To finance slow payments, the estimated overhead included in subcontractors’ bids is 2.75% and 5.81% for general contractors. This year’s report uncovered that slow payments to subcontractors and general contractors will create $136B in additional costs for the US Construction Industry in 2021.
Construction Lender Efficiency Tip #5 – Eliminate Time Spent Maintaining Spreadsheets and Rolling Over Formulas
You may find that every time a new draw request comes in you spend considerable time checking the previous draw spreadsheet. You need to verify that historical figures match, sometimes borrowers reallocate historical costs to different line items, or formula errors throw off ‘Balance to Fund’ amounts. In either situation you have to spend valuable time fixing the errors or circling back with the borrower for clarification.
Instead, leverage technology to automatically check reallocations and the ‘Previous Amount Requested’ value for you. If an error is found, your solution should proactively notify all relevant users to take action. With today’s technology you only need to upload the current draw summary spreadsheet once and automated rules will flag any inconsistencies in the ‘Previous Amount Requested’ cells in the borrower’s spreadsheet. Your solution should roll forward previous amounts requested using system data instead of relying on spreadsheet formulas to be correct. Part of the key here is that you’ve followed step 1 and digitized your process. Sure, anyone can build a nifty excel macro that analyzes data, but housing the data where everyone can access it and alerting users immediately to issues is where the biggest efficiency gains lie.