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August 16, 2013

Achieving Subcontractor Compliance: The Devil is in the Details

In the course of any construction project, it’s easy to forget that like a piece of heavy equipmenC  Users ARogers Pictures istockphoto downloads magnifying glasst, there are multiple cogs in the gears – or multiple people wearing safety vests and hardhats – that all work together to finish a project on-time and on-budget.

There are numerous mechanisms that are essential to completing construction work safely, efficiently, and with all participants in compliance with the general contractor.

 So, what does it take to ensure subcontractors adhere to the contractor’s requirements for jobsite performance? Let’s find out.

 

Know who is working on your job site.

It is important to carefully monitor and screen subcontractors to ensure they have the necessary paperwork, from insurance certificates to payroll reports for work performed. Because subcontractors themselves occasionally contract work out to their own subs, it is critical for the general contractor to be fully aware of who is working on each jobsite at all times, as there can be liability  for non-compliance issues with the potential for jobsite closure or heavy fines. The bottom line: stay vigilant at all times to avoid damages later.

Lien waivers are key.

Another step to remember when pursuing subcontractor compliance is that it is essential to collect a signed lien waiver from subcontractors, a document that is necessary for protecting the general contractor and the project's owner. If this document is not returned with the appropriate signatures, the general contractor is exposed to significant risk, as any number of project team members – even the subcontractors’ subs – could place a lien against the owner’s property due to lack of payment by a fellow sub. Even if the general contractor is dutifully paying its subs, the subcontractors themselves may be defaulting on payments to their own vendors, making it an absolute necessity – especially in this economy – for GC’s to enforce compliance via the lien waiver form.

And there is more:  details and documentation.

While the lien waiver may be the single most significant document to keep contractors out of hot water, there are multiple other forms of documentation essential to achieving compliance between subcontractors and GCs. For instance, contractors need to track whether or not the firms it works with have proof of insurance, certified payroll, business licenses, and evidence of drug tests and documented safety training, to name just a few.   

The time for organization is now.

All of these requirements create the need for a committed approach to cataloguing every form of documentation in a coherent manner to ensure all of this info is easily accessible when needed most.

In recent years, new regulations have resulted in increased scrutiny into general contractors’ business practices, driving the need for a comprehensive approach to achieving and maintaining compliance. It’s time to get organized to ensure general contractors are protected from damaging fines and property liens by adopting and implementing the tools necessary to ensure a streamlined path to subcontractor compliance.

 

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