Published date: 08/26/2021
Congrats! You’ve successfully won the bid as a prime contractor on a Davis-Bacon / prevailing wage project. You’ve been the prime on a few projects in the past so you’re pretty familiar with your responsibilities.
You start putting together your subcontracts, diligently reviewing them to make sure you’ve included the required Davis-Bacon information, such as flow-down provisions and wage determinations.
You triple check the contracts to make sure all your ‘Ts’ are crossed and your ‘Is’ are dotted, and all systems look like they’re a go. You’re ready to start building!
But let’s step back a second… If our prime contractor in this scenario took a closer look, there’s one item he failed to factor in: mandating the use of an electronic labor compliance system.
The Case for Going Digital
Let’s face it: almost everything is now on the cloud. With technology moving at such a rapid pace, it’s only a matter of time before we can start programming our coffee machine to not only make our daily brew, but also automatically answer our emails.
While the coffee-making-email-answering-combination technology is still a figment of our imaginations, electronic labor compliance systems are not. This type of technology has been around for decades, and they are just like fine wine – they are getting better and more sophisticated with age. So why not incorporate them into your labor compliance program? Still need more reason? Then read on, my friend.
Top Reasons Why You Need to Take Labor Compliance to the Cloud
Reason #1: It saves you a TON of time
As a prime contractor, you’re responsible for your subcontractors’ compliance as if it was your own. Hopefully this isn’t news to you. If it is, you should check out this other article. It’s the liability for subcontractors’ mistakes that prompts many primes to collect and verify certified payroll reports (CPRs) from their subs (all lower-tiers included) in addition to doing so for their own employees. But as they very well know, this process is too often tedious and disorganized.
Instead of collecting these CPRs by hand, by mail, by fax, or via a combination of any of these, why not consolidate your collection methods and have the reports submitted electronically? Better yet, why not actually use technology like we’ve been talking about and have all of those reports delivered and available on the cloud in one centralized place? If that’s not enough to help you see the full picture, then remember again that you as the prime should be double checking your subs’ compliance. Do you want to do that manually? Does your administrative staff like going through hundreds (if not thousands) of printed, handwritten reports and running manual calculations? Because an online application can do that for you. Speaking of which…
Reason #2: It’s more accurate
Digital solutions can automatically flag errors and potential violations as the contractors are creating the CPRs to let them know when something isn’t right. The wrong wage determination was used… overtime wasn’t applied correctly… fringes and benefits were miscalculated… the list goes on and on. Not only does this waste time when trying to double check this manually, but it also drastically increases the chance for human error – both for the contractors creating CPRs and for the primes verifying the data.
There’s no better way to reduce your risk of violations than by removing the portion of the compliance process where a vast majority of the mistakes occur. Electronic solutions can help with this. In fact, some can even streamline the data entry as well. Imagine not having to manually fill out CPRs? Imagine being able to import your payroll data from your provider to auto populate most of the fields on the CPR? Talk about reducing human error…
Reason #3: You can leverage other aspects of the job to further mitigate risk, like daily logs
One of the best things about going digital with compliance is that once you do, it allows you to integrate seemingly independent construction tasks to increase efficiency across the board. Call it that “greater than the sum of their parts” cliché – only its true.
Let’s look at recording daily logs, for instance. Mobile applications have been part of the industry for a while now, and the most competitive primes will have their subs use them to submit their dailies electronically. But what if you could also leverage those dailies as a second measure to catch mistakes on certified payroll? What if your compliance system could cross check data points submitted on those dailies – like the crafts/classifications of every worker on the job and the hours they logged each day – with the corresponding data points submitted on CPRs? If you think an investigator won’t dig into other records to check for consistency during an audit, think again…
Reason #4: It’s a life-saver if you ever get investigated
Paper audits and investigations are brutal. First and foremost, the storage space alone needed to retain all of the compliance documents (required per Davis-Bacon for all projects up to 3 years after completion) is a complete waste of space. For the largest primes, this can be an entire room, if not multiple. The burden is compounded exponentially if you have to hunt down subs to pull up records in the event that they never sent them to you to begin with. Playing that “cat and mouse” game between you, the investigator, and the sub will only prolong the headache. In the event that you aren’t able to locate all of the requested documents or you incur violations on the ones that you do have, you’re looking at the possibility of a failed audit or investigation and the potential repercussions.
It should go without saying that utilizing a cloud-based application for all contractors on the job can make these audits a much quicker and less painful experience. Everything would be in one centralized place and yet easily accessible from anywhere. You would also have the peace of mind knowing that the system previously checked the documents for violations and required corrective action prior to the audit ever happening. It’s not bullet proof, but it’s a night and day difference. And some investigators may even be less intrusive when they see you are using a reputable labor compliance solution because there’s typically less cause for concern.
Reason #5: It actually saves you money
Lastly, like most all technology, it can help you save money in the long run. For an electronic compliance system, it’s two-fold. On one hand, administrators can be more efficient at their job and waste less time with the tedious aspects of labor compliance. This can then free them up to do things that are more important or that they never used to have time for, like ensuring subcontractors get paid faster or performing field wage interviews to ensure employees aren’t misclassified.
On the other hand, a proper labor compliance solution can greatly reduce the likelihood of fines, penalties, and even potential debarment, all of which can have a direct impact on both a project’s and a firm’s profitability.
If you’d like to learn more about cloud-based solutions that can help you and your subcontractors in each of these ways, check out https://lcptracker.com/solutions/lcptracker/.