eConstroy - An electronic buying platform for the construction sector

The case presents the first years of Econstroi, an electronic trade platform born in 2000, a short time before the fall of NASDAQ which marked the bursting of the digital bubble. The case describes what happened since its launching until the end of 2004, and mentions the problems the management team presented to the shareholders in the annual general meeting for that year. This platform was launched by a group of some of the main Portuguese constructors, who founded Vortal, S.A., a public company which also included a bank group and PT, Portugal Telecom. Econstroi’s business model is based on the payment of a yearly subscription by all operators according to their size, with a special situation for the suppliers, as adherents, which allows the free use of the tool and paying only when a business transaction is closed. A team of independent professionals manages Econstroi, ensuring the confidentiality of all business and equal treatment for all shareholders. A constant concern of the managing team, not always well-succeeded, has been to get members to use the tool, placing an increasingly significant part of their orders through Econstroi. This is an aspect which may give rise to an interesting class discussion. The case also analyses the relation with the suppliers and an attempt to block negotiation through the tool in the steel segment was an example of a difficult situation. An annex shows a systematic results report of its use in three real-life cases of different types of suppliers. Finally, in a direct quote of Vortal`s Chairman of the Board, Rui Dias Ferreira, four lines of thought stand out: (1) The key to the obtained results stays in having the right answer, at the right moment. For this a well thought-out business model is fundamental, which means having the right shareholders who provide determination and capital and, finally, a cohesive and very enthusiastic team. (2) Econstroi has already exceeded the critical mass necessary to keep itself going. However, it is important to increase and improve the services offered both to contractors and suppliers, for only thus will the demand attain a dynamic of its own, without being so dependent on our business efforts (3) The significant technological upgrade the use of this tool has imposed on companies working within the portal, and the great improvement of access to wide band communications offered by operators in the market. (4) The relation between the sector?s crisis, reflected in the results obtained to date, and the perspectives opened for the next year.