How to select a construction payment management solution: Risk mitigation

In the blog post titled, “Eight issues that should be top of mind when considering a construction payment management solution,” we explored that with construction payments comes the need to manage lien waivers and ensure compliance requirements and prompt payment deadlines are met. Failure to do so creates both legal and financial risk.

With Oracle Textura, customers like you reduce risk with automated compliance workflows, secure document and lien waiver collection, and strong governance and controls around one of your core financial functions.

Dave Jolin, chief financial officer at Commodore Builders, says:

“With Oracle Textura, subcontractors can’t bill for changes that weren’t approved, and there won’t be any misplaced lien waivers. What our customers see is that we have excellent control of a very important process. That puts their mind at ease,” he says. “It’s their name on the building and they trust us to mitigate their exposure.”

Automated compliance workflows

With a manual process, the workflows for collecting lien waivers, ensuring that compliance requirements are met, and adhering to strict payment timelines may be executed and tracked in Excel, email, and on the phone. The information may be stored partly in online file-sharing systems or as email attachments. Part of the information also may be stored in the company’s ERP system.

Subcontractors have limited or no visibility into their compliance status (or lack thereof) triggering more rounds of emails and phone calls. Add an extra layer of complexity from compliance requirements that vary from project to project, and you get an unsecure, siloed, complex, inefficient, and risky process with multiple potential failure points.

With Oracle Textura, the automated workflows allow you to collect electronically signed invoices, lien waivers, sworn statements, and unconditional lien waivers. You also can configure additional compliance documents and compliance requirements to ensure all project requirements are met. You and the extended project team can centrally track everything from one place. For example, you can track yearly insurance expiration dates while also tracking requirements with a different cadence. You can configure the solution to track certified payroll weekly or safety reports monthly.

Another example of flexibility around configuring compliance requirements might be to track closeout documents. Since you only need to get these documents from your subcontractors at the end of the project, you would set a conditional requirement that would only be triggered when a subcontractor submits their full and final invoice.

The key is not just automating the compliance workflows but having the flexibility to configure them to fully meet the exact requirements of each of your projects. A short video shows some of the capabilities around the automation of compliance and lien waiver workflows.

As Jeff Metcalf, vice president-information systems at Layton Construction Company says:

“The automation, workflows, and controls prevent human errors, stop incorrect billing, and ensure accuracy. The compliance capabilities allow for standardization across projects and produce reliable data.”

Secure document and lien waiver collection

Project owners often require collection of unconditional lien waivers from both subcontractors and their subtiers and suppliers. Plus, all the other documents that may be required alongside the invoice before any payment can be made. The time and effort to collect and store all the documents and lien waivers manually can be huge.

With Oracle Textura, you collect and track conditional and unconditional subcontractor and subtier lien waivers as well as any compliance document or requirement, such as standard compliance, periodic or recurring, or rules-based compliance. Oracle Textura even automates the joint check process to ensure that you have the sign-off from the subcontractor for the deduction of their payment to the subtier organization.

As Alston Construction Chief Financial Officer Adam Nickerson says:

“My project accountants might have 15 projects with 20 subcontractors each, plus all the lower tiers. It sometimes feels like stacks of lien waivers are flying at your desk. With Oracle Textura, we don’t worry—everything is accurate and where it needs to be.”

Strong governance and controls

Automation and efficiency are important to the construction payment process, but to properly mitigate both financial and legal risk, you need strong governance and controls around one of your core financial functions. Nothing can fall through the cracks.

Oracle Textura allows you to enforce the use of the correct document template, whether standard or customized to fit your requirements. Examples include invoices (AIA G702/703), sworn statements, conditional lien waivers, unconditional lien waivers, and statutory declarations.

Subcontractors enter their billing amounts directly into the system. From there, the math is automatically calculated, and all the correct billing forms and waivers are auto-populated. Each document is then signed digitally using DocuSign. Controls are in place every step of the process.

As Sarah Murray, vice president at Wood Partners says:

“Getting correct and valid lien waivers was a big administrative task for our teams. And being able to do that with proper controls in the software was another big plus that brought us to the table.”

Jeff Marsh, principal sales consultant, Oracle Construction and Engineering, contributed to this story.