How to Be Prepared for a Government Construction Project

Q:

With the economy still slow, we’re having trouble finding enough work to maintain a full staff, not to mention the problems managing our volatile financial situation. It seems like there is a lot of government work out there we could bid on, but all of the additional red tape is a big turn-off. I wouldn’t even know where to start. Thoughts?

Jesse

A:

It’s true that while commercial and residential construction is taking a big hit, thanks to the stimulus package, government work is on the upswing. But, many contractors feel the same way you do about all of the additional paperwork and reporting requirements. Since it sounds like you may have no other choice right now but to start bidding on government jobs, let’s take a look at how you can be prepared.

First, you’ll need to understand the special reporting required of contractors working on government jobs. These include certified payroll, Equal Employment Opportunity (EEO) and others. Fringes are another area to consider, as they may be paid directly to the employee or to a fund such as a 401(k). You’ll want to do your due dilegence about these requirements up-front to avoid surprises later.

The next step is figuring out how you will produce the required reports. This is where you’ll need a construction-specific accounting system that can automatically handle all of this for you. If you already have one, you’re ahead of the game. If not, simply consider the long-term effects of producing these reports manually-in time, money and effort. In most cases, the costs involved with “making do” with inadequate software far outweigh an investment in new software.

Having said this, you may not be in a position to purchase new software. If that is the case, your next best option is to outsource your payroll to a construction-specific payroll service that can keep you compliant with all of the government regulations.

With so little private-sector work to go around, bidding on government jobs has become a necessary evil for many contractors today. My best advice is to understand and be prepared for the additional compliance you will face, and get the right resources in place so you can focus on running your business.

Construction Business Owner, June 2010