Case studies / Construction and Engineering Contracting
Case studyProgress billing and subcontractor payments for a civil contractor
A Canadian civil and building contractor sped up progress certification, controlled subcontractor billing and linked site costs to budgets every week, which improved cash flow across its projects.
Overview
An employee-owned general contractor in Ontario and Alberta delivering roads, bridges, water treatment plants and institutional buildings for provincial agencies, municipalities and private owners.
Scale. Around 40 live projects at any time, from six-month road rehabilitations to four-year plant builds, more than 600 subcontractors and some 1,200 subcontractor progress claims a month, delivered as a phased, multi-location programme.
The challenge
Certification was slow. At the end of each month, site superintendents estimated how much of each item had been completed, project managers argued the numbers with the owner's engineer, and the progress invoice went out two or three weeks into the following month. Payment arrived thirty or more days after that. On large projects the company was financing several million dollars of work for six weeks or longer.
Subcontractor billing was the mirror image. Subcontractors submitted claims in their own formats, by email or post, and project staff checked them against whatever records they had. Some claims ran ahead of the work actually done; others were paid late, which strained relationships with the trades the company depended on. Statutory holdback, the portion retained under prompt payment and lien legislation, was tracked on spreadsheets that did not always agree with accounts.
Cost overruns surfaced late. Site costs for labour, equipment, materials and subcontracts were coded inconsistently between projects and reviewed only at month end, after invoices had cleared. By the time a project manager saw that earthworks or concrete were running over, the work was finished.
Each region ran these processes slightly differently, so head office had no single view of cash, exposure or margin.
The solution
Progress is measured on site throughout the month. Superintendents record quantities completed against each line of the schedule, with photographs and location, from a field application. Project managers review the figures weekly, and the owner's engineer can see the same evidence before month end, so certification becomes confirmation rather than negotiation.
Subcontractors submit claims through one portal against their agreed schedule of values. Each claim is compared automatically with the quantities the site has recorded, holdback is calculated by contract and jurisdiction, and differences are flagged to the project manager before approval. Approved claims flow to payables with the right deductions, and subcontractors can see the status of every claim.
Every week, each project compares committed and actual cost with budget, by cost code, and forecasts cost to complete. Variances above an agreed threshold go to the project manager and area director with a short explanation. Shared master data for projects, cost codes, subcontractors and owners underpins group reporting, and management dashboards show cash, holdback and margin across both provinces.
The engagement
- Eight months
- Five specialists, with project controls, contracts, accounts payable and finance leads
- Process mapping, progress measurement and certification, subcontractor billing and holdbacks, weekly cost against budget, shared master data, pilot and phased rollout.
Integrations
- Project and document systems
- Banks and payment services
- Field and mobile applications
- Management dashboards
How we delivered it
- 01
Map the work and agree measures
Six weeks
We spent time with superintendents, project managers, contract administrators and payables clerks on six projects. Before design began, the executive team agreed three measures by which the programme would be judged: days from period end to certified progress, days to bill the owner, and the gap between forecast and final cost.
- 02
Design common processes and integrations
Eleven weeks
Project controls and site teams agreed one cost-code structure and a weekly cost update. Progress would be measured on site against the schedule of quantities and recorded on mobile devices with photographs. Subcontractors would submit claims through one portal against their schedule of values, with holdback calculated automatically.
- 03
Pilot on one project
Seven weeks
A water treatment plant expansion in southern Ontario piloted the processes. Early on, the team agreed with the owner's engineer to review progress jointly during the month rather than all at once at the end.
- 04
Roll out in waves and track results
Ten weeks
The remaining projects joined in three waves, Ontario first and Alberta second. The executive team reviewed the three agreed measures monthly.
Results
- Cash flow improved through faster certification
- Subcontractor claims checked against measured work
- Site costs compared with budget every week
- Teams worked from the same data across two provinces
Cash flow improved. Because progress was agreed with owners' engineers during the month, invoices went out within days of period end rather than weeks, and the amount of work the company was financing at any time fell substantially.
Subcontractors are paid against measured work, on time and with holdback calculated correctly. Overbilling is caught before payment, and several key trades said the predictable payments made the company a preferred customer when they were choosing which bids to price.
Linking site costs to budgets weekly meant overruns were spotted while the work was still under way. On a bridge rehabilitation, an early variance on temporary works prompted a design change that recovered most of the overrun. Because the measures were agreed at the start, leadership could see plainly each month what had changed.
We used to spend the first fortnight of every month arguing about last month. Now the argument is over before the month ends, and the money arrives sooner.
What made the difference
The contractor linked site costs to budgets weekly. Agreeing measures at the start made success easy to recognise.
