Managing Contractor Disruptions During Times of Crisis

In our interconnected world, global disruptions greatly affect businesses. Whether it’s a disease outbreak, a natural disaster, or a geopolitical event, these crises can disrupt supply chains, endanger contractor relationships, and impact profits. Over 80% of organizations experienced negative consequences from the pandemic, including material shortages, production scalability issues, and supply planning difficulties. As a result, these complexities provoke contractor disruptions across industries.

According to research made by Ernst & Young, 47% of businesses indicated that the pandemic had a significant impact on their workforce. While numerous employees transitioned to remote work, those in factory environments faced new demands, including physical distancing, contact tracing, and additional personal protective equipment. To mitigate employee exposure to COVID-19, industrial products and high-tech manufacturing firms are heavily investing in technology, particularly in labor-intensive industries.

Regarding future disruptions, a Deloitte survey on climate change impact revealed that 97% of top executives expect climate change to influence company strategy and operations. Sustainability initiatives go beyond using sustainable materials and improving energy efficiency. They also include actively involving employees and contractors. Presently, 50% of companies are already training their workers on climate actions. These are just some widespread disruptions that influence supply chains and contractor management across different sectors.

In this post, we’ll share practical tips to help businesses manage contractor disruptions during times of crisis.

Impact of Disruptions

Disruptions can create a ripple effect, leading to cumulative impacts on project performance:

• Out-of-Sequence Work: Changes in project schedules often force contractors to work out of sequence, which can decrease productivity and increase labor costs. For instance, contractors may have to perform tasks in less favorable conditions, such as winter masonry work, which is typically less efficient than summer work.
• Demobilization and Remobilization Costs: Frequent disruptions can lead to increased demobilization and remobilization costs, as crews may need to stop and restart work multiple times. This affects project timelines and adds unplanned expenses that can strain contractor budgets.
• Increased Project Delays: Global disruptions, such as those caused by the COVID-19 pandemic, have led to significant project delays involving contractors. Contractors often face challenges obtaining necessary materials because of supply chain disruptions, resulting in extended timelines and increased costs. This has been documented as a major issue, with contractors having to work unproductively to achieve project goals due to material shortages and delivery delays.

Assessing and Prioritizing Contractor Risk

Managing contractor risk involves analyzing financial indicators, performance metrics, and workforce stability. This data informs risk scores, addresses vulnerabilities, and helps develop response plans for potential disruptions.

Identifying Key Risk Factors

Key risk factors include the financial health of contractors, their geographical location (which might be prone to natural disasters or geopolitical instability), and their operational capacity. Risk assessment software provides comprehensive insights, aiding in informed decision-making.

Prioritizing High-Risk Contractors

Contractors should be prioritized based on risk levels, with particular attention given to those critical to the supply chain. This approach allows for effective resource allocation to manage potential disruptions.

Developing Contingency Plans

• Scenario Planning: It’s important for employers to think ahead about possible disruptions and have a plan for how to handle them. For instance, planning for alternative contractors in case of a key supplier shutdown helps mitigate risks.
• Diversifying Contractor Networks: Building relationships with contractors in different regions helps reduce reliance on any one supplier and lowers the risk of supply chain issues.
• Increasing Safety Stock Levels: Maintaining higher inventory levels acts as a buffer against supply chain disruptions, ensuring production continuity despite temporary supply shortages.

Enhancing Communication and Collaboration

By actively engaging with contractors, businesses can stay informed about potential disruptions and develop contingency plans together. Using contractor management software like Appruv simplifies communication with contractors and ensures alignment among all parties, leading to improved preparedness and prompt action in the face of challenges. This article provides a thorough overview of the key criteria to consider when selecting contractor management software.

Post-Disruption Reviews

Thorough assessments after disruptions identify effective measures and areas for improvement. For instance, after COVID-19 disrupted the construction sector, companies analyzed how the pandemic affected project timelines, worker safety, and supply chains. Many construction firms reviewed how delays in material deliveries impacted project schedules and how safety measures like social distancing on-site affected productivity. 

Implementing Regular Updates after Disruptions

Applying lessons learned from past disruptions helps industries enhance their resilience. As an illustration, after Hurricane Katrina severely impacted the Gulf Coast, various industries, including construction and emergency management, implemented significant improvements. Construction firms updated their building codes and construction practices to better withstand future hurricanes, incorporating more resilient materials and designs. Similarly, emergency management agencies refined their disaster response plans, improved communication systems, and developed better evacuation strategies. These changes helped both sectors better prepare for and respond to future natural disasters, demonstrating a proactive approach to risk management and resilience building.

Conclusion

Global disruptions, like pandemics or natural disasters, seriously affect contractor management. Appruv can help businesses handle these challenges effectively. By using our contractor management platform, employers can improve communication with contractors, track their performance more easily, and respond quickly to any issues that arise.

Appruv’s features include tools for assessing contractor risks, developing backup plans, and coordinating responses. This makes it easier to manage delays, avoid extra costs, and keep projects on track despite unexpected events. Using Appruv helps businesses stay resilient, ensuring that they can maintain operations and minimize the impact of global disruptions.

If you’re looking for a comprehensive contractor management platform, Appruv can help you stay ahead of upheavals and safeguard your business. Contact our team today.