In an industry where margins rank among the lowest of any major sector when risk is factored in, the process of sourcing bulk construction materials, aggregates, steel, pipe, and cementitious products remains surprisingly primitive. Contractors still rely on phone calls, voicemails, and personal networks to locate basic supplies. McKinsey and others estimate that up to 30 percent of all wasted time in procurement goes to this kind of low-skill administrative work. The gap between how construction sources materials and how virtually every other major industry handles procurement is one of the sector’s most persistent and costly blind spots.
Rachael Mahoney, Chief Strategy Officer at Bulk Exchange, a digital procurement marketplace for bulk construction materials, has watched that gap play out across two decades of building technology for industries adjacent to real estate. Her assessment is direct: highly compensated estimators spend a considerable percentage of their time on tasks that require no specialized skill, leaving less capacity for the complex judgment calls that determine whether a bid wins or loses. “If you have someone spending 30% of their time doing administrative, low-skill, low-return work, then that just takes away the time that they can spend on doing the incredibly important work that goes into refining numbers and materials,” she says.
Why Material Sourcing Derails Projects Before They Start
The cost of procurement inefficiency compounds at every stage. During bidding alone – before a shovel touches dirt – contractors invest heavily. According to Mahoney, one project she references cost approximately $5 million in the bidding process before the firm was even shortlisted to the top three. Win rates in heavy construction range from one in five for focused firms that bid only on projects where they have deep experience, to one in ten or fifteen for firms that cast a wider net. Every losing bid still carries the full cost of preparation.
The problem extends beyond pre-construction. Once work begins, unexpected conditions force contractors into last-minute sourcing where leverage disappears entirely. Contaminated soil discovered during excavation requires specialized disposal that not every facility will accept. Higher-than-estimated moisture content can demand 10 percent more material than originally ordered. Natural disasters deplete local supply while simultaneously generating disposal needs. “The very smart folks on the other end know that you’re in a bind and they can charge whatever it takes to get it done,” Mahoney says.
For developers and builders, the implication is that material availability and disposal options need to be mapped during planning, not discovered during construction, when every delay costs crew time and eliminates negotiating position.
A Taxonomy Problem That Software Can’t Easily Solve
One reason construction procurement has resisted digitization is that the industry lacks a shared language for its own products. On the East Coast, a common aggregate is called 3/4 inch stone. On the West Coast, the same material is called 3/4 inch rock. A human recognizes these as identical. A software system does not, and that mismatch repeats across hundreds or thousands of product variations.
The underlying problem is structural: construction data has historically been captured in silos, held within individual companies, and rarely shared publicly or standardized across markets. A handful of procurement platforms have begun building tools aimed at closing this gap, Bulk Exchange’s version uses AI to construct synonym libraries and extract material needs from job specs and bid documents regardless of regional naming conventions. Whether that approach or another eventually becomes standard, the naming mismatch itself has to be solved before construction procurement can be data-driven at scale the way other industries’ supply chains already are. “We don’t even speak the same language,” Mahoney says. “It sounds rudimentary and ridiculous. Now imagine that over the course of hundreds, if not thousands, of product variations.”
Logistics as the Hidden Majority of Material Cost
For many products, more than 50 percent of most material cost is in logistics or delivery, according to Mahoney. Labor shortages in trucking compound the problem; there is no excess delivery capacity available. Yet without coordinated data on sourcing locations and routes, trucks frequently travel empty in one direction. A truck delivering material to a site should ideally leave full of material that needs disposal elsewhere, but that coordination too rarely happens because the data connecting supply, demand, and disposal locations is not centralized.
The construction industry spends less than 1 percent of its operating budget on technology, according to Mahoney, compared to 3.5 to 5 percent in most major industries. That spending gap helps explain why logistics coordination often remains manual and reactive rather than planned and optimized, and why more than half of every material dollar goes to moving it rather than producing it.
Data Centers Are Forcing the Issue
Data center development is accelerating demand for better procurement infrastructure because the clients commissioning these projects are technologically sophisticated and insist on connected systems throughout the project lifecycle. Site selection for data centers requires early awareness of utility constraints, material logistics, and hauling access, information that, when siloed, creates costly surprises after construction begins.
A site approved on paper may prove impractical once material delivery constraints become clear, Mahoney says. If road access cannot support the hauling volume required, alternatives like barging add cost and complexity that were never budgeted. These gaps compound when planning, logistics, and procurement systems do not communicate with each other. “What may seem fine on paper because some community has approved this acreage or land availability may not work, given the proximity and availability of those resources that you need to actually follow through and build the infrastructure,” she says.
A Workforce Shift That Makes the Status Quo Unsustainable
The pressure to modernize is not purely technological. Seventy percent of the construction industry is set to retire in the next five to seven years, according to Mahoney, and their replacements are digital natives with little tolerance for fax machines, Rolodexes, or phone-tag procurement. The generational gap shows up starkly in how differently the two groups approach the same task: research that once took manual researchers weeks can now take digital-native users using modern procurement tools a fraction of the time, once the underlying data is structured and searchable.
That speed difference is part of why the industry’s traditional resistance to technology adoption is loosening. As the workforce that built its career on phone-tag procurement retires, the case for maintaining manual processes weakens along with it. “We’re just not going to go back to doing things that take more time and are more difficult,” Mahoney says.
About the Expert: Rachael Mahoney is Chief Strategy Officer at Bulk Exchange, a digital procurement marketplace for bulk construction materials, with two decades of experience building technology for industries adjacent to real estate.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
