Why Subcontractors Need to Own Their Construction Data
Are subcontractors at a data disadvantage?
As new construction projects get underway, a routine practice is for general contractors to ask their subs to use software such as Procore or PlanGrid. The GC’s goal is to ramp up efficiency by making sure all parties stay on the same page with billing, RFIs, submittals, logs, photos, and various key performance indicators (KPIs).
After the job is finished, the GC can then analyze that historical data to do things better, faster, and cheaper down the line. Subs, though, usually have no choice but to say au revoir to the data relating to their portion of the project.
As a result, subcontractors too often miss out on the full benefits of project management and construction analytics software. Busier subs may be so focused on the present project—making sure things run smoothly right now—that “leaving the data to the GC” even feels like a relief.
COMO (Costs of Missing Out)
But for subcontractors, there is a problem with this status quo—namely, the costs of missing out on data analytics are increasing all the time.
Today’s construction-management researchers are hard at work on new approaches to analysis that stand to provide powerful competitive advantages to subs. The potential benefits here are eminently practical. They include things like reducing or eliminating the need to file liens against GCs due to payment delays (a relationship-ruiner if ever there was one).
Manideep Tummalapudi, a Ph.D. candidate in the construction management and education program at Colorado State University, is among those researchers. You have likely read about how collecting and analyzing medical data can lead to earlier and better interventions. Tummalapudi and his CSU colleagues are working on something similar with respect to the project data collected by subs and GCs.
The idea is to put real-world construction projects’ cash-flow curves under the microscope by collecting planned-versus-actual data on schedules, estimates, and billings from a diverse array of projects, as differentiated by type, size, and other characteristics. “We want to look at these various metrics and attributes so that we can better understand the kinds of patterns that emerge on successful projects,” the researcher explained.
With enough project data in hand, Tummalapudi says, predictive analytics should allow subs and GCs to dramatically improve their day-to-day project management.
“The subcontractor could say, ‘right now at this stage of the project, our cash-flow curve is looking like X, and we know from past patterns that it is likely for this project to be delayed,’” he said. “If you learn this in month two or three of the project using data, you can do what it takes to help the GC/subcontractor avoid delays and overruns. If you don’t know it’s happening until month nine of the project, you’re apt to lose time, money, and reputation.”
Data-driven cash-management for subs
Cash management is critical for all contractors, but especially subs. While the contract may stipulate payment within 30 days, in the real world the actual check from the GC could take, on average, anywhere from 45 to 75 days.
Clearly, subs need to be as aggressive as possible about getting cash in the door.
Many are accustomed to seeing cash go negative for the first couple of months as they pay out of pocket to keep the job rolling. Ongoing research in construction management could yield exciting new predictions such as when, on projects with certain characteristics, you should expect to see the curve go cash-flow positive.
Crossing that threshold without being cash-positive would warn you that something is off. Find the root cause and you could avoid the additional costs associated with falling behind schedule.
The types of historical data that Tummalapudi and his colleagues are collecting could be applied within individual subcontracting companies (provided the datasets are large enough) and even industry-wide to yield valuable benchmarks for subcontractors and GCs. The former can only happen if contractors prioritize collecting and analyzing their data; the latter requires widespread participation in academic research by companies in the industry.
Data warehousing for subcontractors
Within an individual subcontracting company, the analysis of historical data could yield nuggets such as indicating precisely which GC partners are most likely to pay on time. But a complicating factor is the reality that many subs, in bouncing from job to job, work for GCs that use different types of accounting and project management software. So how can subs proceed if the data from some of their GC customers is in Procore, and others in Sage, Foundation, or Excel?
Painstakingly extracting data from multiple systems and then re-entering it into “monster” spreadsheets is one way to accomplish this analysis, but the process tends to be laborious, time-consuming, and error-prone. An alternative approach is to rely on data-warehousing as well as the related functionality of real-time syncing between different construction applications.
Data warehousing allows subs to integrate information from many different applications into one analytics dashboard that provides big-picture views and customized reports. These platforms can serve as the vault or library for historical project data. Access to that data can then give subs an advantage when they want to scrutinize cash-flow curves or “show their work” on past projects as they bid on new jobs.
Syncing allows data from one system (Procore let’s say) to be integrated into another (the subcontractor’s construction data analytics platform) and vice versa. This can yield significant benefits while the job is underway. For example, specific submittals or RFIs can be linked together in the different systems: If an update is made in one application, the corresponding fields in the other automatically update as well. This eliminates inconsistencies between the records, which could otherwise have led to costly rework and other adverse consequences.
In addition, many subcontractors routinely work with multiple GCs that all use the same project management software (often, it’s Procore). Syncing allows the subcontractor to work from one analytics interface and manage multiple projects among these different stakeholders. Doing this also allows for streamlining relevant project data—you can pull and interact with only the project data that is directly relevant to your scope of work. A sub working only in the building lobby doesn’t need to know the status of the third-floor bathroom.
Lastly, when you’re a sub, your inbox tends to quickly fill with requests to review RFIs, drawings, submittals, and other documents related to your scope of work. Using an analytics platform to sync these updates allows you to keep track of which ones have been reviewed. Never missing an update means never missing an opportunity to proactively notify GCs about potential problems.
Own your own data
For subcontractors, the dynamics associated with working with multiple GCs can make it seem as though data-driven approaches are just too difficult and complicated to be viable. But many subs would do well to reconsider these assumptions. Larger companies, subcontractors included, are already leveraging their historical data to make powerful predictions about the future. As this trend continues and accelerates, those who “leave the data to the GCs” will be at greater risk of falling behind.