According to McKinsey, construction is one of the largest industries in the world, with more than $10 trillion spent on construction goods and services.
Because of fragmentation and underinvestment in digital technology in business operations such as accounting and compliance, labor productivity has averaged only 1 percent yearly compared to 2.8 percent in other industries.
Compliance is required for every vendor contract signed. Today, compliance in construction is time-consuming and error-prone which leads to cost overruns and legal issues stemming from lawsuits and risk transfer from insurance claims.
The complexity of compliance arises from business processes being isolated across various systems. Contracts might be managed through MS Word, DocuSign, Procore, or Autodesk, whereas collecting W9s, business licenses, COIs, and warranty letters typically involves using Email, Excel, and your ERP system. The lack of integration between these disparate systems leads to inefficiencies that affect both your team and your vendors.
But what if you could automate compliance?
Top construction companies leverage automation to streamline insurance and compliance business processes, reduce errors, and mitigate risk transfer. By implementing cloud-based digital management systems, your team automates key business processes, saving time and money and ensuring adherence to contract requirements.
Streamline Construction Compliance with Automation: Key Benefits and Strategies
No two projects are the same, making construction compliance a complex and time-consuming process requiring careful attention to detail. This means that compliance requirements can vary from project to project due to having different contracts with owners who have lenders and designers working with them, and your company hiring different vendors from project to project.
Relying on non-digitized business processes leads to a loss in staff efficiency and errors that result in lawsuits, delays in payment, and risk transfer from insurance claims.
By streamlining construction compliance with automation, companies can reduce these risks and improve overall efficiency.
Automated compliance management systems use digital tools and workflows to ensure that all necessary documentation and compliance reviews are captured and completed in one easy place that you can access on any internet-enabled device.
This should include vendor prequalification statements, W9s, MSAs, Certificate Of Insurance, Insurance Declaration Page (to verify coverage and limitations), Contractor Licence, Bonding, Warranty Letters and other regulatory requirements throughout the vendor and project lifecycle.
Automate Construction Documentation and Record-Keeping
Effective documentation and record-keeping are essential for construction compliance. However, managing paper-based documents is a logistical nightmare, leading to incomplete records. By implementing digital document management systems, companies centralize and organize all compliance-related documents in one secure and easily accessible location.
Digital construction document management systems can be integrated with AEC project management software, allowing teams to access and update compliance documents directly from their project workflows. These integrations help ensure that compliance tasks are completed in a timely manner and that all relevant stakeholders have visibility into the process.
Best Practices for Implementing Digital Construction Document Management
When implementing a digital document management system for construction compliance, there are several best practices to keep in mind:
- Choose a cloud based system specifically designed for construction that can handle the unique requirements of the industry.
- Choose a system that provides training and support to ensure all team members are comfortable using the system and understand its capabilities.
- Choose a system that integrates with your core systems, such as Procore, Autodesk, ERP, or an API to allow you to build custom workflows. Integrations eliminate double entry between systems automating reporting and compliance in other systems. Example: Letting your project managers know who can come on-site in Procore based on contract compliance in Billy and letting your accounting team know who should get paid that week based on compliance in Billy.
Automate Construction Compliance Monitoring
Monitoring compliance throughout construction is critical for identifying and addressing issues before they escalate. However, manually tracking compliance can be a full-time job in itself. By automating compliance monitoring and reporting, companies can stay on top of their compliance requirements without dedicating excessive time and resources.
Automated compliance monitoring systems can be set up to track key compliance metrics and send alerts and notifications when issues arise, for example, project compliance as a percentage, alerts for missing or expired documents and reporting.
Sample Dashboard
Compliance Monitoring Best Practices
To effectively monitor compliance using automation, construction companies should:
- Identify compliance requirements for your company and contract-specific requirements for each project.
- Determine when the requirements are collected and where the information should be sent.
- Set up weekly compliance reports to identify trends and areas for improvement.
- Establish guidelines for addressing compliance issues, including escalation procedures and communication channels.
- Continuously update and refine the automated monitoring system based on changing regulations and project requirements.
Integrate Compliance with Project Management Tools
Project management tools help construction companies by providing a centralized platform to design, plan, and build a project. By integrating compliance into these tools, companies remove data silos, and streamline the compliance business processes to ensure that all project stakeholders are aligned.
Common construction management platforms such as Autodesk and Procore offer app marketplaces that allow for seamless integration with other tools. Each platform’s robust document management system promotes streamlined workflows and accountability. Its integration capabilities with other construction software, such as Billy, enhance usability and data flow across different project stages.
Mitigate Construction Risks through Automated Compliance Management
The construction industry has made significant strides in adopting automated compliance management solutions to mitigate risks and ensure adherence to regulations. The pandemic accelerated the need for digital transformation, prompting companies to embrace automation to streamline processes and maintain business continuity.
Identify and Prioritize Compliance Risks
Construction firms have been increasingly focused on conducting thorough risk assessments to identify potential compliance issues. This involved analyzing historical data, reviewing industry regulations, and engaging with stakeholders to gain a comprehensive understanding of the risk landscape.
Implement Automated Risk Monitoring and Reporting
In recent years, we’ve seen a surge in the adoption of automated risk monitoring and reporting solutions. These tools leverage advanced technologies like artificial intelligence (AI) and machine learning (ML) to parse data from structured forms such as invoices, certificates of insurance, W9s, Business Licenses, and more so that construction teams can be more efficient.
To gain more efficiency, construction companies should consider investing in automated compliance management systems, foster a culture of continuous improvement, and prioritize employee training to ensure effective utilization of these tools. By doing so, they can mitigate risks, save time, and focus on delivering high-quality projects while maintaining regulatory compliance.
Optimize Construction Workflows through Automation
Automating construction workflows is a powerful way to save time, reduce costs, and minimize the risk of errors. By identifying bottlenecks and inefficiencies in current processes, you can map out ideal workflows and pinpoint opportunities for automation. This section will guide you through the steps to optimize your construction workflows and harness the benefits of automation.
Identify bottlenecks and inefficiencies in current processes
The first step in optimizing your construction workflows is to critically assess your current processes. This involves:
Conduct a thorough process audit
Analyze each step of your existing workflows, from project initiation to completion. Document the time, resources, and personnel involved in each task. Pay close attention to manual, repetitive tasks that consume significant time and effort. According to Autodesk, workflows involve the specification, implementation, and automation of organizational operations, which can help organizations facilitate task coordination and data synchronization across systems, ultimately enhancing organizational efficiency, collaboration, and profitability.
Gather feedback from team members
Engage with your team members who are directly involved in these processes. Ask for their input on pain points, challenges, and areas where they feel automation could make their jobs easier. Their insights will be invaluable in identifying bottlenecks and inefficiencies.
Analyze data and metrics
Review relevant data and metrics, such as project timelines, resource utilization, and error rates. Look for patterns or trends that indicate areas of inefficiency or potential for improvement. For instance, a study by AllGeo highlights the importance of reducing inefficiencies in construction workflows to improve overall project outcomes.
Embrace Automation for Streamlined Construction Compliance with Billy
Automating construction compliance saves time, reduces risks, and enhances productivity. By implementing digital document management, automated risk monitoring, and optimized workflows, you can transform your compliance processes and stay ahead in the industry.
As the construction industry evolves, embracing automation is crucial for success. Invest in the right tools, train your team, and stay updated on emerging trends to future-proof your compliance strategies. Enter Billy–a more efficient, secure, and profitable solution for efficient construction compliance. A one-stop shop for all your construction compliance needs, Billy’s platform includes automated collection and verification of certificates of insurance, W9s, business licenses, etc.
How will you leverage automation to streamline your construction compliance in 2024? Start exploring the best software options for your construction firm today with Billy’s managed plan service. Schedule a demo today!
Frequently Asked Questions
Why is compliance important in construction?
Compliance in construction is essential in practice as it ensures that projects are completed safely, efficiently, and in accordance with legal, regulatory, and industry standards, while also safeguarding stakeholders and enhancing overall project outcomes.
How does automated construction compliance work?
Automated compliance within construction involves the use of software or digital tools to streamline and manage compliance processes. There are dedicated platforms that specialize in simplifying vendor compliance processes.
Where else can I apply construction contract automation?
Contract automation can benefit any industry or function that deals with contracts by improving efficiency, reducing errors, ensuring compliance, and accelerating business processes. Within the construction industry specifically, automation covers every facet including legal departments, procurement and supply chain vendors.
