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4 Reasons Construction Contractors Are Tired of Payday

Posted by Kit Dickinson on Feb 20, 2018 8:07:00 AM
Kit Dickinson
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Government Construction Contractors Payroll Reporting Problems

If you’re selling time & attendance and payroll software to government contract construction companies, you’ve got some frustrated prospects who are fed up with the entire payroll process—which means you've got one terrific opportunity to win new sales.

Government construction contractors have a unique payroll problem that virtually no other industry has to deal with: prevailing wages and fringe rates. Part of the Davis Bacon Act, prevailing wage is a state or federal requirement for government contractors. It states that construction workers must receive the going rate and (fringe) benefits for their job type within the geographical area they’re working in. Construction companies have to continually prove that they're compliant, which means payroll processes are incredibly frustrating and time consuming.

As a result, these construction companies are tired of managing payroll. Which means if your overall offering can address these frustrations, you'll be the company that wins their business. If you're partnering with IDI, you've already got the solution construction companies are looking for.

Here’s what government construction contractors want you to know about their payroll processes.

Discover how to win more construction clients - download the Time Bank Overview.

Payroll Reporting Is Painful

Government construction companies have to file certified payroll reports to prove they're in compliance with state and federal regulations. The problem is, it's nearly impossible to do the reports correctly every pay period. The forms are as complicated as the tax code, and every state has its own version.

Reports can be rejected if they’re incomplete or filled out incorrectly—requiring contractors to go back to Square One and redo the report to make the necessary changes. So contractors who operate in multiple states are constantly doing and redoing certified payroll reports. It's an administrative nightmare that you can't wake up from.

Every Paycheck Is a Lawsuit Waiting to Happen

What happens when a construction company uses paper timecards or spreadsheets for time-and-attendance and wage calculations? They create a ticking time bomb every payday. The opportunity for miscalculating somebody's paycheck is high.

But they're not just risking the wrong pay amount. Construction companies are also playing Russian roulette with government noncompliance. Companies that make calculation or data entry errors can face employee litigation, hefty government fines, loss of future government projects, and even imprisonment. It just takes one fat-finger data entry mistake to damage a company’s future.

It Takes a LOT of Time to Manage Payroll

The Department of Labor expects it will take less than an hour for a contractor to compile the needed information for eight employees on a single payroll report. In reality, your prospects are easily spending 8-12 hours a week just on reporting. On top of that, many contracts need to factor Fringe Rate benefits. All of these tasks are done manually, which means you're double- and triple-checking your data entry.

Add all other payroll-related tasks, and you've got a full-time employee working all week just to issue a paycheck.

Wage Calculations Are Convoluted

Prevailing wage usually means that all your employees in a geographical area get paid whatever the going rate is for the job role in that area. But what happens when a higher-paid skilled worker needs to fill in for a lower-graded prevailing wage job? In that case, your employee is entitled to the higher rate. What if the employee works on multiple jobs in multiple locations in a day or week? What if you have unionized employees? Now you've taken the complexity game to a new level.

That means construction companies are constantly making exceptions to the rule. Determining a worker's pay is never straightforward. Everytime an employee shifts job roles or works on different projects, the pay rate changes and the employer has to recalculate the correct pay—often using painstaking manual calculation methods.

Win New Construction Clients with IDI

Human Capital Management (HCM) companies who understand the frustrations (and fears) of government construction contractors have a tremendous opportunity to win new clients. As you talk with prospects, ask about this issue that’s unique to the government contractor industry. The HCM company that can provide a robust and automated solution to simplify this convoluted process will gain a huge advantage over the competition to win the sale.

IDI's Time Bank solution takes away all the pain of prevailing wages, union rules and fringe rates. Time Bank completely automates the wage calculations and simplifies the reporting—all at the push of a button. With Time Bank, your construction clients can instantly save up to 8-12+ hours a week, so they can focus on more important responsibilities.

Watch this video to find out how Time Bank can help you win more construction clients.


Learn how to eliminate manual data processes

Topics: Construction Industry Solutions