Third in the blogpost series describing some of the many reasons why it is important to reduce payment time, we now refer to the well-crafted McKinsey & Company article called "The art of project leadership: Delivering the world’s largest projects" which furthers the point that owners and contractors must have a relationship built on trust.
Specifically, McKinsey stresses that leaders of ultra large, yet successful projects must embrace the mindset to “Make Your Contractor Successful.” This is centered around the core belief that everyone works best as a partnership where joint problem solving and trust is a shared mission. One simple way to build and maintain trust, is to pay your contractors on-time, every time. It is a sign of respect for their partnership, engagement, and loyalty.
Unfortunately, we hear Owners are complicit in their organizations poor payment practices.
McKinsey points out that great Owner-leaders take full ownership of outcomes. If your payment practices are broken, misaligned, laughable, or draconian; take personal responsibility to challenge your team to fix the issue – regardless of your PMIS tool of choice. Understand your baseline which might be hard to accept. For example, if you are a late payer – more than 45 days, set a target to pay in 25.
You might be able to accomplish this with one less “approval,” or a system to delegate responsibility where there is a bottleneck. Simply focusing on what can be accomplished is a big step.
Too hard? Don’t take it from us!
As hard as it seems, 2 e-Builder customers -universities from both public and private sectors- achieved impressive turnaround results after implementing our solution.
Join us in a lively conversation on November 20 at 2pm EST with Gary Younger (Northeastern University) and Tony DiTolve (University of Virginia) to see how that happened.