August 5, 2022 Strengthen Visibility with Subcontractor Management

A supply chain management solution will identify and mitigate risks at the subcontractor level and across the entire supply chain.

With the Great Resignation and Great Retirement pinching the global workforce, many hiring clients and contractors rely on subcontractors to fill gaps and help see projects through. The Associated General Contractors of America (AGC) reports that 81% of contractors have trouble filling positions that require specific, in-demand skills. While subcontractors effectively and consistently contribute to positive project outcomes, ill-informed hiring decisions can compromise safety or threaten the entire supply chain ecosystem, leading to project delays.

Hiring clients and operators should view subcontractors as an extension of their agreement with their main contractor. Subcontractors should be held to the same contractual obligations as the main contractor, including prequalification, verification, and performance criteria. When subcontractors aren’t properly vetted, contractors risk unqualified workers creating unsafe conditions that can put a business’s reputation at risk and financial losses due to contract breaches.

It’s impossible to eliminate accidents and injuries. Still, a recent study revealed that 22% of contract worker injuries and 42% of fatalities could have been prevented had adjustments been made during the project’s design phase. Many hiring clients require contractors to implement a safety program that will prevent incidents, but without a strong subcontractor management program in place, these efforts may prove ineffective. Workflows should be scheduled in a master plan that considers all potential issues and empowers all stakeholders – from the hiring client to contractors and their subcontractors – to reference the plan and mutually adjust as needed.

A supply chain risk and compliance management solution will empower hiring clients and contractors to identify and mitigate risks at the subcontractor level across their entire supply chain. Here are six ways any contractor can successfully establish a comprehensive and effective subcontractor management program, from start to finish.

1. Conduct pre-qualification verification when selecting a subcontractor.

For a contractor to win a bid, they must prove they are capable and meet or exceed the requirements of the hiring client – the same should apply for subcontractors aiming to win a project with a contractor. Subcontractors must be vetted through a rigorous evaluation process, including:

• Requiring written occupational safety and health policies and procedures
• Verifying worker training and qualifications
• Confirming a subcontractor safety program is implemented
• Considering insurance requirements
• Evaluating financial stability

2. Set expectations before awarding work.

Before contracts are signed, contractors should establish expectations during the hiring evaluation process. This will help to weed out subcontractors who might not meet the standards of either the contractor or the hiring client. Consider defining work requirements up front, disclosing whether the job might include work that comes with specific hazards and control methods for safety that would warrant specific training, and what the project timeline looks like.

3. Include subcontractors in the job planning.

Contractors can have a smoother planning process if the lines of communication regarding expectations are clear early on. Then, continue working through the entire process with them, from resource allocation to timeline and safety. Subcontractors spend most of their time on worksites, so having their perspective on potential hazards can help best align an approach to a project. When both parties can have input into the master plan, unanticipated chain disruptions, material procurement, and potential manpower issues.

4. Document and have conversations about schedule expectations.

Plenty of projects begin on track, but those derailed fall between 20% and 30% behind the anticipated completion date. As any contractor knows, time is money, and for larger projects, this can end up costing millions of dollars. Be clear about schedule expectations – contractors can face these losses if subcontractors are not properly informed or held accountable for upholding the timeline through their contracts.

5. Establish good communication around operational and safety procedures.

Subcontractors are extremely valuable in ensuring projects are completed on time and on budget, which is why keeping them in the loop is essential. Communication can keep everyone happy, operations running smoothly, and ensure a safe work environment. Three easy steps contractors can take to ensure there is good communication around safety priorities are:

• Defining the chain of command within a contract
• Communicating concerns early on
• Remaining direct and clear

6. Conduct post-job performance reviews.

Reviews should always be conducted to determine areas for improvement and understand what went well. It’s important to understand when a process needs to be improved on both sides; therefore, some questions to consider asking during exit interviews include:

• What went well, and what didn’t?
• What could be improved?
• What can the subcontractor do better?
• What can the contractor do better?

The follow-through

Executing all the suggestions above will aid in creating a clear vision of safety and project schedules. Hiring clients and contractors can ensure visibility across their entire supply chain by implementing a comprehensive and effective subcontractor management program.

About the Author
Jeff Muto is Chief Marketing & Strategy Officer at Veriforce, where he sets the company’s direction in tackling the most significant and most challenging aspects of managing safety, risk, and compliance within global supply chains.

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