By Wendy Swift, eSUB
Despite subcontractors’ initial reluctance, they’re embracing technology in their businesses. At this point, most subcontractors communicate through email and access the Internet on a regular basis. They also use estimating and accounting software as tools to create tighter bids and streamline cash flow. Yes, subcontractors who have traditionally prided themselves on the structures they build, not the technology they use have finally succumbed to what every other industry has—the use of technology tools to increase productivity and competitive edge.
Now that most subcontractors are comfortable with their estimating and accounting programs, they’re finding a gap when it comes to managing their projects. Project Management software is designed to make contractors more efficient in generating, logging, sending and storing project documentation so they can justify payment requests.
General Contractors are now using what’s known in the industry as “collaborative” project management systems. Accessed through the Internet, these project management systems link remote parties in a network of communication so the GC can effectively fulfill his duty as information and coordination broker between those that determine the scope of work—owners, architects and engineers—and those who perform most of the work—subcontractors. In theory, if you can get everyone on the same page at the beginning of the project, improvements in communication and productivity will follow. This will lead to less interruption of workflow, faster turn-around time and ultimately a more successful project.
This theory sounds great, but has a fatal flaw. Better communication can in fact lead to a better run project. However, until now all these “collaborative” project management systems have ignored subcontractors—the people who actually perform almost 90% of the work on construction projects. These systems have also ignored the fact that project management needs of general contractors are distinctly different than project management needs of subcontractors. Today most GCs broker the work out to subcontractors who actually perform most of the work on construction projects. GC’s project management needs revolve around supplying sophisticated communication methods to link many different parties in a “collaborative” network and facilitate the coordination of changes and the workflow of multiple trades.
Subcontractors’ project management needs rely on managing their internal labor force in the most efficient manner, and providing proper documentation of the work they actually performed so they can get paid for the work that they did, not just the work that they bid. In order to accomplish this Subcontractors need to track daily activities, rapidly generate, log and calendar RFIs, change orders, submittals and other crucial correspondence, track milestones and productivity levels and proactively communicate with the GC consistently throughout the course of the project.
Subcontractors need to be able to communicate with the GC and with their home office, so that management can access information about the progress of their projects and track what’s really happening at the field level so there are no “surprises” at the end of the job. Collaborative project management for Subcontractors means that the field, the home and the office need to be “networked” so that anyone companywide who is given an access code can have all project information available to them from any computer 24/7. Traditionally, software programs “sit” on one computer and others in the office may be able to access the same documents if the office is networked. With an online project management system, the Internet acts as the networking device that links Subcontractors to all their project information through the Internet. That means project managers can check on the next days’ activities from their home the night before. The owner of the business can check on the status of RFIs, change orders and productivity levels from home, the office, or a phone with an Internet connection on the golf course. Timecards can be generated in the field and downloaded directly into the Subcontractor’s accounting system. The goal for subcontractor project management is to implement consistent standards for documenting and responding to field events in the most efficient and productive manner based on best industry practices.
Let’s face it. Subcontractors are very comfortable sticking with what they know best…performing the labor necessary to complete a project. Subcontractors as a whole don’t usually venture into new ways of conducting business unless they are compelled to by their competitors or the GC. Given that assumption, let’s take a look at what’s happening with technology adoption right now in this industry.
Most software systems—especially the first systems on the market—were developed for GCs. Studies were being done in the 80s predicting that owners and GCs would be the first adopters of technology in our industry. At this point, systems were developed to facilitate the interests of the parties they were designed for—owners and GCs. Any proactive subcontractor exposed to these systems who figured out that eventually it would be in his best interest to jump on the technology bandwagon sooner rather than later ended up disillusioned at best. After spending thousands of dollars and hundreds of hours “training” his people on software systems, the subcontractor usually ended up shelving the software because it was too complicated and ultimately didn’t address his specific needs as a subcontractor. Still to this day, many subcontractors continue to be reluctant to embrace software despite the fact that they know it’s only a matter of time before everyone will be using it.
Early technology leaders ignored the subcontractor, focusing on creating systems for owners and GCs and envisioning a “cram down” approach that would eventually trickle down to the subcontractors. The initial idea for collaborative project management was to dominate the market with one particular system and then get the owner to spec it out so that subcontractors would be required to use it. The problem with this approach is three-fold. First, owners and GCs have adopted not one, but many different project management systems. Second, subcontractors can only be pushed to use so many different systems for so long before they rebel. And third, it won’t take long before the sort-term benefits of one sided technology that shifts risk in the favor of owners and GCs will eventually backfire and cause a revolt in the industry. If owners and GCs have the technology tools to shoot down directives to the subcontractor at faster and faster paces, without subcontractors having the means to manage these changes, reallocate labor, and process the proper correspondence to get paid, it will only be a matter of time before the whole industry gets thrown off balance and we see a repeat of what happened in the late eighties when everyone started suing each other.
Attempting to force subcontractors to use project management systems that were designed by nature to fulfill the needs of GCs is not in the best interest of either party. Providing an Internet based system to a GC while limiting a subcontractor’s access to it won’t work either. What Subcontractors need is a system that addresses their specific project management needs. They need a project management system that isn’t limited to a single computer in the office, but one that can link the field to the office through a delivery system called the Internet. In short, subcontractors need a tool that is equivalent to what GCs are being offered today—Internet based project management.
With margins and competition tighter than ever, making a profit has less to do with how well you’re performing and more with how well you’re documenting. It all goes back to accountability. As GCs continue to adopt collaborative project management systems that force more accountability onto the subcontractor, the only way for subcontractors to compete, or even survive long-term into the future is for them to force that same accountability down into their own companies. The days of showing up at close-out meetings with a shoe box full of “back-up” to negotiate final payment are quickly going by the wayside. Software systems have given us the tools to proactively communicate with consistent correspondence, manage according to greatest levels of efficiency and track actual day to day activities in a way that things are less likely to fall through the cracks. GCs have their tools for increasing efficiency. Finally, it’s the subcontractor’s turn.
To view a 3 minute movie demonstrating the effectiveness of online project management for Subcontractors, you can click on the following link:
