By David Kelly
Payment processes in construction have long presented significant complexities for all project stakeholders, and the challenges from these historically manual and time-consuming activities can be particularly tough for subcontractors.
George Pfeffer, a member of general contractor DPR Construction’s management committee, notes in a recent article that: “The industry needs to focus on the entire invoicing process and making sure it functions in an efficient and timely manner.” Founded in 1990, DPR has been a top 50 general contractor in the U.S. since 1997.
Pfeffer went on to note that it’s key that “everyone feels invested in the health of the entire construction community and takes steps to be diligent in keeping money moving.”
TECH BENEFITS PROCESS
From our perspective at Oracle Construction and Engineering, technology certainly has brought much-needed improvements to the back office, but the critical and interrelated areas of invoicing, payments, and compliance management continue to pose headaches and risks for general contractors, owners, and subcontractors.
Although these activities comprise an important part of effective project delivery, in many cases they remain manual, opaque, and disjointed for general contractors, their owner customers, and project subcontractors alike. The result is a lack of efficiency, visibility and control for all of the stakeholders—and potential financial uncertainty for the subcontractors.
Further digitization holds the key to solving this longstanding challenge. Like the collaboration solutions that have driven new levels of field productivity in construction, cloud-based invoicing and payment solutions can enable collaborative and transparent processes. Such an approach helps save time, improve cash flow, minimize risk, and keep projects moving.
The right technology can simplify, standardize, and automate processes, while also enhancing visibility for all participants by providing real-time access to current information. Benefits include greater productivity and visibility across stakeholders, reduced errors, and increased control over areas that entail risks. These risks include compliance, change orders, and lien waiver management.
Such technology also helps customers ensure margin and enable scale without the traditional burdens of increasing costs or staff. We’ve seen that better processes can improve operations so significantly that they can help organizations grow their average project value, total project value, and the breadth of business.
DPR is committed to continuous improvement and looked to the cloud when it set out to improve its payment management processes. The general contractor, which recorded more than $6 billion in revenues last year, needed a streamlined and efficient way to collect, approve, and pay subcontractors for over 500 project starts and 7,000 subcontracts written on average each year.
To achieve this back-office transformation, DPR integrated its existing ERP application with Oracle Textura Payment Management Cloud Service. This enabled the general contractor to streamline and automate processes across payment and compliance management activities, including facilitating the secure, digital exchange of e-signed lien waivers for electronic payments to subcontractors using automated clearing house (ACH) transactions.
“Every dollar counts right now for so many businesses and Oracle Textura has been a way which we’ve increased efficiency in paying our trade partners,” says Anna Bickford of DPR Construction.
By integrating systems across billing, review, and compliance management and moving to electronic payment, DPR can now pay contractors in just a few days, allowing tens of millions of dollars to reach subcontractors up to 7 days faster. DPR also estimates savings of:
- 450 company hours per week through subcontract change order compliance integration which allows for quicker reviews and updates of compliance status, enabling faster payment hold releases.
- 360 company hours per week on managing call sheets by integrating Oracle Textura Payment Management with their ERP solution, eliminating double entry and improving information access.
- 90 company hours per week by enabling sending invoice documents from the cloud service back into the company’s ERP so they can be accessed by accountants in either system at any time.
“Solutions that help us increase efficiency and deliver better value for our customers are priorities across our business, from the field, and into the back office. Our Oracle Textura Payment Management integration has been an important part of how our accounting team contributes to that goal,” says Bickford. “The ability to share invoice documents electronically supports DPR’s paperless archive process and advances the project accountant’s ability to prepare payment applications for customers in a timely manner. This helps us build trust with both owners and subcontractors, and ultimately contributes to the health of the construction community as a whole.”
DPR’s vision and success is a leading example of how cloud-based payment management services can help an organization improve payment outcomes for all project stakeholders. Contractors of all sizes can benefit from contacting a payment management cloud service provider to learn how these solutions can help their organization thrive, grow, and build longstanding relationships with subcontractors and owners.
About the author:
David Kelly is vice president of client services for Oracle Construction and Engineering. For more information, visit Oracle Construction and Engineering: www.oracle.com/industries/construction-engineering.
Modern Contractor Solutions, December 2020
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