GCs face a tough market. Critical labor shortages and increasingly complex projects create capacity issues. At the same time, rising material and labor costs are reducing profitability.
Within this market, effective subcontractor management is key to maintaining profitability. After all, when your subcontractors are managed effectively, construction is more likely to be completed on time and on budget.
This article explores how subcontractor tracking, compliance and management software can help GCs optimize their processes and thrive in a challenging market. Let’s start by unpacking how other GCs are leveraging technology today to manage their subcontractors.
What subcontractor management software can do for you
Subcontractor management software is not the same as project or people management tools. Rather, this software is tailor-made to improve construction finance processes, boost project deliveries and avoid delays.
we find that the vast majority of GCs accessed a number of benefits from using software to track and manage subcontractors. For example, 91% of GCs reported experiencing higher productivity; 84% reported improvements in estimates and bids; and 82% enjoyed better customer relationships.
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Although there are many important features to look for in a subcontractor management applicationmost GCs are looking for solutions that can help them track and manage payment requests, change orders, stock scheduling, subcontractor payments, and lien waivers.
Despite this, 70% of GCs lack solutions to manage all of their key business tasks, such as OSHA compliance reporting and tiered supplier management. That’s good news for contractors: there’s more you can do to improve your business.
Five key challenges overcome with subcontractor management applications
1. Resource management
For GCs, the ability to allocate resources efficiently can make or break a project. Balancing a growing number of subcontractors without overwhelming your administrative staff is a delicate art. The challenge only intensifies in the face of labor shortages.
Construction apps address this issue head-on by automating back-office tasks such as invoicing, exchange of lien waivers, and document management. With the help of these applications, you can work with more subcontractors without the need to hire additional administrative staff, an advantage that helps you overcome labor shortages.
In addition, subcontractor management software provides clearer lines of sight on projects, allowing you to dedicate the right resources to the right project at the right time.
2. Project and cost monitoring
Budget overruns and project delays are a nightmare for any GC. Without a clear overview of each project’s progress and expenses, these issues can easily spiral out of control.
Each project has its own unique schedule, budget and set of deliverables. Subcontractor software provides control by tracking the real-time status of each project along with updates on timelines, project milestones, and labor and cost allocations.
The software can also track key factors such as lien exemption status reports, lien communications and billing summaries. These features help you manage costs to avoid overspending while providing transparency into project progress.
3. Management of payment applications
Did you know that the majority (73%) of GCs still rely on error-prone manual processes to manage their payments? These manual processes are not only tedious, but leave a lot of room for accounting and project management errors that can disrupt cash flow and delay work.
Outsourcer software provides a solution by automating this entire process, ensuring timely payments and reconciliation accuracy while eliminating the possibility of errors entering the system.
4. Subcontractor Compliance and Legal Matters
The landscape of legal regulations is a minefield, and the smallest oversight can have major repercussions. Compliance is not just a box to check, but a vital aspect of safeguarding a project and a GC’s reputation. Risks of non-compliance include increased liability, potential insurance complications and the imminent threat of substantial fines.
By using subcontractor compliance software, GCs can securely store all essential compliance-related documents, from contracts and permits to insurance certificates. In addition, these applications ensure that subcontractors are up-to-date with required documents, even automatically reminding them before they are due.
5. Communication and Conflict Avoidance
Poor communication is the root cause of many project setbacks. When collaborating with multiple parties, making sure everyone is on the same page is crucial and challenging. The ripple effects of a simple misunderstanding can lead to significant project delays and interpersonal conflicts.
Subcontractor management applications provide a single platform for seamless and transparent communication for all parties. These apps allow instant and easy sharing of project updates, from status reports to change orders. Features that document and track all communication ensure that agreements, changes and instructions are recorded, reducing the potential for misunderstandings and disputes.
Transform subcontractor management with the right market research
Using technology to manage subcontractors significantly improves project performance while helping GCs overcome growth-limiting challenges.
For exclusive information on how contractors are using the software to eliminate errors, streamline construction, and save time and money, download our report in partnership with Dodge. This report is a comprehensive survey of US GCs. It assesses the current use of technology by these contractors and identifies areas for further adoption in the future.
