Transforming the Owner-Contractor Relationships Using Data

Lost time. Questionable invoices. Audits. Failure to pull permits. These are all things owners and contractors prefer to avoid. But everyone can get on board for greater accountability, safety and prompt payments.

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From labor constraints to equipment breakdowns to supply chain disruptions, the broader manufacturing industry has plenty of challenges.

In my experience, these issues are universal, whether producing steel, refining chemicals, managing a mine in Australia or a maintenance crew at a refinery in Texas. The age-old conflicts and rifts between owners and contractors in the manufacturing sector often boil down to the same issues: safety, productivity and costs.

Is everyone safe and accounted for inside your facility? Are the correct skilled craftsmen, equipment, and materials needed to complete the planned work on-site? Do you have visibility into contractor spend, efficiency and compliance? Are crews spending time during their shifts waiting around for permits or safety inspectors?

Even tougher—how do you improve what you can’t measure?

To overcome these challenges, technology can help streamline legacy business processes, automate data collection and provide real-time visibility. Using technology to collaborate with contractors increases transparency and accountability—plus ensures accurate and timely payment for services rendered. This partnership leads to more efficient and safer operations, fewer conflicts and stronger relationships between owners and contractors.

If your goal is to build stronger owner-contractor relationships, only technology will provide the tools you need.

Capturing Data to Boost Your Productivity

Contractors want to safely complete the assigned jobs and get paid on time. Owners want visibility into worksite productivity. Achieving these goals in a manual environment is challenging because the process is time-consuming, lacks transparency, increases risk of errors, involves multiple data sources, and limits access to information. By the time information is collected and consolidated, it is too late.

With technology, you can provide a single shared source of truth for both owners and contractors. Real-time data provides visibility into worksite productivity and progress, ensuring everyone involved is on the same page. Resourcing issues such as the availability of skilled labor, equipment and materials on-site are identified early, allowing for proactive resolution. This helps to minimize delays and costly mistakes and ultimately increase productivity.

For example, here are some of the standard roadblocks causing lost time:

  • Contractors showing up when permits haven’t been pulled or they are delayed
  • Crew members not showing up for work, causing the other crew members to wait around
  • Crew members waiting for a safety inspection
  • Owners waiting for a force report or planned headcount vs actuals of who showed
  • Knowing where equipment is located

Today, many industrial companies are operating in the dark. Many decisions are made by management with very little data or insight into root issues. With technology, companies capture and view labor and equipment activity in real-time within designated productive and non-productive zones inside of the facility. This helps managers to identify bottlenecks and eliminate roadblocks proactively--instead of learning issues at the end of a shift. Managers not only gain visibility into these zones, but they can also identify the schedule and cost impact of delays and inefficiencies happening on site.

We all know understaffing is a big issue. In fact, 43% of manufacturers said they were understaffed for highly skilled positions in a 2022 IDC survey. Yet excess head count is also an issue.

This is another way where advanced data and analytics help you nail the right skill mix or identify skill gaps on the jobsite. For example, you plan to have 10 contract welders on-site to complete the work and only four welders are on-site at the start of a shift. Managers can quickly identify the shortage and work with their contractors to either call out more welders or adjust the day’s work schedule. Or if you have an excess ratio of foremen to labor resources, you can identify in real-time and communicate with the contractor admins to eliminate excess headcount.

We’ve found that by identifying these root causes of lost time and implementing processes to remove inefficiencies – from unpredictable weather to waiting for permits – you will boost productivity, ensure contractors get paid on time, and keep track of training and certifications.

Preventing Over- and Under-Billing

Ultimately, contractors don’t want to under-bill, and owners don’t want to be over-billed. Yet it happens. Especially when contractors leave 5-15 minutes out of their day, but bill for a full shift. Or there are inconsistent contract terms and conditions across different contractors for holiday pay, rounding rules, grace periods, and paid/unpaid lunch.

Even with millions of dollars at risk, many owners and contractors still lean on traditional data collection methods. For example, manual data entry into timesheets and spreadsheets is both time-consuming and error-prone.

Think of it this way: how accurate can a paper-based timesheet be if it was validated by a foreman and his watch—instead of by capturing the time through the Access Control/Gate system.

In this example, it’s not uncommon for inaccurate timesheets to be approved. This is not just a productivity issue but a cost and compliance one. Imagine if you can’t validate hours worked or an individual’s skill qualifications and pay rate in a high-risk overtime and double-time situation like a shutdown or turnaround.

Without controls in place, owners are dependent on the contractor to invoice them accurately and adhere to all contract terms & conditions. In a manual process environment, it is not uncommon for owners to spot-check the security/gate time logs and compare it to the timesheets submitted by the contractor.

While this can be effective in verifying gross time on-site, more criteria should be verified for compliance and accuracy of payment. This includes contract terms & conditions, skill qualifications, pay rates, per diem, transit time, grace periods, time rounding, lunch deductions, and other site rules.

Some of the benefits of using contractor spend management technology for billing, include:

  • Contractors get paid accurately and on time
  • Labor hours are captured and validated automatically through the Access Control/Gate system
  • Contract terms and conditions and skill pay rates are automatically enforced and calculated
  • Understand contractor labor hour distribution, ST, OT, DT, Holiday Rates
  • Single source of truth for all contractor costs, schedules, and activity
  • Future bad audits are reduced by eliminating non-compliant payments upfront

Predict and Prevent Safety Issues

Step onto a manufacturing site. It won’t take but a second to see it is rife with safety challenges—from ensuring contractors are trained and certified on the proper handling and storage of hazardous materials to providing personal protective equipment (PPE).

These risks only grow exponentially without visibility into unplanned and unscheduled work. Or if you fail to identify new contractors on site–especially if they’re not trained and monitored when coming onto the job site.

Everyone wants to go home safely at the end of the day. Period.

With the right data, owners can access hours worked for employees. Owners and contractors can easily see safety training and certifications with on-site reporting and dashboards. Historical reporting for personnel on site, work hours, fatigue levels, and exposure time is critical. This is helpful when you need to adhere to government regulations or meet compliance requirements.

For example, data shows when contractors have been sent to the site for too many consecutive days. Knowing how many consecutive days on-site or consecutive hours on-site can prevent an injury or even save a life.

Here are some ways owners and contractors benefit from using data and analytics to predict and prevent the root causes of safety incidents:

  • Use safety dashboards to proactively monitor fatigue thresholds – know which workers are close to exceeding limits for hours worked in a day and consecutive days on site
  • Protect restricted and high-risk areas of the plant
  • Increase awareness and safety procedures when high-risk equipment is in use on-site or remote work is performed
  • Tie into weather data sources to avoid scheduling work to occur during high-risk events
  • Understand ratios between critical equipment on site and the number of safety personnel and permits needed

Partnering with Your Contractors for Accountability

Lost time. Questionable invoices. Audits. Failure to pull permits. These are all things owners and contractors prefer to avoid. But everyone can get on board for greater accountability, safety and prompt payments.

The key? As explored above, data and analytics are the foundation needed to build stronger owner-contractor relationships. When aligned around common goals, everyone wins with greater transparency.

Sharing data and analytics to track key performance metrics for production and safety ultimately means everyone is on the same page.

When owners know every aspect of contractor labor, equipment and materials on-site or off-site, making informed decisions becomes baked into their business. For contractors, it’s a win-win when technology automates and simplifies the work-to-invoice process.