This is the sixth blog in our industry payroll mini-series. This mini-series will look at payroll across multiple industries and provide insight on the impact it can have on an organization.
For the construction industry, the upcoming massive infrastructure bill has the potential for the same kind of impact that the Affordable Care Act had on businesses. Although companies had some time to prepare for it, there were a lot of what-if scenarios planning right up until the last minute. With the infrastructure bill, contractors know they have to do something to get ready to bid on the government projects that spin out of it, but it’s not clear yet what projects will be available and which ones they should go after. However, one thing is for certain. In order to manage an influx of certified projects, construction companies are going to need seamless payroll processes, including generating accurate, required weekly Certified Payroll reports. Without automation of these reports and integration of a company’s best of breed software, the dual-entry in multiple systems and time-consuming manual spreadsheet calculations are going to create inefficiencies and cut into profits. Companies who have their processes automated and streamlined will likely be the ones awarded the bids.
The time to act is now
There are two major implications for contractors that should be addressed in advance. First, because the projects will be government funded, companies will need to be in compliance with government contract regulations. That means paying the correct prevailing wage and fringe wages, and providing Certified Payroll reports to prove compliance. Only by having the correct wage rates calculated and assigned will these reports be accurate.
Second, unions are going to be a major part of the infrastructure bill. In 2019, there were just over 1 million union members in construction. The best forecasts say these new infrastructure projects will require two to three times that number of union workers — and possibly even five times as much. In any case, it’s certain that the construction industry needs to be ready for unprecedented numbers of new unionized workers that need to be paid. Which means in addition to government-mandated prevailing wage rates to consider, union contract compliance and required reporting is also paramount. These implications could pose significant challenges for companies that take on this work. If they haven’t dealt with certified projects or unions before, they’re in for an awakening. They will need to have the necessary technology and process infrastructure within their company to meet the expectations of the infrastructure bill.
To be ready to take on these infrastructure projects, construction companies will need to have reporting and time capture technologies fully in place before bidding on one of these government contracts.
Action steps to take now
Here are some practical questions to ask so you can take steps now, before the bill passes, to take advantage of the upcoming opportunities.
Do you work on any aspect of infrastructure — roads and bridges, internet broadband, government buildings, etc.? Have you started thinking about how you plan to capitalize on the infrastructure bill?
What is your current level of preparedness? Do you have the back-office technology you need to stay in compliance with the government contracts? How prepared are you to take on any new union contracts?
Have you started talking with attorneys, accountants, and other advisors about the business implications of taking on an infrastructure project(s)? You’ll need to be more intentional and strategic than usual about implementation timelines with HCM providers in order to be ready.
Construction credibility is important
However you decided to address your needs for payroll compliance, ensure the team has expertise and understands construction. IDI has been steeped in the industry for over 35 years, and we have the expertise to help you navigate all the tricky spots—from a pre-evaluation of needs to implementation of a solution.
When you partner with UKG and IDI, you have a solution that other payroll providers can’t match. Our Contractor Central solution holistically addresses the key components that have prevented construction companies and other contractors from successfully outsourcing their payroll needs. Contractor Central was built to handle the complexities of processing construction paychecks and getting them right every time. By bringing in Contractor Central, you can supplement, automate, and streamline your entire process:
- Prevailing and union wages based on multiple variables
- Fringe rates associated with the prevailing wage rate
- ERP integration to job cost level
- Certified payroll reporting
This blog is courtesy of Integrated Design, Inc. (IDI), a UKG Technology Partner who offers a cloud-based application to extend the time and payroll systems within UKG Pro based on clients' unique needs in any industry, with a focus on construction, manufacturing, non-profit, and professional services. IDI integrates with Time, Payroll, Human Resources, Point-of-Sale, ERP, Mobile, and many other systems to help enforce a company’s specific pay policies and transfer data between disparate applications. To learn more or connect directly with IDI, visit the IDI UKG Marketplace profile.