Optimizing the Flow of Money: Final Report

The Alberta Construction Association received its final report on ”Optimizing the Flow of Money” – Best Practices at its recent Board of Directors meeting in June 2018.

The uniqueness of this Workshop was not only engaging all OAEC partners (Project Owners,

Architects, Engineers, and Contractors i.e. General Contractors, Subcontractors, Sub- Subcontractors and Suppliers), but engaging the accounting people from each partner (those who actually process the payment) to hear their perspectives and for them to hear from others in the supply chain. A Buyer of Construction Services (Project Owner) rarely has a contract directly with a Subcontractor or a Supplier and thus little to no knowledge of their world.

One participant reminded us of the importance of payment, “Treat the processing of the payment as if it was your own paycheck”.  No one WILL/CAN wait for a paycheck; they WANT/NEED when it is expected – on payday.

This Workshop was not only important for the direct value it produced (a formal list of Best Practices), but also the informal process of collaboratively discussing a topic that is affected by all in the supply chain of a construction project.

What clearly resonated in the Workshop was all the Partners being authentically interested in working to find solutions for “Optimizing the Flow of Money”. There was respectful contemplation of ideas.  As one Project Owner stated, “Some very compelling strategies and options were tabled.” It is this multi-disciplinary conversation among the Partners that drives meaningful conversation for change.

Integral to “Optimizing the Flow of Money” is ethics. Without continual discussion about the core values of ethical behaviour (integrity, transparency, trust, fairness, honesty), we are just “talking the talk and not walking the walk”. An ethical company culture is a foundation for “Optimizing the Flow of Money”.

There is a view that “Prompt Payment” legislation will be the answer to “Optimizing the Flow of Money”, but without creating efficient and effective processes in each of the partners offices for getting money to flow, we can’t expect legislation to solve the issue.

The far-reaching consequences of the Alberta Construction Association engaging the industry partners in collaborative discussion on “Optimizing the Flow of Money” is recognized in construction classrooms where this topic is discussed.  The impact is noted when Project Owner’s management team conclude two days of training in Victoria and Winnipeg by saying, “I realized today how important the flow of money is to everyone in the construction chain and particularly the Subcontractors contractors and suppliers. Thus, I am committed to living collaboration; not just as a “buzz word”, but actually living it by prioritizing payment through my role as a coordinator and purchaser of construction.”  It doesn’t get better then that when the importance of flowing money gets understood by those who touch it.

Summing it all up is the fact that the construction industry needs to CHANGE its approach and practices to “Optimizing the Flow of Money” otherwise we live the definition of insanity, “doing the same thing over and over expecting different results”!  By working collaboratively to create business cultures that thrive on integrity, transparency, trust, fairness, and honesty, we can make a difference.

The eight local construction Associations will soon begin discussions on what activities they can undertake to continue this important dialogue and create the recommended tools to improve practices.

The Executive Summary report is an overview including the Best Practices.  A copy of the Executive Summary can be found here.

The Full report contains the background material of issues and solutions with the recognition that finding solutions is an ongoing exercise.  For a copy of this report, please send a written request to ken.gibson@albertaconstruction.net