Redefining Subcontractor Management
When it comes to effectively managing today’s complex construction projects, collaboration is the key to success. With large, multi-faceted projects involving the potential for dozens, even hundreds of subcontractors, keeping track of communications, processing data, tracking job progress and changes and managing compliance issues can be a hefty task for even the most skilled project managers and construction lead teams.
As competitive markets and tight profit margins still rule the day, contractors are looking for any and all advantages, with emphasis being placed on improving collaboration and productivity across projects. That means finding the solutions to work with subcontractors in real time, streamlining processes and workflows to keep jobs moving, digging deeper into project data and analytics to understand how jobsites and vendors are performing and providing better tools and resources to connect the office and field.
Powering this evolution in project and subcontractor management are innovative technology solutions. From cloud-based construction management software and powerful data intelligence and business intelligence tools in the back office to mobile applications for sharing and collecting data in the field and intuitive document and workflow platforms to extend collaboration channels across entire project teams, technology is transforming the way contractors have traditionally operated. This helps them improve productivity, boost profit margins and gain competitive advantages.
Common Subcontractor Management Challenges
Focusing in on the general contractor-subcontractor relationship, it’s important to understand some of the challenges manual processes and/or non-integrated, outdated software systems can present. Here’s a look at some of the most common:
- Lack of unified collaboration. When juggling multiple subcontractors, communicating and sharing data when they need it can present challenge — especially if there is no easy vehicle to do so. Contractors attempting to manage their collaborative efforts with subs through phone calls, meetings, email, disparate software programs and other antiquated methods can find that not only do these processes take significant time, there is no guarantee all parties are consistently working from the most up-to-date information. This can lead to missteps in the field or conflicts between subcontractors or the larger project team members.
- Missing paperwork or project documentation. Changes on a construction project are a given, but they aren’t always communicated in a timely or effective manner. Sometimes, a subcontractor will miss a critical project update email, or a change order is incorrectly routed, or the latest versions of plans and specs are lost or ignored. This can lead to delays, significant cost increases, conflicts, rework and even legal issues.
- Problems with materials, tools, equipment or work. This can range from subcontractors using incorrect materials or doing work that differs from what is on the original contract to equipment, materials and tools being incorrectly routed to and from jobsites. Keeping tabs on subcontractors’ work on projects is critical but doing so manually or relying on disconnected software that can only be updated in the back office is a risky venture.
- Maintaining compliance. Construction is one of the most heavily-regulated industries. Beyond the contractual agreements between the owner, contractor and subcontractors, construction firms need to consider building codes, insurance and bonding requirements, credit and background checks, prevailing wage and union payroll requirements, lien requirements, a plethora of safety regulations and much more. There are a lot of compliance hoops to jump through and any one of these issues falling through the cracks can bring work screeching to a halt while it is addressed. It can also present significant risk to the contractor via penalties, lawsuits or other conflicts.
Process Digitization and the Case for Integrated, Cloud-Based Software
A recent McKinsey & Co report1 touched on both general and subcontractors’ move toward process digitization — moving away from paper and manual processes toward online, real-time sharing of information to ensure transparency and collaboration, timely progress and risk assessment, quality control, and stronger, more reliable outcomes. In that study they noted a couple of examples of contractors that were netting significant benefits:
“In an American tunnel project that involved almost 600 vendors, the contractor developed a single platform solution for bidding, tendering and contract management. This saved the team more than 20 hours of staff time per week, cut down the time to generate reports by 75 percent and sped up document transmittals by 90 percent,” the report noted. “In another case, a $5 billion rail project saved more than $110 million and boosted productivity by using automated workflows for reviews and approvals.”
By adopting cloud-based software and moving to fully-integrated construction enterprise resource planning (ERP) platforms that work with one set of real-time data, contractors are seeing significant benefits. Among them: significant time savings, increases in productivity, more flexibility with projects, better tracking of equipment and materials, stronger data protection and disaster recovery measures.
Arguably the biggest benefit, however, is the creation of a truly connected construction operating environment, expanding access to data and software functionality to entire project teams. This demolishes the traditional barriers between both the field and office and general contractors and subcontractors.
Working through web browsers and mobile devices, all project team members can work as if they’re always in the same room. Coordination for items like submittals, RFIs and issues are handled via automated workflows, with alerts, dashboards and online portals to facilitate processes. The ability to connect anywhere, anytime – and the ability to work offline and sync when connected — keeps work moving. General contractors can easily keep tabs on subcontractors’ work, track issues, manage compliance and communicate project changes.
Streamlining Document and Compliance Management
Another powerful benefit that integrated, cloud-based software platforms provide is effective document and compliance management.
Documents are digitally hosted and archived, accessible with a click or a tap. And, they’re distributed with ease, with versioning control, alerts and more ensuring subcontractors and other project team members receive — and are working from — the latest information.
Construction drawings, meanwhile, are unlike typical construction documents. It’s not unusual for a project team to be working from version seven of a sheet that came in from the architects as part of ASI version three. Managing, organizing and keeping an audit trail of such complexity overwhelms paper-based processes and cumbersome document sharing tools like FTP programs or disconnected online plan rooms. Contractors need to be confident that the entire project team is accessing the most up-to-date version of a drawing to avoid error and rework.
Integrated software platforms that allow easy access for subcontractors and team members when they need it, provide rigid versioning control through drawing logs and store drawings and metadata alongside other project management processes such as daily logs, submittals and RFIs allow for a much more streamlined, collaborative project management process.
One of the most challenging tasks for general contractors is controlling the documentation and processes around compliance issues. For effective compliance management, contractors need to:
- actively communicate compliance requirements to everyone involved in the project;
- collect, store and track all compliance documentation;
- proactively communicate with subcontractors when documentation is needed or is expiring; and
- know when and how to take action for non-compliance, including holding subcontractor payments and halting work until safety issues are addressed.
Dedicated job compliance management solutions, also integrated into some construction ERP software programs, provide a dedicated management portal to manage the various levels of compliance documents and tasks associated with projects. These include automated workflows to streamline compliance management tasks and alerts to when documentation is needed or soon expiring. These programs can also manage the compliance documentation process down through multiple tiers of subcontractors, ensuring that compliance is always in place, no matter who is doing work on the project.
There are also specialized kiosks and web portals, which allow subcontractors to easily self-manage their own compliance issues. These solutions allow subcontractors to update compliance information, upload supporting documents, and receive warnings and alerts when documentation is needed, or new information becomes available. They can also use these solutions to process billings and see job information relevant to them.
Contractors adopting integrated, cloud-based construction management solutions can dramatically improve their subcontractor management processes and build stronger relationships with subs. By empowering subcontractors with the tools to work smarter, their productivity and profitability too will increase, project risks and delays will decrease, and bottom lines will improve for all those involved.