How do you demonstrate that construction management software actually works? You take its through its paces in meeting industry-specific challenges. In this blog post, we take a closer look how Sikich HEADSTART for Construction construction management software helps you manage insurance certificates and invoicing with ease and simplicity.
As we discussed, HEADSTART for Construction, which integrates Microsoft Dynamics 365 Business Central and ProjectPro, can help you manage subcontractors with your business requirements front and center, including liens, contracts, and payments. Today, we dive into two other critical areas of the construction business: certificates of insurance and invoicing.
When construction companies use manual processes and stand-alone software tools to manage insurance certificates and invoices, the visibility and manageability of activities and data can quickly degrade. Many construction businesses are thus challenged with ensuring timely, accurate, client-appropriate invoicing and error-free tracking of insurance certificates. Your business needs one consolidated construction management software system that includes managing both insurance certificates and invoicing.
When risk management itself becomes risky
With powerful equipment, high elevations, and a lack of people-ready structures, conditions on construction sites can be dangerous, with many potential causes of accidents. A bad safety record will jeopardize a company’s ability to stay in business and win new clients.
Many types of insurance apply to construction operations. Complex, risky, and protracted projects require more extensive coverage, or need contractors to procure special, additional policies for certain phases of a project.1 Builders’ risk insurance, liability insurance, and insurance for vehicles and equipment can comprise a variety of policies. Workers’ compensation insurance is another critical coverage that contractors need to purchase.
Certificates provided by insurance companies allow contractors to prove that they have acquired coverage at the right level. Often, these are still paper forms, although more and more insurance providers also distribute them electronically. Contractors have to record and safeguard these certificates and remain alert to their expiration dates and renewal periods.
One important step general contractors can take to reduce the risk in their business is to make sure that subcontractors have all the insurance coverage they need. It’s not just prudent; it’s also financially sound, because enforcing subcontractor coverage can reduce the insurance premiums general contractors themselves need to pay.
However, tracking subcontractors’ insurance certificates can mean a huge workload for a contracting company. Larger construction companies work with hundreds of subcontractors, and even smaller ones may use dozens.
Insurance certificate tracking made simple
In our construction management software, HEADSTART for Construction, you can archive and track all insurance certificates—your own and those of your subcontractors—with their coverage details, premiums, and expiration dates. They are easily searchable and always available. You will receive automatic notifications if insurance is tied to subcontractor payments that should be processed or put on hold. The system also reminds you when an insurance certificate is about to expire and needs to be renewed.
The insurance certificate management functionality in HEADSTART for Construction alone can generate a solid return on investment (ROI) for the solution. Sikich construction clients save millions of dollars every year with automated, electronic management of insurance certificates. Several factors play into this:
- Savings of administrative time because a large workload has been cut;
- Reductions in insurance premiums because companies can prove that their subcontractors have required insurance coverage; and
- Avoiding late-payment penalties and other expenses.
Discussing insurance certificates offers a smooth segue to invoicing, because you can connect invoicing and billing milestones to insurance certificates and insurance costs in HEADSTART for Construction. That allows you to be aware of and manage dependencies between the two and invoice accurately, at the right time.
Invoicing, your way
You can configure invoicing in your construction software to reflect project milestones, percentages of completion, and just about any other invoicing criteria you establish with clients and subcontractors. Depending on how you define a project, invoicing can incorporate labor hours and the purchasing and delivery of materials as line items with appropriate markups.
Many contractors use the billing practices and document formats developed by the American Institute of Architects (AIA), and most clients who commission construction projects are comfortable with AIA standards. HEADSTART for Construction supports AIA billing along with the also standardized, associated reporting that your clients may request. Some operational details, such as union types, prevailing wages, and work class codes, feature in AIA billing and can also be useful in your workforce management or other reporting. HEADSTART for Construction lets you add these options when you define project conditions.
Retainage managed gracefully
The retainage often stipulated by clients in their contracts allows them to withhold a portion of the contract price until the work is substantially complete. General contractors may do the same with subcontractors. Retainage (or “retention”) provides assurance that a construction business will honor its commitments. If your construction software does not support retainage, you may erroneously invoice for full amounts when you shouldn’t, or accounts receivable managers may think that customers are delinquent. You can document retainage conditions in HEADSTART for Construction to avoid such errors in invoicing and customer communications.
Keeping changes profitable
Project management and invoicing can become challenging when you need to consider clients’ change orders or additional requests. When you manage change orders in your all-in-one construction software, they will become a component of jobs that are in progress, along with appropriate resource and project management as well as billing. Change orders are immediately reflected in project reporting, such as in your profitability analysis. You can run a profitability analysis per job, client, region, or other parameters and be confident that HEADSTART for Construction reflects current conditions.
Take the next step
- Contact us and we’ll be right back in touch to answer your questions or arrange a demo.
- Visit the Sikich construction page with the latest on our services and solutions.
1See https://constructioncoverage.com/construction-insurance for a good overview.
Co-written by Tim Tucker and Jason Niccolau