Holdback time, or the amount of time between the completion of a project and the release of final payment to vendors, is a common issue in EPC (engineering, procurement, and construction) projects.
To decrease holdback time and ensure vendors get paid more quickly, there are a few strategies that can be implemented:
- Establish clear documentation requirements: Clearly define the documentation that vendors are required to provide at the completion of their work, and make sure that vendors understand these requirements well in advance. This can help to ensure that vendors provide the correct documentation the first time, minimizing the need for revisions.
- Implement a pre-approval process: Develop a system for pre-approving vendor documentation before the work is completed, which can help to catch errors and inconsistencies early on. This can help reduce the need for revisions and speed up the approval process.
- Use technology to manage documentation: Implement a digital document management system to streamline the process of reviewing, approving and storing documentation. This can make it easier for vendors to submit documentation and for project managers to review and approve it, which can help to reduce holdback time.
- Develop a punchlist system: Develop a punchlist system that outlines any outstanding issues that need to be addressed in order for final payment to be released. This allows vendors to address any issues in a timely manner, so that final payment can be released as soon as possible.
- Have a centralized document control management: Have a centralised document control system to keep all the document at a single place which will increase the visibility and traceability of the document. This will avoid delay due to missing document.
By taking these steps, project managers can help to ensure that vendors provide the correct documentation the first time, minimizing the need for revisions and helping to reduce holdback time.
It’s also important to build a good communication channel with vendors and to be transparent with them throughout the process to ensure they are on the same page about the requirements, deadlines and any feedback regarding the documentation.
Are holdbacks a problem for you at the end of your EPC projects?
DocBoss can help.