You have finally achieved your goal and been appointed to manage your first project. It is likely that you have been working as an assistant project manager for a period of time, but now you are on your own. Organizing the day-to-day running of the site and setting up a timeline for the project has become second nature. You also know exactly when each trade has to be on-site, and how long a specific section of the project should take to complete. All the costings will have been finalized and orders placed with suppliers and contractors. But what about dealing with contractors when they actually appear on-site? The following provides a basic guide for project managers dealing with contractors for the first time.
Paying the contractor
Paying a contractor is somewhat different to paying a directly employed worker. Employees, for the most part, receive their remuneration through a tax withholding system, which means taxes and social security payments are deducted from their wages or salary at source. The employee then receives the net amount due and the employer pays the taxes and social security due directly to the tax authorities every week or month.
In order to be paid, a contractor must submit a timesheet every week or month as a record of time spent on-site and any overtime worked. As the project manager you will be required to check each timesheet to ensure the hours being claimed are accurate, raise any disputed hours with the contractor and finally approve the timesheet for payment. In order to avoid possible litigation it is essential that you authorize payments as quickly as possible. If payment is delayed for an unreasonable period the contractor is also within his or her rights to cease working on the project. Once authorized you must hand the timesheet back to the contractor, who is responsible for submitting it to their umbrella company or agency who will raise an invoice, which is sent to the main contractor for payment. Contractors who are trading as limited companies prepare and submit the invoices themselves.
What can go wrong?
When project managing a busy site, it is inevitable that things will go wrong from time to time. The most common issues relate to contractor’s timesheets. The contractor may be suspected of claiming hours that have not been worked, or timesheets may be misplaced. In either of these cases you should talk to the contractor as soon as possible and try to resolve the problem with the minimum delay. In situations where the contractor is suspected of over-claiming hours you are advised to carry out spot checks and monitor sign-in and sign-out times.
Other issues relating to late payments include the contractor’s agency or umbrella company withholding payment, the main contractor’s accounts office withholding payment, late submission of the timesheet by the contractor and the main contractor receiving the timesheet late from the project manager.
Claims for expenses may be submitted by the contractor from time to time. The contractor is responsible for submitting the claim, including supporting documents, such as receipts, to you in a timely manner. Once approved, expenses claims follow the same process as that of timesheets.
As a first-time project manager, you may find it useful to check out one or two umbrella companies; for example, Atlantic Umbrella offer a range of services and are one of the foremost players in this highly specialized sector.