencies in procurement can significantly improve productivity.

Kylie Davis

Talk me through because, look, the only construction I've done Andy, is well, we built a house. That we did that was awesome. Although also one of the most stressful things we've ever done. And we've renovated, which also one of some of the most stressful things we've ever done. So I can only imagine what happens when we do this at a commercial scale.

Andy McColgan

Yes.

Kylie Davis

What are those traditional methods that commercial construction companies are using still when procuring?

Andy McColgan

So a lot of the outdated methods, so word of mouth is still used.

Kylie Davis

Google, I know a guy.

Andy McColgan

Yeah, exactly. Somebody's cousin previous relationships. Google is still surprisingly used quite frequently as well. So that ultimately comes down to who's paying the most on SEO to appear at the top of the search results. So a lot of those outdated methods aren't really using data to make informed business decisions as well, to make it easier for clients to actually find and pre qualify suppliers they can trust to deliver projects at that commercial scale.

Kylie Davis

Okay.

Kylie Davis

So what, are they just sort of phoning up and saying, can you drop me around a couple of pallets of bricks? Or I feel like I'm being completely inappropriate with it. Or are they emailing and sending PDFs of price lists?

Andy McColgan

Yes, so email is still very common. So a client requesting quotation, whether it's from a consultant, from an architect, from an engineer, from a contractor, or for a trade as well. So essentially the client's uploading the request and the supplier responds to that request. And it doesn't actually get into the detail of what a supplier's experience is, what their capacity, their capabilities, and what their risk profile is. So we're just trying to place a lot more focus and qualitative criteria on Procuracon as well to make it easier for clients to connect with suppliers that have a demonstrated track record, that have the expertise, that have a risk profile, that matches the opportunity, and they have the right ESG initiatives. As right.

Kylie Davis

Okay, well, I like this a lot. So what you're telling me at the moment, while Australia is in the midst of an inflation crisis and all of that 40% of the costs of.

Andy McColgan

Building with the actual program itself, the construction program. So the timeline actually can be spent on finding and then awarding contracts to consultants, contractors, and trades. So it's a very timely process because.

Kylie Davis

It takes a long time to email people, get responses back, then email somebody else, and then phone somebody and then phone a mate because that quote wasn't quite right. That's the process that we're replacing here.

Andy McColgan

Right, exactly. In my experience as well, I've been the client that's been managing 100 million dollar project, and you can be overwhelmed wondering how you can quickly find the right team for your project. So what architect are you going to use? What engineer can help you? Who can you actually trust to help you deliver your project without having to sift through an abundance of supplier data. So it's hard to really unfold what they're truly capable of. And it can actually take months just to find one supplier. And you could need 15 to 20 other suppliers to deliver your project. So it's an administrative burden.

Kylie Davis

Suddenly so much is making sense to me around building. It's so painful. So Procuracon is basically assembling all that information. Tell me how your tech works.

Andy McColgan

So, it's a B, two B expert, two sided marketplace. So suppliers create a bespoke procureicon profile showcasing their point of difference, their experience, their expertise, their risk profile, all the systems and policies they have in place, and their ESG initiatives. So then the client organizations, such as developers, government agencies, can use our procurement tools to instantly find, evaluate, and shortlist suppliers on the platform. So it's really easy for clients to target suppliers that align with the project requirements. And then we actually have automated reporting as well. So it makes it very easy for clients to substantiate supplier selection. And it's data backed decisions now. And this process can now actually take 15 to 20 minutes for each supplier rather than months. But the other difference is we're really focused on that qualitative criteria. So who are the right suppliers for the project?

Andy McColgan

Not who is going to be the cheapest suppliers.

Kylie Davis

Yeah, okay, fantastic.

Kylie Davis

Oh, I'm loving the sound of this. I'm absolutely loving the sound of so tell me a little bit about now. You recently won with this technology, the Proptech hub WA Emerging Tech of the Year award, didn't you?

Andy McColgan

That's correct. Yep. That was about a week and a half ago. So were very happy to receive that award.

Kylie Davis

Yep. And a big shout out to Ash and the guys over in Perth. They do a great job over there. Doing a great so how old is Procuracon? How long have you been doing this for?

Andy McColgan

So, it's actually over four years since my business partner raised the concept with me. So it's not been an overnight process to get to this point. So since he raised the concept with me, my business partner, Kuhn, that is, who is currently overseas, so couldn't be here today. We've had hundreds of meetings with the different members of the construction industry to get as much feedback as possible. And we've done a very comprehensive beta test, which lasted up to a year with around 40 companies from the construction industry. So, as I mentioned, it's not an overnight process to get to this stage.

Kylie Davis

Yeah, I bet. And so what's your background, Andy?

Andy McColgan

So, my background is actually construction management. So I used to work for head contractor for around six years, and then I moved to Australia 13 years ago and worked for a project management consultancy and then became a project director. So a big focus on that role was in procurement. So I was acting as the client trying to actually find and recommend consultants and contractors for those projects. And I was also working as a supplier as well, so we had a large team of project managers that had to be kept busy. So I was constantly responding to client requests as well to try and secure these opportunities. So really experienced that procurement pain from both the client and the supplier's perspective.

Andy McColgan

There was multiple occasions sitting behind a laptop at midnight pulling together a submission, and you could have been working on the submission for four weeks, and it's due the following day, but you then, as a supplier, need to submit the same information to another client in a different format the following day. So that really takes your focus off managing your projects as well, which should always be the priority.

Kylie Davis

Yeah, it feels like we're seeing a real shift at the moment, aren't we? In the agency or the power structure behind how business has been done traditionally, which is the employer or the project manager, whether that's in construction or whether that's even as a property manager looking for a tenant, asking, saying, oh, well, we have a vacancy, so who wants to apply to, I guess, the common theme behind what you're doing at Procuracon? And then also what we're seeing in property management, with tenants or with renti or Snug or the guys from Inspect Real Estate. So fill in the form once, get the structure and the information correct once, and then you can decide who gets to see that or share that information with the people that need to be able to make good decisions around it.

Andy McColgan

Exactly. We're just encouraging suppliers to centralize their data and keep it up to date. And that way multiple clients from different sectors, from anywhere in Australia or eventually throughout the world will be able to actually view their Procuracon profile and instantly pre qualify them without requesting to submit all this data in different formats as well. So we're really trying to eliminate that administrative burden for suppliers.

Kylie Davis

And so if we go down this.

Kylie Davis

Path and do it and the sort.

Kylie Davis

Of Procuracon method becomes the way, what is the potential around how much 40% of the time does that translate into cost savings in terms of projects or the significant?

Andy McColgan

So depending on the scale of the project as well, the cost saving would vary, but the cost saving would be very significant. So if you factor in, construction is the third largest industry in Australia and annual revenue exceeds $400 billion. There's over 400,000 organizations in Australia involved in construction. There's 42,000 in Western Australia where we are currently based, and that's just Australia. So the Efficiencies would have a pretty significant impact to those organizations operating within the space. So time is money at the end of the day.

Kylie Davis

Yeah. Fantastic.

Kylie Davis

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Kylie Davis

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Kylie Davis

How big are you guys? Four years, a couple of beta projects, and I imagine there's a lot of work involved in setting up tech of this size. How big are you guys now?

Andy McColgan

So we're still early days, so went live in the fourth quarter last year and it's both myself and my business partner Kuhn are full time on Procuracon. We also have an advisor that specializes in government procurement and we've got a long standing partnership with a local software developer as well. So they're really a key part of our team. So they've been the ones developing our modules and also they developed our branding as well and are going to help with our marketing campaigns.

Kylie Davis

Right, okay, cool. Tell us a little bit. You were part of the Curtain University accelerator. Tell us involved.

Andy McColgan

That was a great program. So we finished the program around a month ago as well and it's a twelve week program that helps provide startups with the tools to take their business to the next level. So it really gives access to Curtain University's resources such as they've got a network of world leading entrepreneurs, innovators and investors as well. And just even hearing they brought in startups that are now scale ups and global successes. So hearing from their perspective about their journey and lessons learned was really invaluable as well. So it was a great.

Kylie Davis

So before when you mentioned that you do risk profiles and the companies that are as part of their Procuracon profile are asked to kind of upload information about themselves. Is Verified third party stuff or is it industry standard stuff? What are you doing to sort of confirm that it's not just them saying.

Andy McColgan

Oh yeah, no, we're not risking so they're backing up the information on the platform. So for instance, if they're saying they've got professional indemnity insurance for 20 million, they have to upload the certificate of currency demonstrating that financials. If they're saying they've got a certain annual turnover, then they upload the information demonstrating that turnover as well. So they really need to back up what they're saying on the platform. So talking about their track record, if they're saying they're experts at delivering services within a particular sector, they have to demonstrate that with case studies on the platform as well. And that's where they can upload client testimonials for those projects as well. They even do the same for their key personnel.

Andy McColgan

So if they're saying that their key personnel are experts in a particular sector or delivering projects up to a certain value, then the key personnel have to demonstrate that experience and their qualifications on the platform as well.

Kylie Davis

Fantastic.

Kylie Davis

Okay. And so the issues around the problem that needs solving seems really screamingly obvious. Who are your competitors in this space or how big is the competitive space?

Andy McColgan

Yeah, there are procurement platforms out there Aveta vendor panel tenderlink and Felix, but from Procuracon's perspective, because we've lived and breathed construction for over 20 years each. So my business partner, Kuhn, who I mentioned before, that originally raised the concept with me, he used to be an architect, worked as a developer, and a project manager as well. So we've really covered a good cross section of the construction industry. And we like to think this has really been reflected in the user experience on Procuracon. And this is the feedback we're constantly receiving from our early adopters as well, that they don't believe there's really any other platforms that give them access to the data that's available on Procuracon, and it's as easy to assess and evaluate as in Procuracon  as well.

Andy McColgan

So although there are other platforms out there, we don't believe they do what Procuracon does.

Kylie Davis

Right, okay. And so are you able to say how many suppliers you've got on the platform at the moment?

Andy McColgan

Since our launch in Q four last year, we've got over 70 companies signed up to use the platform, and that ranges from small trays to through some of the largest global construction businesses as well. So we've got a really good cross section on there because Procuracon is essentially catering for any type of service provider that's involved in commercial construction. So you've got your head contractors, then you've got almost endless consultants. You've got your engineers, architects, planners, quantity surveyors. There's a long list there and then down to your trades as well. And then you've got your client organizations, so you've got your developers and your government agencies as well that the platform can be used for. So we've primarily focused in WA, but a lot of our members have a national and global footprint.

Andy McColgan

So within the next six months, we are going to really start pushing for our national launch, and then our global launch will follow.

Kylie Davis

So what's your business model like? Who's paying for it? The suppliers? Or do I pay to put my information up or am I paying to pull it down?