Why is construction payroll complex?

Construction payroll is different from payroll in other industries because of the unique characteristics of the construction industry.

Construction is the second largest industry in the world. In the United States, more than 7.6 million people are employed in construction. In this blog, we’ll discuss what’s unique about construction payroll, some ways to simplify construction payroll, and the qualities/items to look for in construction payroll software

Unlike many other companies which pay their workers a bi-monthly salary or total up the number of hours worked by part time employees, construction payroll must account for workers who work in different jurisdictions that have different tax regimes, variable pay rates for each task that an employee performs, union deductions, and worker’s compensation. For companies that work on Federally funded projects, there are additional requirements for submitting certified payroll.

Your construction workforce could be in the hundreds one month and increase to thousands quickly as you can take on new projects.

In addition to all the complexities of the industry, construction continues to be one of the least digitized industries. That means many construction companies employ a mix of paper and digital processes to collect labor hour data, assign labor hours to specific jobs, and process and distribute paychecks. Construction payroll is particularly vulnerable to human error because of the large amount of data that must be input every week.

Here’s a short list of the items that your payroll application must include:

Full Time Employees, Part-timers, Contractors, and Subcontractors.
Some construction companies employ many people full time and keep them employed. Some companies subcontract workers, hiring them for a particular project and lay them off after the project’s completion. Other companies use a mixed approach. Each employee’s employment status and their work location will translate to different payroll taxes.

Projects in Different States
Companies that build projects in different states must adhere to the taxation and reporting regulations in the jurisdiction where they are completing work.

Union and Non-Union Payroll
On jobs that employ a union workforce, the union or unions require detailed reporting of the employees and their work.

Certified Payroll
Construction companies that work on Federally funded projects are required to submit weekly payroll reports (Form WH-347) to the Department of Labor to show compliance with prevailing wage laws.

Integrated Job Costing
Ensure your payroll application integrates completely with a robust job cost system so that it can provide analytics and a “single version of the truth” across all reporting, operations, accounting, and decision-making activities.

Reporting
Payroll reporting must include multiple different types of reporting, including union reporting, certified payroll, as well as accounting for the labor hours accruing to each of the company’s particular projects.

Finally, construction payroll must also account for their employee benefits like Sick Accrual, Overtime, and Insurance. 

What can help construction companies streamline payroll as much as possible?

Automation for Accuracy
Eliminate human error by automating as many payroll processes as possible such as verifying data and calculating overtime. Using payroll processing software that’s made for construction means that key reports for governments and unions are built in and generated automatically. Automate the collection and distribution of data as much as possible with mobile apps.

Go Mobile
Integrated mobile time tracking eliminates errors from re-keying timesheets and saves time by giving your office staff real time access to approved labor hours, labor rates, and other project data without having to chase down paper timesheets.

Cloud Based Software Means Consistent Access to Data
The use of technology can mean a big improvement in your organization’s payroll processing. If you’re using integrated cloud construction software that allows your team to input, approve, and access data, then you’ll be able to reduce mistakes and streamline your payroll process.

Five Qualifiers for the Best Construction Payroll Software:

1. Flexibility to accommodate multiple types of pay.
2. Reliable enough to pay your team accurately and on time.
3. Scalable so that it can accommodate a workforce that can grow or shrink by hundreds in a short time as projects scale up or wind down.
4. Excellent embedded, integrated reporting to file payroll documentation with your federal and state governments.
5. Superior digital workflows for collecting, processing, and distribution of payroll.

Cloud computing is rapidly reforming the construction industry. Cloud computing is scalable, accessible, and reliable, which means that the technology is an ideal fit for the construction industry with its fluctuating workforce, varying sites of work, and the need to access data from anywhere. 

Cloud Computing Supports Growth  

What is Cloud Scalability?

Cloud computing scalability refers to the ability to increase or decrease IT resources as needed based on changing demand. Scalability is one of the primary characteristics of cloud computing and a key reason that contractors have begun to adopt cloud computing in high numbers.  

Benefits of scalability for contractors  

The scalability of cloud computing makes it ideal for construction businesses, which need to quickly expand IT capacity to match the demands for contracting work.  

Cloud scalability means that construction companies can manage, utilize, and capitalize on the increasing amounts of data produced by construction activities, while also benefiting from just right sized IT services. This is critical for general contractors who manage an employee base that ebbs and flows with the seasons. Scalability is perfect for companies that are growing — whether organically or by acquisition because it means that IT resources you need to rely on are available when you need them.  

Scalability also means big cost savings and waste reductions. With cloud computing there’s no need to pay up front for IT equipment that may not be used immediately, and that will need to be upgraded within a few years.  

The scalability of cloud computing is also a benefit when it comes to disaster recovery because construction companies no longer need to maintain and manage secondary or backup data centers.  

Cloud computing scalability helps your business stay competitive. You can quickly adapt to increase storage and performance with zero upfront investment, while still providing necessary resource availability.  

Cloud Computing Makes Data Available Wherever You Need It 

The COVID-19 pandemic has proved that universal on demand access to your data at any time is an essential part of doing business. With cloud computing availability, your team can access the data, tools, and services they need to complete their work using their mobile phones, laptops, and tablets.  

Modern contractors need access to job cost updates and invoice approvals and change order requests, and they need it before they get back to the office. Web based applications like eCMS from CGC can provide mobile access to software and data using cloud computing  

Cloud computing is high availability, which means you can have access to reliable, secure IT services on demand, anytime, and anywhere.  

All upgrades and updates for your cloud services can be completed instantaneously so your team always has access to the latest technology.  

Cloud Computing Means You Never Have to Worry About Delivering Consistent Service 

Cloud computing reliability means the expectation that your service is up and running and that you can access what you need from any device at any time and from any location.  

Whether you’re working with an owner to approve a series of change orders or asking your office staff to review subcontractor information, time is critical. You can’t afford any service interruption. You can ensure that your solutions work as expected much more efficiently, effectively, and consistently in the cloud.  

Reliability is a key metric for cloud computing because it’s the indicator that allows you to perform the task that you need to do to get the job done. When assessing potential cloud computing providers always ask: What’s your average uptime? 

Once you have a commitment from your cloud computing service provider, you’ll want to sign a Service Level Agreement (SLA) with your cloud computing provider that outlines the provider’s reliability commitment. You can collaborate with your hosting provider to assess and analyze the most important processes in your business so that they can provide the best support.  

Competitive Contractors Rely on the Cloud 

Contractors need flexible, highly available digital tools to be successful. Cloud computing is scalable, available, and reliable, which makes it an ideal way to manage the complex workflows and challenging work environments of the construction industry.  

Any business can suffer material impacts from system failures, power or network outages, cyber attacks, accidents, and natural disasters. If you haven’t planned for disaster, it’s already too late to recover.

Data is a critical resource for contractors now more than ever. That means that business continuity planning and anticipating how you’ll recover from a disaster should be considered key business strategies. You’ll want to ensure your company can continue to function and thrive even when there are unexpected interruptions to your IT assets.

A simple data backup is no longer enough, but the good news is that cloud computing can make disaster recovery planning easier and simpler.

First, let’s define some key terms:

What is business continuity?

Advanced preparations made by an organization to ensure that it can continue up and running during unexpected interruptions.

What is business continuity planning?

Business continuity planning is the process of creating a system of prevention and recovery from potential threats to a company. The plan ensures the protection of people and assets, while maintaining their function in the event of a disaster.

What is disaster recovery?

Disaster recovery means regaining access and functionality of your company’s IT hardware, applications, and data following a technology interruption. A disaster recovery plan allows businesses to restore their most critical IT services and business operations following an emergency.

While no company can remove all of the risks, you should have an effective strategy to mitigate the effects of a system or data outage.

Make cloud computing part of your business continuity planning.

Cloud computing can be an ideal asset in disaster recovery and business continuity. Because cloud computing uses the internet to run applications and store data, your most critical data can be backed up and easily recovered.

Moreover, data storage and the delivery of key applications over the internet means that these functions are distributed, rather than localized, which means that it’s a safer method for storage overall.

Cloud computing provides critical system redundancy and replication of your data. If there’s a smaller outage or interruption, cloud customers are likely to see a 100% restoration, and fewer interruptions than a competitor with an on-premise data interruption.

Using the cloud in your disaster recovery planning means that you will more likely return to full operations faster and more efficiently than if you had on-premise IT systems.

Your cloud provider is responsible for the core resilience of the infrastructure that they provide, which means that they are key partners in maintaining business continuity for their customers.

Because you’re outsourcing the risk and responsibility for the management and maintenance of your data, your cloud provider will be a pillar of support if you have to recover from a disaster. You can work with your cloud provider to identify your risks and learn about their disaster recovery precautions and average recovery times.

Your cloud provider can help you to identify your Recovery Time Objective and Recovery Point Objective so you are able to continue modified business operations even if you experience a disaster. Recovery Time Objective is the maximum amount of time your infrastructure can be down before there’s damage to your business operations. Recovery Point Objective is the maximum amount of data that can be lost in a service disruption.

Here are five advantages to cloud computing as part of your disaster recovery plan.

1. Proactive monitoring so that your IT systems are managed to minimize interruption and thwart malicious attacks.
2. Faster recovery of regular operations from small or even significant interruptions.
3. Fast rollback of any problematic release.
4. Redundancy and replication of data so that data recovery is most likely 100% complete.
5. Peace of mind from having a cloud partner to support your business continuity objectives.

Conclusion

It’s crucial to have a business continuity plan that includes a disaster recovery program so that you will be able to continue operating your business, even in catastrophic situations. With a plan for business continuity your company can be resilient despite difficulties in front of you. Find out more about how eCMS  (https://computerguidance.com/products/) in the cloud can be a part of your business continuity and disaster recovery strategy.

Businesses rely more heavily than ever before on digital information to help make smart decisions, run operations efficiently and productively, and to connect more meaningfully with their customers. But how can you utilize this digital goldmine in a cost-effective way?  

Construction businesses, like most companies operating today, collect a large amount of data. While this data can be a benefit to your business, the sheer amount of information means that it’s more difficult than ever to keep every piece of company information, and all your programs and services live and running on your company’s servers.  

First things, first.  

What is Cloud Management? 

Cloud management is the management of cloud computing products and services. Essentially, that means careful documentation and tracking of your IT systems in the cloud to maintain oversight and administrative control of cloud computing products and services.  

Cloud management means you can spend less money for the same level of operations. Here are four ways that you can reduce your IT system maintenance and management costs by moving to the cloud.  

1. Buy Less Hardware 

Servers and the networks that connect them are expensive. Moving to the cloud means that you can eliminate new spending on hardware, software, and middle ware, while still benefiting from access to the most advanced technologies, an investment your cloud provider will take on. And when you are ready to grow, you can take on additional capacity for data and systems as needed. That’s smart and efficient. By using only what you need, cloud management ensures that every dollar you spend goes directly to infrastructure management.  

2. Reduce Labor Costs 

Streamline your workforce. One of your biggest budget items is your staff costs and expertise in IT is expensive. Moving to cloud management might not mean downsizing staff, but you’ll be better able to assign your IT team to areas where they can be most effective. Your IT team can focus on supporting and expanding existing infrastructure instead of managing the network, handling storage capacity, upgrading software, or tackling security concerns. An additional benefit of moving your operations to the cloud is that you can eliminate the cost and responsibility of constantly re-certifying your IT staff as system technology changes so quickly. Besides, construction has its own necessary expertise, and it’s more productive to ensure your team is an expert in your field.  

3. Increase Productivity

Cloud computing is fast, and that means applications run without hiccups or interruptions, which makes it easier for your entire team to communicate and collaborate. With cloud management you’ll spend less time overall waiting and more time working. You’ll also benefit from better data consistency. Everyone on your team can access the same data in the same way, rather than navigating a patchwork system. And you’ll free up your IT people from all the requests to convert data into usable information.  

4. Cut Maintenance Expenses 

It can be tough for construction businesses to judge how much to invest in their IT systems, only to have servers sit half empty. A cloud-based system means that you pay only for what you use. That means your investment in IT is as lean as you need it to be. What’s more, you can cut your energy costs, since cloud management uses less electricity. And you can also eliminate the need for security software, security monitoring, performance monitoring, and other kinds of alert software.  

Some Things To Consider 

Consider your ROI. With cloud management, easy access to your data from anywhere becomes less costly and easier. Pay as you go means you only pay for what you’re using, so you know that your investment is as lean as you need it to be. And that investment also ensures that your IT infrastructure is current with the latest technology and IT practices.  

Consider the benefits of redeploying your IT team so they can focus on managing the complexities of your construction business.  

Consider how you can re-invigorate your IT budget with a move to the cloud. Cloud computing helps companies run their organizations more efficiently, provide better service for their customers, and boost their overall profits. 

With cloud maintenance, you’ll be better able to compete with other contractors and construction businesses who have already made the move to the cloud. And making the move ahead of your competition will give you a significant advantage.  

Find out more about how eCMS in the cloud can help you improve your business operations for less.  

The construction industry is rapidly digitizing, thanks to new technologies that help companies work more efficiently and productively. Digital technologies that benefit construction companies include communications and collaboration tools, project planning and management software, business analytics and reporting programs, and the data processing power and storage facilities to handle increasing amounts of digital data. 

Maintaining these new technologies means that construction companies are now tasked with managing an increasingly complex IT infrastructure.

Stewardship of crucial IT infrastructure such as software and data management requires highly qualified employees. Smaller contractors may find it difficult to maintain a staff of highly skilled IT professionals. Some construction companies are too small to add any IT staff at all.   

Even larger construction companies with existing IT departments may face significant challenges to managing their IT infrastructure. Increased risks, costs, and time require more than simple oversight and optimization of software and data usage. 

Furthermore, industry standards for maintaining, managing, updating, upgrading systems, and security change continually. Contractors must adapt and become experts in both construction management and information technology.

One solution to the challenges of administering two systems is cloud migration. That’s where a company moves some or all of its IT infrastructure into the cloud.