Subcontractors have chafed under the burdens of electronic prequalifications and the American Subcontractors Association is pushing back with a list of concerns calling for standardized forms, limited project-specific questions, clear scoring logic, data security and fair and transparent fees.
Fees are an especially sensitive issue, with some subcontractors saying they are resentful of having to pay to prequalify and others stressing that as long as the cost is known before a project is estimated, the fee can be put in the price.
To be sure, prequalification—involving submission of financial data, safety history and work experience—is a vital and important practice, ASA leaders say.
“What I don’t necessarily agree with is these third-party platforms that are charging subcontractors in order to do the prequalification process,” Martin Press, chief executive of Manassas, Va.-based Press Mechanical Contractors and ASA secretary/treasurer, told an interviewer on a podcast for subcontractors, “Billing and Chilling,” in September.
“You don’t have the transparency. You don’t have the insight as how these third-party processes actually work and it can actually be such a rigid scoring system that it can fail to reflect the full reality of a subcontractor’s business.”
Because of longstanding relationships with GCs in his area that don’t use third-party platforms, Press told ENR, he has largely been able to avoid them. That’s not the case for many subs.
“There’s is no avoiding them,” says Melissa Rossi, chief executive of Division 9, a Bothell, Wash.-based flooring subcontractor. “‘If you want to bid on this project, then you have to fill this out. There’s no getting out of it.”
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Fees are a major irritant, she says, if they are not honestly communicated to the subcontractor early enough. The fee usually starts low and scales up over time, says Rossi, often reaching $3,000 or $4,000, and “I would like to know the fee to the dollar ahead of time.”
Repetitive submissions, and the possibility of “form fatigue,” are another major problem.
One thing ASA asks for is standardized annual submissions on standardized core prequalification forms—avoiding repetition—with limited project-specific questions and then only when needed.
Richard Bright, ASA’s chief executive, says “everyone has a different packet of what they want and our members are spending a lot of time doing things in pre-qual repetitively. So it’s costing money [for projects they] don’t even know if they will get to bid for, don’t know if they will get a job, either, [and] those are soft costs that take up time within the organization.”
Consistent with ASA’s history of advocating for pay fairness, ASA also recommends aligning payment and retainage practices with prequalification expectations, including “timely review of payment applications and change order requests.”
ASA isn’t suggesting that prequalification or the electronic platforms be abandoned. “Qualified technology providers can help address long-standing inefficiencies in pre-qualification when their tools are transparent, secure, and balanced in their treatment of subcontractor data, review standards, and cost burdens,” the association states.
Regretfully, ASA notes, there is a pay-to-qualify dynamic in that “some programs shift platform fees and ongoing verification costs disproportionately to subcontractors, despite benefits accruing to owner/GCs and others in the supply chain.”
Hammered out this summer by ASA, the measures described are to some degree already at least acknowledged by general contractors and construction managers, some of whom say they don’t use services that charge subcontractors or that they pick up the fee themselves.
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The prequalification platform companies that provide the service to general contractors and owners say they are aware of the issues and work to address them. Some note that they help to avoid repetitious submissions, limit the renewal fee a subcontractor may be charged or promise not to resell data from the subcontractors while carefully guarding the private financial data required.
Some subs note that there has been some consolidation in their area among the various prequalification platforms, eliminating some of the scrambling to submit data to various companies with different systems.
Still, Martin Press remains a resolute critic, citing one example in his podcast interview:
“I just sent a subcontract agreement back that I wasn’t willing to sign because they we’re not willing to compromise on the prequalification process,” Press recalled, “and then they rethought their decision and 10 minutes later sent me my contract back and said, ‘Alright, we’ll wave the prequalification fees.'”
Source: www.enr.com
