Supporting Telecom Subcontractors: Challenges, Solutions, and the Digital Way Forward

Hello Glass Half Full Readers,

Rapid advancements and competition characterize the telecommunications sector, with subcontractors often working behind the scenes. Their expertise, dedication, and agility contribute significantly to the industry, facilitating its consistent growth and service delivery. Yet, this critical role has challenges that can impact their growth and potential. This article examines these challenges and suggests practical solutions for this week’s edition of ‘Glass Half Full.’

Skills and experience are crucial in telecommunications, but established connections and trust hold considerable weight. Unlike many industries that prioritize bids and qualifications, the foundation of telecom subcontracting is primarily based on relationships. This emphasis on relationships is due to the budget of telecom projects, where even a minor oversight can lead to significant challenges and risks for the general contractor.

So, why is there such an emphasis on relationship-building?

Established connections and positive referrals are often vital to securing new opportunities. Connections lead to trust, trust leads to partnerships, and these partnerships result in ongoing revenue. In an industry with a narrow margin for error, a history of successful collaborations and strong connections can sometimes take precedence over competitive pricing or expertise.

The Payment Puzzle

The challenges subcontractors face aren’t just limited to securing work. Once they get a project, payment issues emerge as a significant concern. The absence of a clear, well-defined work order between the parent company and subcontractors transfers considerable risk to subcontractors dependent on production for revenue.

This risk can be defined for several reasons:

1. Vague Assignments: Unclear directives can lead to misinterpretations. The Work Order is essential as it distinctly stipulates payment schedules, penalties, and conditions for due payments. Payments and retainage are released only when these work order criteria are met. Without such explicit guidelines, payments might not only be deferred for weeks or months but there’s also a risk of doing work you are not getting paid for.
2. Project Delays: Telecom projects frequently grapple with unexpected hold-ups, commonly from procurement constraints, safety incidents, and geographical impacts. These setbacks ripple through, disrupting production timelines and payment cycles for subcontractors. Understanding invoicing intricacies and net agreements is crucial for endurance in such scenarios. Work orders are designed to optimize operations and minimize such delays. Ensuring transparency in project timelines benefits every stakeholder, paving the way for smoother construction processes.
3. Mismanagement by General Contractors: 52% of subcontractors attribute payment discrepancies to the mismanagement of general contractors. Conversely, the remaining 48% recognize operational shortcomings, manual labor, and human error as factors delaying the payment process.

It’s alarming that despite the industry boom, only 5% of subcontractors report consistently receiving on-time payments. Over 90% of companies might offer payment terms of 30 days or fewer, but fewer than average meet this promise. Extensive approval procedures, quality control, and assurance measures significantly contribute to these delays. Additionally, 40% of material suppliers blame general contractor mismanagement fo payment delays. These discrepancies result in wasted resources (45%), reduced profit margins (41%), and, in worst cases, an inability to meet payroll commitments (18%).

Focusing on Process Control Management can reduce OPEX by 6% — Process Street.

The Digital Revolution: Opportunity or Challenge?

Digital technologies are transforming telecom. On average, subcontractors use five distinct applications for tasks ranging from communication to invoicing. With the industry’s rapid tech evolution, there’s a heightened need to ensure seamless tech integration.

1. Tech Integration: Subcontractors often juggle multiple applications for different tasks. The increasing number of these tools complicates operations and increases the risk of errors, and despite these digital tools, many still rely heavily on manual documentation for field tracking.
2. Training: With tech advancements, there’s a continuous need for training. However, this becomes a double-edged sword. While training ensures subcontractors are updated, it also means time away from actual work. To support the industry, including contractors in fundamental company-wide safety and operational training is pivotal.
3. Cost Implication: Investing in the latest tech tools and systems is expensive. For smaller subcontractors, constantly adapting to different operators and their respective technologies can put a serious dent in their budgets. It’s vital to recognize this balance when considering tech implementations.

Recognizing the importance of this transformation, 72% of subcontractors are considering adopting technology for business management. Precisely, 63% are weighing estimating and takeoff software, while 65% are exploring material procurement and payment technology, according to a study by DigiBuild.

Onboarding: The Hidden Delay

Delays aren’t just restricted to payment schedules. The onboarding process alone can set back subcontractors by up to 30 days. This step is pivotal as general contractors need to verify compliance requirements, from licensing to bonds. Digital solutions aiding compliance tracking can significantly reduce this waiting period and get subcontractors in the field sooner.

Actionable Insights for Subcontractors

For subcontractors to navigate these challenges and solidify their position, they need a strategic roadmap:

1. Embrace Digital Marketing: Subcontractors should prioritize their online presence regardless of size. A simple act like updating a LinkedIn profile or building a simple website can vastly improve visibility. — I also know plenty of subcontractors ready to work; don't hesitate to reach out.
2. Continuous Learning: With the telecom sector’s evolution, continuous learning is non-negotiable. Embracing new technologies, regulations, or industry practices ensures subcontractors remain at the forefront.
3. Collaborative Approach: Collaboration remains a powerful tool. Subcontractors can pool resources, share insights, and collectively tackle challenges, ensuring industry-wide growth. — Start here and lets see if it grows -> TelecomTies

Glass Half Full

Subcontractors, often hailed as the pillars of the telecommunications industry, certainly face challenges, yet their potential to reshape the telecom horizon is immense. By embracing data-driven strategies, swift adaptability, and fostering collaborations, they secure their success and propel the entire sector forward; often easier said than done. Their milestones are interwoven with the broader industry’s achievements.

So, how do we simplify tech integration without piling on the pressure? And how can we ensure that subcontractors, particularly those in the micro to the small business range with 1–50 employees, stay aware of the shuffle of enterprise software solutions not designed for their scale?

Considering the industry’s dynamic and unique requirements for each project, it’s essential to avoid constructing unintentional barriers that impede efficient building. The way forward? Embracing open-source platforms and apps. These platforms empower subcontractors with data mobility while ensuring seamless API communication with larger enterprise systems during project operations. The era of purchasing every software on the horizon for short-term production needs is hindering production and growth. To truly champion the forces propelling our industry, we must rally behind efficient open-source solutions focused on supporting the frontline. The success of our field partners is synonymous with the success of our projects, our operations, and our entire ventures.

Thanks for Reading,

Christopher Machuca

www.fieldvision.io

Resources: https://digibuild.com/subcontractors-face-challenges-in-2022/