The effort to meet project diversity goals creates complex challenges for general contractors. While beneficial, these initiatives can be challenging for prime contractors who also have to deal with tight budgets and condensed schedules, leaving little time or resources to achieve diversity goals, which can be as much as 40% of cost of construction Identifying and hiring suitable subcontractors may sound simple, but the reality quickly gets complicated. Traditional approaches to finding small, local and diverse certified subcontractors have not evolved and can no longer keep pace with modern construction processes.
However, the intent of these goals, which is to expand opportunities for underrepresented groups, can have a transformative impact on workers, businesses, and the surrounding community. In addition, expanding the bidding process to a wider pool of subcontractors reduces costs by increasing competition. For example, when Restani Construction Corp. won a New York State project to build four bridges in Westchester County, they partnered with hard blade, a construction technology company, to optimize the way they matched, screened and contacted Disadvantaged Business Enterprises (DBEs). This innovative approach increased bids received by 3.5 times and saved $1.1 million on the project. Improving DBE provisioning makes good business sense.
Despite all this, as well as the $110 billion allocated annually to various construction companies by US federal, state and local agencies, and the desire of private organizations to champion environmental, social and government efforts ( ESG) to achieve diversity. objectives remains a persistent challenge. Connecting with diverse companies that possess the right capabilities, experience and project track record is time-consuming and often requires a lot of manpower and meticulous attention to detail. In addition, premiums face substantial risks, including fines, disqualifications and withholding of payments, intensifying pressure if they fail to meet diversity participation requirements.
In 2005, the supply of various subcontractors was blocked
Wissam Akra, founder and CEO of Tough Leaf, realized this during his years as an executive in the construction industry. “We have always had the challenge of finding the right diverse companies,“, remembered. “Couldn’t find accurate work history data anywhere online. Government databases only list companies and their contact information, which is usually incorrect. It doesn’t elaborate on what its capabilities are. So you have to call thousands of companies.” Akra’s experience is not unique. Regardless of the project, if a general contractor is tasked with achieving a diversity participation goal, the traditional approach would involve:
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Search public agency databases or internal spreadsheets
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Call or email multiple companies
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Request information on insurance, bonding capacity, union memberships, project history, etc.
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Verification of the information received
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Ensure that the company has capacity for the project
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By confirming that the company will provide a quote before the deadline
These steps take between 70 and 200 hours per project. With tight budgets and deadlines, coupled with the fact that approximately 40% of the various company information in public databases is incorrect, general contractors are woefully positioned to fail.
The challenges of sourcing from multiple companies can also be frustrating for others.
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Developers, owners, and government agencies struggle to create effective programs that monitor how general contractors and construction managers source multiple firms and track dollars awarded to multiple firms.
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Multiple subcontractors can spend dozens of hours estimating projects that have no chance of winning because they don’t align with project requirements.
The solution: Use AI to work smarter
The key to overcoming these challenges lies in leveraging technology to work smarter, not harder. That’s what led Akra to start Tough Leaf, which streamlines the process of matching, vetting and contacting small, local and diverse businesses, and helps with education and capacity-building services to help them take on more complex projects .
Prime contractors working with Tough Leaf receive more bids in less time and robust, bona fide documentation to address each project’s compliance requirements. “This would have taken us two people for a month: we received the necessary information in a week,” said Sachin Bhide, Senior Estimator at JRM Construction Management. Nicole Dupiton, Director of Structural Technologies, added: “We struggled to find the right MWBE subcontractors before partnering with Tough Leaf. They fit perfectly with our process.“
Smarter tools facilitate efficient information management, allowing multiple companies to showcase their capabilities, confidently identify the right partners and agencies to manage projects more efficiently. While achieving diversity goals in construction may seem daunting, it is not insurmountable. Tough Leaf addresses the complexities inherent in the industry and by adopting innovative solutions, stakeholders can work together to foster a more diverse and inclusive construction sector.
To know more visit www.ToughLeaf.com.
