May 16, 2023 Automation Eases Owner-Contractor Conflicts

Manufacturing project owners and contractors can streamline operations and strengthen relationships through automation.

By Ken Naughton, President, Management Controls

The manufacturing industry has its fair share of challenges, like labor shortages and skill gaps, ongoing supply chain disruption, and difficulty sourcing raw materials. Yet, striking a balance between safety, productivity, and cost savings is the age-old conflict that can cause the most harm to the project owner-contractor relationship.

In my experience, juggling these three priorities – safety, costs, and productivity – requires meticulous planning and strategizing. And its importance can often be underestimated.

As the manufacturing industry continuously advances and adds to its tech stack to keep operations up-to-date and efficient, the same can be said for behind-the-scenes tools. With today’s tech, automation can lend a hand in creating greater visibility into safety, costs, and productivity metrics, ultimately transforming the owner-contractor relationship. The key is real-time data.

The Main Priority: Safety

Nothing matters more than employee safety. And while clear instructions, protocols, protective gear, and other traditional safety measures are effective, they don’t factor in unplanned or unscheduled work.

Safety tech is a great way to support safety efforts, but automation can be manufacturing leaders’ crystal ball. It can provide real-time insights into who is on the jobsite at any given moment, the equipment each person is using, as well as the certification levels of each employee to ensure that they are not working beyond their trained skillset.

It only takes one under-skilled or overworked worker to create a safety risk. Automated contractor management tools can monitor for employee fatigue, workers who have been on-site for too many consecutive days, or certain workers who have been staying for longer shifts.

Access to real-time data benefits the contractors and reduces the risk of accidents or injuries. It also allows management teams to make more informed decisions on behalf of their workforce to ensure the entire site is meeting safety standards.

Stay On Track and On Time

Once safety concerns are addressed, productivity is the next project priority. Owners want the job done on time, and contractors want to get paid on time. But today, so many manufacturers are operating in the dark and making productivity-related decisions without any data to back them up.

To make matters more difficult, manually gathering productivity data is a time-consuming process. It lacks transparency and involves multiple data sources, which opens the door to error. By the time the data is collected, consolidated, and digested by management, it’s too late.

But with the right technology – again, tapping into automation – this data becomes visible for both owners and contractors in real time. This keeps both teams on the same page about project statuses and enables them to make more informed project decisions. Not to mention, issues like resourcing, limited labor, and equipment maintenance needs can be forecasted and handled ahead of time. This reduces unexpected delays that negatively impact overall project performance and work to reduce costs.

Reduce Invoicing Errors

Perhaps the most debated conflict between manufacturing owners and contractors is over- and under-billing. And despite being a major pain point, invoicing is still commonly done by hand with pen and paper, which is not only a time-consuming process, but can lead to costly errors.

Leveraging today’s automation and software capabilities, invoicing processes can be digitized to create a simpler process for both owners and contractors that is based on pre-negotiated terms and rates.

Whereas with traditional tracking, manufacturing leaders face inconsistent contract terms and conditions across different contractors for holiday pay, rounding rules, grace periods, and paid/unpaid lunch, which results in confusion and billing errors at the site level. And this often leads to the owners overpaying.

With a digitized invoicing system with spend management, contractors get paid accurately and on time because labor hours are captured and validated against contract terms, and skill pay rates are automatically calculated and enforced. This creates a single source of truth for all contractor costs, schedules, and activity, and it reduces disputes in future audits.

What It All Comes Down To

The owner-contractor relationship is an essential aspect of all manufacturing projects. If it’s not in a good place, it can create more challenges that permeate into the jobsite and project itself. Manufacturing leaders should look to tech and automation tools to streamline operations, create greater project management visibility, and automate billing processes.

With greater insight and visibility, owners and contractors benefit and can work together more effectively, leading to greater productivity, cost savings, and most importantly, safety.

Ken Naughton is a leading authority on the challenges of contract work management and is currently the President of Management Controls. He has been with MCi since April of 2011, previously holding the positions VP of Consulting Services and Chief Operating Officer. Ken has over 25 years of oil and gas experience. Before his time with MCi, Ken was an executive in Accenture’s Energy and Chemicals practice.

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