While building a multimillion-dollar structure, the imprecise choreography between a general contractor, a dozen or so subcontractors and hundreds to thousands of laborers is anything but graceful.
When things go awry with just about any single task—such as installing the concrete foundation or plumbing—the fallout can bring construction on a new metropolitan hospital or the latest chain restaurant to an unceremonious halt. Miss one inspection deadline and a project can be set back weeks; cost overruns can climb to seven digits.
Thats what cash-flow-dependent businesses like Layton Companies need to avoid if theyre going to survive and thrive.
Layton, a Sandy, Utah-based holding company for four construction and engineering firms, found that the typical construction delays were exacerbated by its outdated billing system. Project managers had to wait four or five days for a bill to be sent to accountants for review and approval. In the meantime, the next stage in the project, such as hiring another subcontractor to hang the drywall, was either delayed or ordered to proceed without anyone on site knowing the exact cost.
"When youre out on a construction site, everything happens so fast, you sometimes dont have time to think through all the implications of a single decision," says Alan Rindlisbacher, marketing director at The Layton Companies. "Youve got all these moving parts and a project manager out at the location trying to keep everything straight and under budget. Its not easy."
Working with multiple subcontractors simultaneously providing a variety of materials and services challenges even the most organized crew.
"Wed have to tell a particular contractor not to proceed with one element of construction like the electrical work until we could get the order approved back [at corporate headquarters]," Rindlisbacher says. "So youve already got the next stage of construction, perhaps the interior walls and painting, lined up for the next day. But they cant do their portion until the electrical work is done. Meanwhile, were paying for these contractors time and falling behind our own work schedule."
Managing a construction project from the initial bid all the way through to completion is an endeavor that, until recently, relied mainly on Excel spreadsheets and handwritten orders that were then mailed to corporate offices where an accountant would approve any materials or subcontracting contract.
Getting an order or contract approved often took at least a day, which is a lifetime amid the bulldozers and cranes of a construction site.
Worse, transactions on a given project were stored under one file and couldnt be sorted by date, vendor, contractor or even a single project manager. So accountants, field representatives and executives had to dig through green-bar paper to find relevant data for ongoing jobs or completed projects.
Next Page: Playing catch up.