Digital transformation of the subcontractor construction workforce
A simple Google search and a scan of the news headlines gives some indication of the scale of the problem.
- Subcontractors not being paid in a timely fashion
- Lack of transparency over how work is allocated
- The time allocated for works
- Concerns over compliance with applicable regulations
- Subcontractors being left out-of-pocket as participants elsewhere in the value-chain go under.
It’s easy to point fingers in these situations as the devolved nature of our 21st century workforce is brought into stark reality. The finger-pointing and the typically cost-driven, and sometimes adversarial relationships endemic to the industry don’t address the imperative for a unified response to the problem that takes into consideration the needs of all stakeholders.
Regardless of whether one is an advocate or a detractor of subcontracting, most would agree that the prevalence of subcontracting relationships has accelerated over the past decade, as organisations focus on core business while simultaneously pursuing cost reduction initiatives. While this approach is understandable and justified in the context of maximising organisational profitability, subcontracting itself, regardless of how many interposing layers are utilised, does not absolve the economic ‘owner’ organisation of responsibility and fairness. Driven by industry stresses and organisational failures, governments have resorted to policy and additional regulation. Organisations themselves have developed supplier codes of conduct and ethical sourcing initiatives. And yet failures are still occurring, and a multi-stakeholder response still eludes us.
Based on our research, digitalisation of the entire, end-to-end procure-to-pay construction process is still siloed. Procurement and onboarding of the contractor through to work allocation and on-site delivery of the service, including variations, compliance with regulations and the contract and finally an expedited payment to the contractor can be achieved through digital transformation. When line-of-sight between these disparate functions is ignored, participants in the process resort to self-interest and what should be harmonious, mutually beneficial relationships can sour.
The complexity in these processes is well understood by our ConSol team. Working collaboratively with our clients, we leverage KPIs and benchmarking to evaluate performance of the entire procure-to-pay and field service delivery cycle. We develop optimisation and automation opportunities designed to improve project performance and profitability for the organisation and collaboration between the organisation and the contractor. Importantly, these optimisations reduce invoice cycle times leading to faster and more efficient payments and an improved relationship with the subcontractor.