The use of contractors can be both a great opportunity and a challenge and it can also bring risk to the companies that employ those contractors. Ask yourself, can you afford that risk?  Today, more and more companies are seeing the need for prequalifying contractors and suppliers.

What is Contractor Prequalification?

Contractor prequalification is the information gathering and assessment process that determines a contractor’s capability, capacity, resources, management process, and performance.  Data such as business information, safety and environmental performance, licensing and qualifications, financial capacity and surety, work history, management standards, and regulatory compliance may all be factored into a hiring company’s decision to work with a contractor.  This information is carefully considered and reviewed to ensure it meets the hiring company’s expectations and requirements prior to a contractor arriving on a jobsite. 

Know Your Stakeholders

Stakeholders are those who care about or have a vested interest in a project.   This includes everyone from operations to safety, risk management, supply chain and procurement all the way up to executives.  Interest may vary between groups, but they all share a common goal.  It’s important that every stakeholder gets what they need in terms of contractor management but also that communication is being done in a way that everyone knows what’s going on and what’s being expected of contractors. 

Define Accountability

Creating a culture of accountability within the organization is very important, both internally and with contractors.  Define the expectations of the members of your team in supporting contractors and expecting the best of them. Understand this is a partnership.  There is a great need for the hiring company to collect the right information to ensure they are making good business decisions and managing business risks. From the contractor’s perspective, it is important they understand it will help their business, not only from the standpoint of elevating their safety and performance over time, but also helping to secure a good relationship for working together in the future.

Additional Information You Might Consider When Implementing a Prequalification Program

• Safety and health statistics. A good program uses leading indicators to drive change and lagging indicators to measure effectiveness.  Lagging indicators measure the occurrence and frequency of events that occurred in the past, such as the number or rate of injuries, illnesses, and fatalities while leading indicators measure events leading up to injuries, illnesses, and other incidents and can reveal potential problems in a safety and health program.
• Most programs begin with collecting certificates of insurance and quickly expand from there.  It is important contractors are maintaining active and effective policies for the work they are doing.  Making the need for having a mechanism in place to track policy changes and expirations even more crucial.  If a policy expires or is cancelled, a contractor working on your site may be creating an unexpected liability.
• Licenses and Training. It is important, as you are qualifying contractors, to not only look at licenses and certificates of the contractor organization but to look at the employees as well.  It is vital contractor employees are appropriately trained, which is a big part of programs that often gets overlooked.  Employee turnover is inevitable, so managing that data for individual workers is imperative. 
• It is not just about recognizing the fact there is risk, but accounting for different levels—high, medium, and low risk contractors.  Customizing your approach and asking questions appropriate to the different levels of risk should result in better participation in your program.  Contractors should be less frustrated in becoming compliant to your standards and expectations when you are not asking for information that is not applicable to them. 
• Financial health. Insight into financial strength, stability and history of contractors is very valuable.  Contractors in financial trouble may be more likely to cut corners.  In addition, you do not want to worry about contractor organizations becoming financially insolvent over the course of a project.  This could leave you in a difficult situation.

The process of prequalification can be time-consuming and tedious. Effective management of information, such as that listed above, takes time and effort.  In the end, that effort does pay off and results in an established pool of qualified contractors who have demonstrated commitment and desire to work. 

Some companies find they can manage this process on their own, however shortfalls and inaccuracies often occur.  Utilizing a prequalification service allows you to place the process in capable hands and gain peace of mind knowing that all documents will be managed, and information will stay properly updated and secure in one central location. Appruv has a talented team of technology and safety experts, with an effective prequalification process that is standardized, efficient and accessible to all.  Contact us today to learn more!