How to Speed Up Progress Claims in Construction with Digital Dockets

In the fast-paced world of construction projects, progress claims are essential for maintaining cash flow and ensuring timely payments. Progress claims are the pivot-points of a major contract - tied to milestones in the job. Once you achieve the milestone, you can make an application to the head contractor for a progress payment. 

Traditional progress claim processes are riddled with delays due to incomplete documentation, disputes, and inefficient communication between stakeholders. This can lead to severe financial hardship for contractors and subcontractors, who rely on steady cash flow to sustain operations. It can also lead to severe disruptions on job sites for contactors, if slow progress payments result in supplier financial difficulties or insolvency.

This blog will explain how digital dockets can speed up the process of successfully submitting a progress claim, and therefor speed up payment, reduce friction between you and your customer, and substantially reduce administration costs.

Understanding Progress Payment Claims

Progress claims, or progress payment claims, are requests for payment for work completed on a construction project. A payment application is a detailed document used by contractors to formally request progress payments, requiring supporting documentation to substantiate the request.

These claims are typically submitted periodically, reflecting the amount of work done to date or are submitted at the moment in time with the subcontractor has completed an agreed milestone. The process involves several steps, including documentation of work completed, submission of supporting documents, and approval by the client or main contractor. However, this process can be time-consuming and prone to errors, especially if the contract terms are not clearly understood, leading to potential delays in payments.

Documents Required to Submit a Progress Claim

In the Australian construction industry, when making a progress claim, you typically need to submit the following documents (this is the most you'll be required to submit, some contractors require less):

1. Progress Claim Form: This is the primary document that outlines the amount of work completed, the value of that work, and the corresponding payment requested.

2. Schedule of Works (or Bill of Quantities): A detailed breakdown of all work items and their respective costs, including any variations or additional work completed.

3. Supporting Documentation for Variations: If there have been any changes or variations to the original contract, documentation supporting these variations must be included. This may include variation orders, quotes, and approval documents.

4. Tax Invoice: A formal invoice for the amount being claimed, which should be aligned with the progress claim, the original purchase order and needs to reconcile to the dockets provided as work evidence.

5. Evidence of Work Completed: This can include dockets, site photographs, site diaries, or reports demonstrating the progress of the work done to date.

6. Subcontractor Payment Certificates: If you are a head contractor, you might need to include evidence that subcontractors have been paid, or payment certificates that correspond with the work completed by subcontractors.

7. Statutory Declarations: Some contracts require statutory declarations stating that all payments due to workers, subcontractors, and suppliers have been made.

8. Retention and Security Documents: Details regarding retention amounts, if applicable, and any security deposits or bonds that need to be accounted for.

9. Insurance Certificates: Up-to-date certificates of insurance, particularly if required by the contract.

10. Contractor’s Statement: A statement confirming that the contractor has complied with all relevant laws, including payment of workers, subcontractors, and suppliers.

These documents help ensure transparency and compliance with the contract terms and are typically required to process and approve progress payments within the construction project.

Challenges in the Traditional Progress Claims Process

For smaller projects, subcontractors may issue a simple invoice, which is straightforward to prepare and requires minimal documentation - and requires a correct purchase order (with the agreed amount), supporting dockets from the site and the invoice, and all three must match. For larger projects, contractors must submit a myriad of required documents, including proof of work completed, contracts, invoices, and other supporting materials.

One of the significant challenges in the traditional claims process is the reliance on paper-based documentation for proof-of-work. These paper dockets must be created on site with the correct information (purchase orders, amounts, rates etc), signed by the site supervisor, and then transported back to the administration hub at the depot or office. This can obviously be difficult and expensive if the subcontractors office is a distance from the site. Then, once transported to administration, they must be reconciled, checked for errors, then sent to the head contractor (physically or over email). Only some contractors allows dockets to be submitted as scanned or emailed, and some still require the physical docket to review with a submission.

The paper-based process is fraught with potential errors, document rework, and sometimes the need to regenerate dockets after the job has finished to correct errors that occurred on the manual paperwork. This is extremely frustrating for head contractor and sub contractor.

Due to all these administration headaches, and the amount of work required to submit an accurate progress claim, it might be tempting to wait and submit one invoice at the end of a project. This approach is often impractical for larger projects and can lead to significant delays. This manual process often leads to lost or incomplete documents, discrepancies between what was agreed upon and what was delivered, and disputes over the value of work done. All these factors contribute to delays in payments, which can cause cash flow issues and financial stress for contractors that can sometimes be deadly.

How Digital Dockets Can Help

Digital dockets, like those provided by Docketbook, offer a solution to these challenges by transforming the traditional paper-based process into a streamlined digital workflow. Similar to how a Centrelink claim requires thorough documentation and efficient processing, digital dockets ensure that all necessary information is captured and submitted accurately. Digital dockets serve as a real-time, immutable proof-of-work system, capturing all relevant data on-site and storing it in a cloud-based platform. By automating progress claims, digital dockets help streamline the payment chain, ensuring timely payments and reducing disputes among all parties involved. This digital transformation offers several advantages:

1. Real-Time Documentation: Digital dockets allow for real-time capture of work completed, reducing the risk of missing or inaccurate data. This ensures that all supporting documents are complete and readily available when submitting progress claims.

2. Seamless Integration: Docketbook connects orders, dockets, and invoices in a three-way matched, verified invoice system. This integration minimises discrepancies and disputes, ensuring that all parties have access to the same information. As a result, invoices are approved faster, reducing the time contractors wait for payment.

3. Reduced Administration Costs: By automating much of the claims process, digital dockets significantly reduce the administrative burden on both contractors and clients. This not only speeds up the process but also lowers costs associated with manual data entry, document handling, and dispute resolution.

4. Improved Cash Flow: With faster approval of progress claims and fewer disputes, contractors can maintain a steady cash flow, minimising financial hardship. This is particularly crucial for small and medium-sized businesses that rely heavily on timely payments to keep projects on track.

5. Enhanced Visibility and Control: Digital dockets provide contractors and clients with enhanced visibility into the progress of a project. This transparency helps in monitoring the status of claims, identifying potential delays, and addressing issues before they escalate.

Start on Your Digital Dockets Journey Today

For contractors, delays in progress claim payments can lead to severe financial hardship, affecting their ability to pay subcontractors, purchase materials, and manage other project costs. By using digital dockets, subcontractors can reduce the likelihood of payment delays, ensuring that they are paid faster and more reliably. This, in turn, helps to stabilise cash flow, allowing contractors to focus on completing projects rather than chasing payments.

Incorporating digital dockets into the progress claims process is a game-changer for the construction industry. It addresses many of the challenges associated with traditional paper-based processes, from documentation errors to payment delays. By providing a streamlined, digital workflow, Docketbook enables contractors to submit claims more efficiently, reduce disputes, and maintain healthy cash flow. This not only speeds up progress claims but also ensures that projects can continue without unnecessary financial strain. For any construction business looking to optimize their operations, adopting a digital docket system is a crucial step toward success.