Payment in an Online World

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Thursday, December 4th, 2014
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Are contractors ready for online payments?

This concept of online payment has been around for a few years now, and there are apps for all sorts of things, including Site Diaries, payment claims and countless others. There are also online systems to manage entire projects. The appeal of these are usually explained in terms of how easy they are, the lack of paper involved, that they can be used from a wide variety of devices, and so on. The sell is that this makes it easy to document your work and so get paid for it, and that its all online in one place.

But in my view these do not address the real problem, because there is no end of projects that have been managed by online systems and yet contractors suffer the same problems as they did before the online world. There are several reasons for this:

  1. No Discipline of Documentation: Here is the root problem. Most contractors do not have a disciplined approach to documentation and either do very little of it or none at all, so this is a cultural problem. That means it doesn’t matter if the tool to record works is a pen or a keyboard; if the discipline isn’t there, it won’t get done. This is so often overlooked by the supporters of online systems who see the ease and centralisation of them as the great bonus, but forget that it all sits on the assumption that most contractors are documenting the work as they should by some other method. Usually they aren’t using any other method. To my knowledge the uptake of apps and online platforms to input claims, invoicing, and project records is still very low.
  2. Difficulty: This will sound silly but I know it’s true because I have had it said to me: it isn’t that easy to record the day’s events online because you have to type it all in. If you’re doing that on a phone then you are tapping in one letter at a time. Keyboards aren’t much better. It’s finicky and time consuming. Even if some systems offer a ‘tick the box’ option, many issues require detailed written entries. Right now, contractors struggle to get enough down using a pen, which at the moment is much quicker and easier than typing.
  3. No Replies and Oral Acknowledgments: There are many instances where an event needs to be recorded fully by a reply acknowledgement from the other party, and yet there isn’t one. The most common example I come across is where an online request for an extension of time is simply left unanswered. The benefit of the ‘one place for all correspondence’ online is immediately lost in such a situation. This is made worse by the common practice of replies coming outside of the online system. Using the example above, the request for an extension may be accepted or rejected orally, but what is actually recorded in the system is still only an unanswered request. Variations may be directed online, but then arguments as to value will occur in a fax, or email, or orally. This leaves the app or system only containing fragments of what went on between the various parties, so the benefit is again lost.

We see endless payment disputes where the project exchanges are split across online systems, SMS messages, emails, faxes, and paper documents, even on the most blue chip projects.

I am the first to admit this is all changing. Perhaps in 10 years, the transition to online project management will be far more common if not the default. But in my view it will require a massive cultural shift that I don’t think the industry is anywhere near achieving for years to come. No doubt at the top end of the management chain there is plenty of online activity and record keeping, but you only need to go one or two steps down that chain and you’re back in the land of paper invoices and dockets, and signed day sheets.

I suspect that will be the case for quite some years to come.

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