Why Contractor Prequalification and Management

Common Challenges 

Organizations have high standards for most aspects of their operations, and that includes safety. You take compliance with safety regulations seriously, so that your employees will not create or expose themselves to any unnecessary risks.

Is that also true of the many outside companies that perform work at your facilities? If you have a large construction project, you probably have workers from dozens of contractor companies performing potentially dangerous tasks every day. If one of those contractor’s employees is injured, you might suffer through higher insurance rates or legal action for liability.  In addition, contractor activities can put your own employees at risk.

Prequalifying and managing contractors is an important process that many companies neglect.  Developing a strong, cooperative, and productive relationship with contractors takes time, effort, and planning.  Companies that do not invest the time or put forth the effort required to manage their contractors and the risk they bring with them, can pay a steep price including lost productivity, fines, and compromised safety cultures.

The barriers to effective contractor relationship management are real.  This process can be complex and present many challenges.   Common challenges companies face when developing a contractor management process can include:

• The burden of tracking contractor information.

How do you track and manage contractor information, such as their points of contact, the type of work they perform,  safety statistics, insurance, signed agreements, and other important information you need to know? You also need to consider where the information is stored, who has access to it, how often it is updated, and who is responsible for it.  A seemingly simple process of acquiring and maintaining contractor information can get quite complicated.

• Collecting, verifying, and maintaining accurate records.

Depending on a company’s requirements, the amount of documentation needed to be collected from contractors can be extensive.  The process used to collect, verify, and maintain these records should be very well thought out and organized.  A standard practice of working with any outside organization is the collection and maintenance of their insurance. It is a time-consuming task to ensure collected insurance is accurately meeting requirements, expirations are tracked and communicated, and insurance certificates are easily accessible.  One oversight in this process can have devastating consequences for your organization.

• Important information not readily available to key stakeholders.

Due diligence is done, and all pertinent information has been collected from your contractors, but is the information readily available to key stakeholders?  These stakeholders are those who care about or have a vested interest in a project. They are the people who are actively involved with the work and oversight of contractors. The process of how and where your contractor’s information is maintained is crucial.  Shared spreadsheets or internal shared drives can be a nuisance to organize, maintain, and access.  The important information collected from contractors must always be up-to-date, accurate, and readily available to your key stakeholders.

Manage Contractor Risk

One of the most important tools for managing contractor risk is a prequalification process.  Before contractors perform any work at your facilities or on your job sites, it is vital that they are subjected to a vetting process.  Putting contractors through a prequalification process will help effectively address and reduce risk exposure.  A thorough prequalification process will ensure they meet your requirements and have a high standard for safety and health.  This should include reviewing safety programs and training documentation, as well as safety statistics such as OSHA and EMR information.  Organizations should also want to make certain that contractors have sufficient insurance. If a policy is expired or cancelled, a contractor working on your site could create an unexpected liability.  Financial stability is another consideration.  While the connection between safety and finance may not be obvious, a contractor with financial trouble may be more likely to cut corners or even go bankrupt in the middle of a project.

Ultimately, having a sound, methodical evaluation process before choosing a contractor will help identify, analyze, and potentially eliminate any contractors that are too risky or cause problems for your project or your business. Also, contractors that choose to participate in the process and subject themselves to a certain level of scrutiny, demonstrate commitment and a level of interest to work at your facility that most companies desire.

Prequalifying contractors can have a significant impact on valuable time and quality of performance. Knowing who you are in business with can prove the difference between a project’s success or failure.  Appruv, has become the preferred method for implementing  a successful prequalification program.  Contact us today to learn how we can help!