Reducing risk: location based micro-milestone payments and auto-generation of subcontractor payment processes

One of the greatest risks for clients lies in paying for work in progress. In an age of digital technology the development of a universal approach to the management of fair payments to subcontractors in Australia remains a challenge. Location Based Management (LBM) micromilestones has been suggested as an innovative solution to reducing the risk in progress payments. The location-based solution proposed focuses on work completion micromilestones to build process reference models for auto-generation of subcontractor certification and payment. Sub-contractors are vital for construction. Studies show that subcontracting for unique construction projects is both efficient and economical simply because general contractors are less skilled and more expensive than subcontractors. However, tardy payment remains a global problem. In Australia, payment systems rely on monthly lump-sum assessments of work, often after work has been completed. This retrospective method for validation of site-work is subject to error. Further, the lack of adequate site records often impedes compilation of a comprehensive payment record. This paper proposes a method that ensures payments are based on work completed and are connected to the productive delivery ofthe project.