“The construction industry is rapidly hopping on the technology bandwagon spending large amounts of money automating systems, collaborating via the Internet, and so much more. Simply, this is a new age of business for the construction community.” (Constructech Magazine)
Some Subcontractors have no idea there’s a revolution taking place in their own industry. Right now it’s subtle and they might be able to ignore it. But it’s gaining steam, and causing a fundamental change in the industry. Some Subcontractors will have the opportunity of a lifetime—to grow their companies beyond comprehension. Others—both large and small—will go out of business. The successful Subcontractors will do more work with less people. They’ll continue to see productivity increase by 30-50% every year. The others will drop by the wayside—they won’t make it.
o, what’s really going on? What’s fueling this fundamental shift? How long will it take to happen? Who will survive and who won’t? How can you better your chances of being one of the companies that thrives in the coming years? All of these questions depend on two things. First, whether you’re willing to accept the fact that new software tools have the power to dramatically increase your competitive edge. And second, if you’re willing to buck the status quo and make the changes in your company necessary to adopt these software systems to your competitive advantage.
Communication and Accountability—Key Factors to Success:
As technology continues to advance into the construction industry, communication and accountability will become the two key issues to determine whether or not Subcontractors will see profits. It’s a well known fact that Subcontractors don’t usually get paid for all the work they perform. Their chances of getting paid for all their work is directly correlated to how well they can document their work and request payment in a timely manner. Today, more and more Owners and General Contractors are adopting online project management systems that make it easy for them to shoot changes and directives down the food chain to their various Subcontractors. This puts Subcontractors in a defensive position as pressure increases to perform out of scope work that Subcontractors don’t have the tools to document in a timely, efficient manner. Whether it be documenting changes, writing appropriate correspondence, submitting and tracking RFIs or processing change orders, many Subcontractors let their documentation fall through the cracks. When this happens, they end up performing work that they probably won’t get paid for simply because they didn’t issue and track timely documentation.
So what’s the answer? As General Contractors continue to adopt online project management, forcing Subcontractors into a defensive position to collect payment, what can Subcontractors do to protect their profits? The answer is to use the same type of technology that the Generals are adopting—online project management.
Online Project Management Needs—Generals Vs. Subs:
In the construction industry, there are two types of online project management. The first type is a Collaborative Project Management System for General Contractors and Owners. The purpose of this system is to link project team members in a communication network in order to facilitate collaboration throughout the design and construction phases of a project. This type of system works to protect the General Contractor and enable him to quickly issue change directives to multiple Subcontractors routinely throughout the project.
The second type of online project management is tailored for Subcontractors. While offering the communication benefits of the General Contractor’s system, a Subcontractor’s online project management system makes it easy to track labor, changes and percentage of efficiency. It also allows the Subcontractor to easily generate correspondence through templates that are pre-written with legally appropriate language. Performing 80-95% of all labor on construction projects, Subcontractors have distinctly different project management needs from General Contractors. Subcontractor project management needs revolve around managing their internal labor pool, documenting project conditions, directives and changes, and corresponding frequently with the General Contractor.
As the General Contractor becomes more efficient in the communication process, the Subcontractor will have to become more accountable for tracking labor, progress, and related issues. The only way for Subcontractors to be successful in this new era is to integrate the same principles of communication and accountability into their own project management practices.
As the General Contractor becomes more efficient in the communication process, the Subcontractor will have to become more accountable for tracking labor, progress, and related issues. The only way for Subcontractors to be successful in this new era is to integrate the same principles of communication and accountability into their own project management practices.
"People on the project become more accountable for their tasks as response time and documentation is always available. Cases of shifting blame have been reduced and peer pressure has contributed to faster turn around time since nobody wants to risk not meeting expectations." (Pricewaterhouse Coopers Study about the effects of online project managemetn in the construction industry.)
Regardless of the type of project management system being used, whether General Contractor/Owner based, or Subcontractor based, online systems allow unlimited amount of Users to access current project information from any location where they can connect to the Internet. Also, because the software is delivered securely through the Internet, upgrades can be delivered free of charge and rolled out routinely. If there is a strong User Group providing constant suggestions on how to improve the software, Subcontractors are literally participating in designing the very software that they are using. What better experts can a company rely on to design the perfect software than the people who are actually using it?
What is USI and why is it important?
The most important issues related to Subcontractor online project management are usability, security and integration. Subcontractors’ most valuable commodity is their project information. Ask Subcontractors and they’ll tell you one of their greatest fears, especially in such a competitive hiring market, is to lose a project manager in the middle of a job—and have all their project information disappear when the project manager does. Many Subcontractors feel vulnerable and at the mercy of project managers. They rely on them for the success of the project, but have no way of checking on the project’s actual on-going progress. This sometimes leads to surprises at the end of the job, lost profits and no clear explanation as to what actually happened and how to protect future profits.
Subcontractors need to know that their information is accessible, confidential and safely stored within their system. In order for Subcontractors to be successful in compelling their project personnel to change the entire way they’ve documented and managed their project and embrace a new project management system, they must be able to ensure that even the most novice computer users can navigate the system. Automated forms such as Daily Reports, Change Order Requests and RFIs must be straight forward and User friendly. They must also be formatted using the same layout as existing forms, and be downloadable for printing a hard copy to complete manually in the field. All forms must also be professional with customized logo, formatting and digitized signatures.
The online project management system must be easy to access from the office, field or any other location. Back-up that ensures instant safety and access to information must be available 24/7. Bottom line—the system must be able to accommodate the complex business needs of Subcontractors, yet be simple enough for anybody to use.
Finally, Subcontractors need systems that work together. Double entry of information such as labor rates and time sheets into a project management system, and again into an accounting program, creates unacceptable quality control and time management problems. In order to receive buy-in from Subcontractors and their Users, the online project management system must integrate with their accounting programs. Also, Subcontractors better beware of software that tries to do too much. Don’t be fooled by accounting programs that claim to have a project management “module.” Just as estimating and accounting software have distinctly different purposes, the same runs true for accounting and project management. Don’t fall for one system that claims to do it all.
Who Needs Online Project Management For Subcontractors?
Subcontractors in the $2-50 million per year range are especially in need of online project management for Subcontractors. These firms are large enough to feel the economic impact of poor project management procedures, but rarely have the economic and/or technical resources to develop their own internal project management and accountability systems.
Subcontractors perform between 80-95% of all labor on construction projects. Subcontractors' profits are directly tied to labor output. As such, effective project management is crucial to their bottom line. Currently most Subcontractors have no way of tracking the ongoing status and success of their projects. The home office has no direct link to field activities. Therefore, Subcontractors rely on their Project Managers to document field events, but have no way of monitoring day to day activities. Some Project Managers are better than others at documenting delays, changes and other critical issues. Not addressing and properly documenting these project issues results in lost time and productivity, which ultimately negatively impacts project profits. A good online Subcontractor based project management system allows all senior management to access current field information from any location. By using simple navigation techniques and systematically completing each form, Project Managers document all field issues and can quickly and easily create their documentation trail throughout the course of the project instead of scrambling at the end for back-up to justify payment requests. This dramatically increases their likelihood of being paid for more of the work they perform. Online project management for Subcontractors is the next tool that will determine whether Subcontractors will revolutionize their businesses through better efficiency and profits, or if they’ll become the victims of technology’s evolutionary process. It’s up to you. All you’re fighting is the status quo.
endy Swift is President of eSUB, the only fully integrated online project management system designed specifically for Subcontractors. eSUB has won the prestigious NECA Showstopper Award for increasing Subcontractor productivity. Visit us at www.esubinc.com and click on the movie screen on the right hand corner of our website for a 3 minute movie about how eSUB can revolutionize your business and the potential for profits.
