Powering Smarter Construction Finance

7 Tips for Tracking Contractor Compliance Documents

Posted by Dawn Killough on May 1, 2020 at 12:43 PM

It is imperative that construction project teams track the status of compliance documents like contractor insurance policies, licensing, bonds, and lien waivers. These documents are often required when turning in payment applications, closeout documents, and for insurance audits. They can come from many different sources and at different times throughout a project, so staying organized is important.

Keeping the documents arranged logically and making sure everyone meets the contract requirements can be daunting, especially on large projects with multiple contractors. There are many dates to track, different types of coverages, licenses, waivers, and other requirements that all need to be reviewed and confirmed. 

To keep everything running smoothly, here are some tips for making sure your project stays in compliance.

One: Store all compliance documents in one location

Finding documents is hard enough without having to look in multiple locations. With many companies having both a main office and several job site offices, it becomes even more important that all compliance documents are accessible by everyone who needs to see them. 

A cloud storage system is a great option for saving files or documents for remote teams. Common tools include Dropbox, OneDrive, or Google Drive. Most of these offer free options for document storage, up to a certain storage limit. Companies can use these platforms to set up connected teams that share folders and documents seamlessly with each other. Team members can access the data from any device that has an internet connection, allowing flexibility in where and how the data is used. These providers all have multiple servers and back the data up regularly, so there is little chance of your data being lost. 

When looking for expiration dates or making a quick check for compliance, it is best to record important dates or the receipt of certain documents in a software system or spreadsheet. This way you won’t have to look through lots of files to check the status of a contractor’s insurance or whether they have turned in a bond for the project yet. Check your existing software to see if it has this capability or see tip seven below for some suggestions.

Two: Know what documents are required

Before you start receiving compliance documents, know exactly what paperwork needs to be turned in from each contractor and what the deadlines are. Pay special attention to what insurance coverages are required, any special licenses, bonding, and lien waiver requirements. 

You’ll want to check with your insurance agent and the project contract documents for insurance certificate requirements (whether you need one certificate for all jobs or job-specific certificates). Make sure you know what coverages and endorsements are required and if the certificates need to be made out to any specific parties or include additionally insured endorsements. 

Read the contract documents carefully for lien waiver requirements and forms, bonding limits, and any other compliance requirements that you may need from the contractors on site. If you find conflicting requirements in the documents, be sure to contact the project owner for clarification.

It is a good idea to set up a checklist or a spreadsheet to track all the project-specific documents you will need from each contractor. Use this checklist to review compliance regularly (see tip five below).

Three: Organize your system depending on project requirements

There are many ways to organize your documents once you start receiving them. The best way will depend on what the project requires. You can organize them by vendor or project, depending on what works best. Also take into consideration who needs access to which documents, and make sure the system is organized so everyone can get what they need with correct folder permissions.

It is also beneficial to have a standardized file naming system so users can tell what the file contains. Once you have developed a system that works, make sure that everyone in your company knows the system if they need to access or save files there. 

Four: Review documents when they come in for accuracy and completeness

When documents start coming in, it is important to review each one for accuracy and completeness. You may want to create a checklist for reviewers to use when analyzing these documents. You’ll want to verify things like the party names, limits, and dates for insurance and bonds.

Some projects require custom forms or reports, such as certified payroll. When these come in, make sure the forms are filled in correctly and completely, and that all the information meets the requirements of the contract.

Lien waivers need to be reviewed to make sure the correct form has been used. Some states have specific language that must be included on all waivers. Make sure they have been signed by a person with authority for the company, and that the waiver has been notarized, if required. Also check dates, especially with notarizations. The notary and signature dates must match, or the notary is not valid.

If you find that the documents that have been submitted are not correct, immediately return them to the contractor for correction. Don’t save them into your system until the corrected forms have been returned and approved.

Five: Regularly check expiration dates

It is important to regularly check the expiration dates for insurance policies and licenses. A good rule is to verify that all active contractors are complying at least once a month. Doing this before sending payment creates an incentive for contractors to send in documents quickly.

Check the expiration dates you have recorded in the software or spreadsheet you use to track them. If there is a discrepancy or you have a concern, verify by checking the original documents in your filing system. Checking the dates in a spreadsheet or software is quicker and easier than looking at the original documents each time.

Some software packages have the capability to send reminders when documents have expired. Take advantage of these features when they are available, as they will help keep your contractors in compliance with little to no effort on your end.

Six: Notify contractors when documents are not in compliance

If you find that a contractor is not in compliance at any time during the project, send immediate correspondence telling them what needs to be rectified. This notice can be sent by email, letter, or phone call. Be sure to document all correspondence. If the contractor does not send the documents in a reasonable time, continue to follow up until you get a response.

Sometimes you can use payment as an incentive to send in correct documents. Since the contractor is in breach of contract, holding payment is warranted in most cases. The problem with holding payment is that it may hold up subsequent payments, especially if you are required to submit lien waivers with each payment application. Weigh the costs and benefits of holding a contractor’s payment before using this as an incentive.

Seven: Use software systems to assist with tracking

There are many software programs that are available to help with compliance document tracking. The best system will integrate with your other processes and be easy for your team to use. 

Accounting software – Many accounting programs can store insurance and license expiration dates and can remind you when they expire. Some may have document storage attached to vendor and invoice records that you can use to organize your documents. Make sure that all team members who need access to this information can get it, and that the program allows you to adjust security settings for each user.

Procore – This is a web-based project management platform that can store insurance and license expiration dates and will send reminders to you and the contractor when those items have expired.  Its prequalification tool can be used to ask contractors to submit all their documents ahead of time. The documents can then be reviewed by your team, and the contractor approved for bidding or issuing contracts. Procore also ties invoices in with lien waivers and other documents. It is important to note that it is not an accounting program, though you can export data from many accounting programs into the platform for analysis and reporting.

Lienwaivers powered by Built – With our cloud-based software platform, you can create lien waivers from payment records and track receipt of signed waivers via email or direct upload. If waivers are overdue, reminder emails are sent out. Our platform integrates with Procore and you can import data directly from other accounting programs. It can also tie the receipt of a waiver to the ACH payment of a contractor, allowing for a quick transfer of funds once waivers are received.

 

Tracking compliance documents for construction can be stressful, especially if your system isn’t organized and available to everyone who needs it. By using cloud-based storage, knowing what documents you need to collect, organizing your folder structure to fit the project, and using software to assist in tracking dates, you will streamline your compliance tracking process and improve the productivity of your team.

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Topics: Lien Waivers, Compliance Document Tracking

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