Every Friday, we select a few articles from the week that we think are worth your time as a construction financial manager (CFM). We look for compelling articles not only about financial topics, but about business, technology, and life, that challenges you to think about your role as a CFM in different ways. We’d love to hear from you about how we’re doing, and to have you join our community by subscribing to receive this weekly post by email. Follow #CFMReview.
They Key to Collaboration in Construction? Trust and Value
“A construction project is like an arranged marriage,” writes Brent Darnell, a guest author at ENR.com. His point? Construction projects are high stakes, high pressure environments consisting mostly of people who have never met before.
Darnell argues that most collaboration software is limited in function because users aren’t trusting enough to share their information with people they don’t know.
British Petroleum (BP) learned this lesson, he writes, only after investing millions in information sharing technology. BP’s CIO John Cross commented, “Since sharing knowledge is important only at the point and time when people need to solve a problem, the key to knowledge management is connecting people in a dialogue.”
I interpret that to mean, people are more willing to share knowledge if sharing that knowledge creates value for them and the person they are sharing with.
zlien transforms what have traditionally been rubber-stamp transactions into valuable exchanges of information. We capitalize on frequent document exchanges—lien waivers, preliminary notices, demand letters—to enable increased communication on construction projects.
On Relationships and Payment: a CFMA Round Table Discussion
CFMA published a roundtable conversation between CFMA president & CEO Stuart Binstock, Story Construction CFO Steve Tenney (general contractor), and the CFO of Hayles and Howe (subcontractor).
It’s an insightful discussion about relationships, payment and more between subcontractors, GCs and property owners. You can read the entire conversation here (scroll to the bottom for main takeaways). Here are a few excerpts I found noteworthy:
Joselin: Our best jobs to work on are those in which the GC includes us in the planning process from the minute we get the job… The more conversations we have, the more likely we will all have a better outcome.
Steve: Like Joselin explains, cooperation is essential for a successful project – not only between the GC and subcontractors, but also with the owner and design professionals… the other key ingredient is communication.
Joselin: We’ve talked about the project communication, but there is also the back office communication that makes everything run smoother. The more transparent the general is about documentation and payment procedures, the better I can ensure they have exactly what they need and when they need it…
And I would be remiss if I did not mention the most obvious relationship issue: payment – prompt and fair payment. While not always the case, there are some GCs that don’t seem to understand a subcontractor’s financial constraints. We usually have to pay our creditors net 30, while GCs often don’t pay us for 60-90 days.
Stuart: We know from [CFMA’s] members that owners are seeking prequalification from GCs pursuing their projects, and GCs are seeking prequalification from subcontractors. What are your thoughts on subcontractor prequalification?
Joselin: While many subcontractors resent prequalifications in general, my primary objection is simply the logistics of completing different prequalification forms. If everyone used a standard form, like the AIA, it would save a lot of time and resources.