Compliance in the Construction Industry is Critical to Success
Construction is one of the most heavily-regulated industries. Beyond the contractual agreements between the owner, contractor and subcontractors, construction firms need to consider building codes, insurance and bonding requirements, credit and background checks, prevailing wage and union payroll requirements, lien requirements, a plethora of safety regulations and much more.
These days, many contractors are faced with managing larger, more complex projects on a regular basis. That means they have even more to keep track of in their already busy schedules. Contractors have to pay attention to budgets, deadlines, collaborators, change orders, progress reports, payroll, safety, compliance requirements and much more. Construction management is challenging, in no small part because the industry is governed by a plethora of regulations.
These are a lot of hoops to jump through to ensure a successful end product. Any one of these issues falling through the cracks can bring work screeching to a halt while it is addressed. It can also present significant risk to the contractor via penalties, lawsuits or other conflicts.
3 Ways to Maintain Compliance in the Construction Industry
Whether it comes down to back-office staff or project managers in the field, it’s critical to have folks on team dedicated to compliance issues and documentation.
1. Learn the Basic Regulatory Compliance Requirements
Regulatory compliance may seem daunting, especially for those new to the construction industry. Step one on the road to managing construction compliance is straightforward, even if it might be time consuming: Learn the regulations that apply to your business.
Common regulations in the construction industry include:
Contractual agreements between owners, contractors and subcontractors.
Insurance and bonding requirements.
Credit and background checks.
Wage and union payroll agreements.
Some requirements like safety regulations are fairly easy to learn, since the OSHA standards for the construction industry apply to contractors across the country. Building codes, insurance requirements and bonding requirements can vary by location, though. Make sure you check in with the relevant authorities in your city and state so you know what applies to you.
To be effective, those in charge of compliance at your organization should also:
Actively communicate compliance requirements to everyone involved in the project. Collect, store and track all compliance documentation.
Proactively communicate with parties when documents are expiring, when information is missing and when payments are held back or work needs to be stopped.
Know when and how to take action for non-compliance, including holding subcontractor payments, halting work until safety issues are addressed and more.
2. Reduce Manual Compliance Processes
Once you know the requirements, you need to ensure all relevant people at your organization are aware of them. You also need a reliable system for keeping track of compliance data.
To do those things effectively, you might need to say goodbye to paper. Disseminating compliance information and collecting data via paper often leads to delays, lost information and outdated documents. When you’re dealing with compliance, you need to have easy access to information and make data visible throughout your organization. Doing so not only helps you stay ahead of possible compliance document expirations, it also helps you respond quickly in the event a compliance issue arises.
Document management software solutions where digital copies are maintained in a central location for easy access and tracking — preferably in the cloud to guarantee the information is backed up — are strongly advised. Leading construction ERP platforms have these solutions built in so that the data is integrated throughout the organization.
This also allows for simple, automated workflows to be established so that the collection and tracking of compliance documents is streamlined. Should a compliance issue arise, like a conflict arising from a subcontractor not providing current bonding certifications or an OSHA inspection that generates concerns over whether safety regulations are being consistently followed, compliance managers can have the answers at their fingertips in seconds.
3. Stayed Organized with a Dedicated Construction Compliance Solutions
Integrated technology like an ERP for construction can streamline compliance across your organization by giving everyone from the back office to those working in the field access to the real-time information they need. This type of software solution can also include workflows that automatically collect and track compliance documents.
Additionally, many contractors find dedicated compliance software solutions useful. These applications are built into some construction ERP platforms and can integrate with others for ease of use, and they serve as a portal for all things compliance related. Within them, you can manage documents, set up alerts for compliance documents that are expiring soon and even manage the compliance documentation of subcontractors.
The moral of the story is that staying compliant with the plethora of regulations you face in the construction industry requires planning, streamlined processes and access to information. Achieving that takes work, but once you have systems in place to help handle compliance, remaining compliant becomes much more manageable.