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Automate & Standardize Construction Compliances

Contractors know the value of staying in compliance with their contracts and their customers – it can make or break the relationship. Keeping up with compliance requirements and ensuring that customers have all the information they need can leave those contractors without an organized process scrambling.

Developing a process, standardizing it, and using automation to carry out routine tasks improves efficiency and saves money. But you may wonder, how do you do this?

So, what is contract compliance?

Let’s start by getting clear on what contract compliance means in the construction industry. Contracts require certain documents and information from contractors so that project owners know that they are operating within the terms of the agreement.

There’s an almost endless list of items that could be requested in a project contract, and each contract is different. Contractors have to provide the requested information and documentation to ensure the owner that they are meeting the requirements, not only at the beginning of the project but throughout its life.

Here’s just a shortlist of information that may need to be communicated to a project owner to ensure compliance:

  • Licensing
  • Insurance
  • Bonding
  • Credit information
  • Background check
  • Union agreement
  • Lien requirements and notices
  • Safety and health information

Ensuring that these documents are received by the owner, meet the contract requirements, and remain up to date with all your clients can be difficult if you aren’t tracking them in an organized fashion.

Here are some suggestions to get started on standardizng and automating your contract compliance process.

1. Create a process

The first step to automating and standardizing your contract compliance process is to create one if you don’t have one already. If you already have a process, document it so everyone knows what it is.

The steps in a contract process may include:

  1. Contract intake and review
  2. List items that need to be sent for compliance
  3. Review list for any items you don’t already have
  4. Obtain/collect compliance documents
  5. Sign contract
  6. Return contract to client
  7. Review requirements regularly for ongoing compliance

Depending on the specific compliance requirements, more steps may be needed. Make the process as simple as possible but recognize that it needs to be flexible as well.

2. Define roles

Now that you have the process written down, you’ll need to define who is responsible for taking care of each part. Steps can be assigned to departments or specific employees, depending on the size of your company.

For each step in the process, define what needs to be done, who is going to do it, and when it will be completed. It’s important to set deadlines for the completion of tasks, as contracts are often time-driven, and you need to ensure that you’ll meet the deadlines listed.

Be sure to include a way to deal with new documents or new requirements that you haven’t come across before. As situations and conditions change, contract requirements will as well. Assign someone to research the new requirements, as well as assign the task to the appropriate department or employee.

Once the process has been written up and all the steps assigned, distribute the information to everyone involved in contract management. Everyone needs to know who will be performing each role and how long they have to perform it, so they can keep each other accountable.

3. Automate as much as possible

Once you’ve created a standardized process for contract compliance, automation is the next logical step. Instead of wasting time finding and collecting paper documents, use technology to expedite the process. Automation helps streamline processes, which will save your team time and improve efficiency. And the chance for human error is reduced when compliance tasks are automated.

Construction management software can help automate your compliance processes. Online document storage and notifications can help ensure that you stay in compliance with your customers.

4. Periodically review and audit the system

On a periodic basis, you should review the system and audit the results to ensure that you are maintaining compliance with your customers. Talk to the employees involved in the process and look for gaps or areas that continually get bogged down. You’ll also want to review the current status of compliance over all your contracts to ensure that the system is working effectively.

Once you’ve completed the review and audit, assess the overall system to see if it is working and if it’s effective. If there are changes that need to be made, implement them, and then review the process again after a while. Continual improvement will help ensure that the process remains effective.

5. Remain flexible

COVID has taught us that we have to remain flexible and ready to pivot at any time. Contract requirements can be changed in an instant, and new requirements are added all the time. Meet with your compliance team regularly to ensure that the current processes are meeting the needs of the contracts and make changes, as necessary.

Start the process today!

The first step to standardizing and automating your contract compliance process is to write it down. Then assess it to see if it’s effective. Assign roles and responsibilities so each step is covered. Then, find out how technology can improve your efficiency by automating as much of the process as possible. Software, like Premier Construction Software, can track expiration dates and prompt you to request new documents as needed, and provide online file storage so your whole team has access to compliance documents from anywhere. Reviewing and improving your compliance processes ensures that your company is always running at the peak of efficiency.

Author Biography:

Dawn Killough is a construction writer with over 20 years of experience with construction payments, from the perspectives of subcontractors and general contractors. Dawn has held roles such as a staff accountant, green building advisor, project assistant, and contract administrator.  Her work for general contractors, design firms, and subcontractors has even led to the publication of blogs on several construction tech websites and her book, Green Building Design 101.

Industry Insight

Compliance Documents You Should Be Collecting from Your Subcontractors

Before you begin working with a new subcontractor, there are several compliance documents you need to collect from them. These documents, like proof of insurance and copies of contractor’s licenses, help reduce risk on construction projects. The documents are often required by the contract with the owner, or the GC may be requesting them as per their own subcontractor agreement.

The goal of collecting these documents is to ensure that the subcontractor will complete the work in the manner specified in the contract documents, and to protect the general contractor and owner from potential costs or damages caused by the subcontractor. GCs want to ensure that the subcontractor will be around to finish the project, will provide quality work, and that they have the necessary insurance and bonds to cover any damages that might happen during the project.

We’re going to look at what compliance documents are and let you know which ones you need to be collecting and tracking for your subcontractors.

What are compliance documents?

Before we get into what documents you need to collect from your subcontractors, let’s take a moment to understand why these compliance documents are important. Compliance documents are documents you request from subcontractors to show that they meet the minimum requirements to work with your company. They help ensure that a subcontractor meets the legal requirements for being in business, as well as any additional requirements your company may have.

Every company has different documents that they require from their subcontractors. Usually, these requirements are contract-driven, so be sure to review their contract for specific requirements. There may also be project-specific documents that need to be gathered. If so they will be specified in the contract with the project owner.

We’re going to start with the essential documents that you should be collecting from all of your subcontractors, and then list some that are optional but may be required.

Essential subcontractor compliance documents

These documents should be collected from every subcontractor on every project.

Contractor’s license

There’s nothing more important than verifying that your subcontractor is licensed to work in the state and city the project is located in. Not all states require licensing for subcontractors, so be sure to check the regulations first. Licensing ensures that the sub has insurance coverage, usually a small bond to cover disputes and claims and that they are registered to work in that state. For trade contractors, licensing also ensures a level of knowledge and education. Once you’ve checked to see if a sub is licensed, make sure the license stays in good standing by regularly reviewing it. This ensures that the insurance policies and bonds remain current.

Insurance certificates or proof of insurance

There are two types of business insurance that all subcontractors should have: general liability and workers compensation. These policies protect the business in case of theft, damage, or if one of their employees gets injured. You may also request proof of automobile insurance if the sub has their own vehicles. Things to look for include ensuring that the policy has not expired and that it has the appropriate claim limits as per your contract. Your contract may also require that your company be added as an additional insured to the sub’s policy, so make sure that is noted as well.

W9 form

All subcontractors should be providing you with an IRS W9 form. This form lets you know the type of company the sub is (corporation, LLC, sole proprietor, etc.), as well as their tax identification number or Social Security number if they are an individual. You’ll need this information for end of the year reporting and sending 1099 forms to those subs and suppliers that qualify.

Project bonds

Some projects, mostly government and public ones, may require performance and payment bonds. Not all GCs ask their subcontractors to bond back the project, but if you do, you’ll want to get a copy of these bonds for your files. You’ll need proof that the bonds were issued, as well as the specific bond information in case you or the project owner have to make a claim.

Optional subcontractor compliance documents

Your company may choose whether to collect and review these documents. If you do require them it should be included in your subcontractor agreement.


Some general contractors require that all subcontractors turn in their SDS (safety data sheets) or MSDS (material safety data sheets) as part of their compliance package. MSDS are required to be on each job site when a contractor uses chemicals or hazardous substances. These are often job-specific as each project requires different products. Subscriptions to MSDS services that provide a website or telephone number to contact to get information can substitute for providing paper documents.

Safety policies

Every subcontractor should have a safety manual or set of safety policies that they institute on their projects. Some GCs require subs to send those policies in so they can be reviewed to verify that they comply with the general contractor’s requirements. Some of the key policies that need to be reviewed include fall protection, personal protective equipment (PPE), silica protection, and health policies. With the rise of the COVID-19 pandemic, ensuring that these policies meet CDC and OSHA requirements has become even more important. All subcontractors need to comply with these requirements when it comes to health checks, PPE availability, and record-keeping.

Keeping it all organized

It’s imperative that contractors track the receipt and expiration of these documents to ensure that their subcontractors are in compliance at all times. GCs should develop a system for verifying, recording, and following up on missing or expired information.

Accounting software packages, like Premier Construction Software, can help by tracking insurance and license expiration dates and providing automatic notification when they are expired. This makes compliance tracking easier by centralizing the data and providing notifications, allowing contractors to be proactive in tracking down information. This helps GCs ensure that their compliance information is up to date, reducing project risk.organizing construction project files with Premier Construction SoftwareTo learn more about how you can streamline your document management process, schedule a call with our team for a live demonstration.

Author Biography:

Dawn Killough is a construction writer with over 20 years of experience with construction payments, from the perspectives of subcontractors and general contractors. Dawn has held roles such as a staff accountant, green building advisor, project assistant, and contract administrator.  Her work for general contractors, design firms, and subcontractors has even led to the publication of blogs on several construction tech websites and her book, Green Building Design 101.