Every Friday, we select a few articles from the week that we think are worth your time as a construction financial manager (CFM). We look for compelling articles not only about financial topics, but about business, technology, and life, that challenges you to think about your role as a CFM in different ways. We’d love to hear from you about how we’re doing, and to have you join our community by subscribing to receive this weekly post by email. Follow #CFMReview.
Where Does Construction Fit In?
Andrei Hagiu describes on HBR.org two opposite types of marketplaces, defined by the amount of control exercised over supplier-customer interactions. “Pure Marketplaces” have low control — for example, eBay exerts little control over the transactions between buyers and sellers. Pure Resellers or Employers have total control over the terms of their transactions with customers.
Hagiu is writing in the context of a recent federal hearing about Uber, and whether Uber drivers should be employees, rather than contractors. Hagiu writes that it is “out of touch with reality” and inefficient to force these marketplaces into only one of two categories.
Where does the market of a large construction project fall on this spectrum (if it even fits into Hagiu’s model)? Is the market (and the relationship) between developers and GCs different from that between GCs and subcontractors? Subcontractors and suppliers?
Hagiu proposed creating a middle option between pure marketplaces (independent contractors) and integrated firms (employees), which he calls “Dependent Contractors.” The overarching idea here is that every marketplace is unique. Nowhere is that more true than in construction. The rules and relationships that govern a job, from bid through completion, cannot be found in any other industry.
In many ways, mechanics lien laws address this individuality. They exist specifically to protect certain parties in the construction and supply industries. But do they do enough? How else can we address the complex web of transactions on a construction industry to create an environment of fair exchanges of work and pay? Leave your comments below.
Cash Application Must-Haves
“…Accounts Receivables teams are still spending countless hours of manual work applying payments at a high cost,” writes Chrissy Werner at Billtrust.
I read and write a lot about updating technological infrastructure and adopting more efficient models of managing credit, payments, and financial security. Cash applications are integral to a company’s organization and financial health, but they can easily drown your resources.
ASA Webinar: Subcontractor’s Guide to a Fair Lien Waiver Process
I’m hosting a webinar with the American Subcontractors Association on September 15. Subcontractors face a unique challenge with lien waivers: they must both collect and give waivers. I’ll be discussing this position and how to succeed in protecting yourself with lien waivers.