In our last post, we started a new series about internal control processes within a public agency. Today we finish up our discussion about stop notices before moving on to other processes.
Last time, I mentioned that stop notices are a warning flag that your contractor may be having cash flow issues. We talked about the importance of quickly and accurately processing stop notices in order to pay the contractor while still meeting your obligations to withhold appropriate amounts from payments due.
School districts are public agency bureaucracies. When I worked for a PM firm, we had a simple way of dealing with the bureaucracy: make as many friends in as many departments as possible.
I saw the same approach used by a contractor with lots of outstanding stop notices. He called his friend in Purchasing and complained that he had been shorted on his last progress payment. His friend reviewed a copy of the invoice and instructed Accounts Payable to remit the difference.
This is an example of a hole in the district’s internal control processes, and it’s the reason that tracking stop notices on a spreadsheet in the Facilities Department or out in the construction trailer does not resolve the issue. Information on stop notices must be available to the entire management team, so that everyone has all the information needed to make the right decisions.
The ability to track and communicate the real-time status of stop notices is a vital part of a cost controls system. Here are some things to look for when choosing a system:
That concludes our two-part series on stop notices. We hope that the information we’ve shared has been helpful, and we would love to hear your thoughts! Please leave us a comment or send us an email at firstname.lastname@example.org.