By Byron DeStigter, CPA

Like most general contractors, you'd likely agree that all subcontractors are a calculated risk. For this reason, it's imperative to gather and track data pertinent to ensuring effective subcontractor management. The good news is that, if you'd like to automate this process, there is software available.

Refining your critical thinking

Several developers have created applications that allow you to track virtually all of the critical aspects of working with a subcontractor. Essentially, the purpose of this software is to help you refine your assessments of these smaller, more specialized construction companies — in both the short and long terms.

For starters, the data you'll have at your fingertips will help you prequalify subcontractors. Maybe you already maintain a list of "go to" subs you turn to first. But you'll be able to maintain such a list in far greater detail and update it much more quickly with the right software. Your surety will also likely appreciate this added capability, knowing you're using technology to minimize the risk of taking on unqualified subs.

Once a job is underway, subcontractor management applications can store performance data (such as project milestones reached and faulty work performed) and generate reports featuring this information. The software also enables you to track compliance requirements (such as insurance and licensing), payments and retainage amounts. Doing so can positively affect your cash flow, improving the timing of payments and ensuring you're not paying subs who haven't fulfilled a job's administrative requirements.

Minimizing your risk

Ironically, an application designed to minimize risk can become one if it's purchased haphazardly or implemented too hastily. Be sure to thoroughly research any product you're considering and assess whether you're likely to recoup the upfront costs in a reasonable time frame.

By typing "subcontractor management software" into your favorite online search engine, you should get at least a sampling of what's out there. Industry publications and a tech-savvy advisor can also help point you in the right direction.

Finally, bear in mind that, following the purchase, training and support will be important. Designate a project manager to lead the transition to the new application, and allocate enough time for your users to learn, not just how to use the software, but also how to get the most out of it.

Maximizing your resources

Subcontractors are a resource that every general contractor needs to maximize. Employing the right software, assuming it's carefully chosen and properly implemented, can help you run smoother, more profitable projects.