Jonny Finity is the Content Marketing Manager at Levelset, where over 500,000 contractors and suppliers connect on a cloud-based platform to make payment processes stress-free. Levelset helps contractors and suppliers get payment under control, and sees a world where no one loses a night’s sleep over payment.
Have you ever been on a construction jobsite where other contractors don’t know who you are, or what work you’re actually doing there? The complicated hierarchy on a construction project makes it really difficult for people to know who is on the job, and who is doing what. If anyone on the job needs this info, it’s the project manager. They are responsible for ensuring that everyone has what they need to complete tasks and deliver a successful construction project. Fortunately, there’s one thing that project managers can do that will improve nearly every single part of a project manager’s job: send preliminary notice on every job.
Preliminary notice basics
A preliminary notice is a critical piece of the construction payment process. Construction companies send out preliminary notice in the early days of a project to notify other parties of their involvement at the jobsite. Contractors and suppliers send preliminary notice to let the GC and project owner know who they are and what they are providing to the project.
There can be a lot of confusion around what a preliminary notice actually is. Some people call it a pre-lien notice, or Notice to Owner (NTO). Some states, like Texas and Tennessee, require a “monthly notice.”
To simplify things, we use preliminary notice to refer to a document sent at the beginning of a project. This document notifies parties that you’re on the job, and gives an overview of the work that you’ll be doing there.
Most states require construction companies to send preliminary notice in order to maintain their right to file a mechanics lien. These notice laws are complicated and differ significantly from state-to-state and project-to-project. For example, sending a “notice to owner” in Florida is different from the “20-day preliminary notice” requirement in California, and the “monthly notice” in Texas. In other states, like New York, there are no preliminary notice requirements at all.
Why project managers should send preliminary notice
Build stronger relationships
If you’re a supplier that was hired by a sub-subcontractor, it’s likely that the GC doesn’t know you exist. Sending preliminary notice to the property owner, GC, and your hiring party helps you create and strengthen your relationship with all of the parties above you on a project. It gives them a clear point of contact on the project to speak with if there’s a problem. Over time, GCs and other subcontractors will recognize you and know what to expect.
Be more professional
Sending preliminary notice consistently on every job is simply a professional way of doing business. When they receive notice from you, the GC and property owner know that you take your work — and your payment — seriously. Who do you think the GC is going to recommend for the next project: the contractor who communicates clearly and openly from the start of a project… Or the one they only hear from when it’s time to get paid?
Communicate more easily
If you’re a drywall subcontractor, and the electrical contracting work has been delayed by a week, that’s something that is critical for you to know. But if the GC doesn’t know you’re on the job, how do you expect to find out? If you sent a preliminary notice, they’re more likely to notify you of the new dates, because they know what work you’re doing.
A project manager has to juggle multiple tasks with different deadlines. They also need to know what work others are doing around them, and how their work will affect their job. The truth is that property owners and prime contractors actually like to receive notices on their projects! It helps them do their job better, too. Sending preliminary notice ensures that the GC and others know you’re there — and that you’re someone they can talk to.
Get paid first
A project manager’s goal is a successful, completed project. Ultimately, the job’s not really over until your company gets paid for the work you’ve done. Preliminary notice helps ensure that the GC or property owner knows that you’re on the job — and that you need to be paid. I can almost guarantee you that the GC’s accounts payable manager has a stack of pay applications on their desk at least a foot high. Which applications are they going to pay first — those from the companies whose names they don’t recognize? Or the companies who reached out at the beginning of the project?
Construction accounts payable departments are more likely to pay invoices to contractors that send notices because they already know what work they’re doing, and they know where to send payment. In some cases, they’ll even prioritize these invoices before paying contractors that didn’t send a notice. By not sending a notice, contractors could actually make it harder for themselves to get paid on time.
Send preliminary notice on every project
Every project manager knows the maxim “if you fail to plan, you plan to fail.” The success or failure of a construction project is often determined before the project begins at all. Sending preliminary notice is a simple step that maximizes visibility and communication, and minimizes financial and operational risk.
Given the outsized benefits of the document, sending preliminary notice shouldn’t just be an exercise used on problem jobs. Project managers realize the biggest advantage when they send it on every job - not just jobs where they anticipate payment problems.