Are You Assessing Your Contractor’s Capability? - If Not, Why Not?

May 15, 2015

When employing contractors, you generally expect to get the job done right, on-time and at a competitive price, but this is not always to reality. There are thousands of horror stories out there, just do a quick Google search on dodgy contractors and see what we mean. Choosing the right contractor can be equaledto picking the winner in the Melbourne Cup. But it doesn’t have to be that way, in fact, the key is to make informed decisions based on the capability of the contractors in a systematic manner through the use of a contractor management system. This means you’re not blindly accepting the lowest price or your mate’s cousin’s mate.

This article will provide a brief overview of how assessing contractor capabilities can assist your business to mitigate risk in contractor management and provide practical ways to more accurately select the right contractors for the right tasks.

Don’t leave yourself and your organisation open to the risk of having incompetent or reckless contractors at your sites. Failing to correctly assess the capabilities of contractors puts you in a lucky dip, not knowing what you’re going to get. Any incident, injury, or damage to equipment by a contractor can cost your organisation a lot of money in damage costs, legal costs and medical expenses, not to mention the simple cost of rework. Under certain jurisdictions contractors are now deemed employees of the host organisation and should be treated in the same manner with a duty of care under legislation such Work Health & Safety.

When it comes to assessing the capability of contractors, it’s commonly the domain of large organisations, but even individuals can benefit from this process, such as when you need to employ a contractor in your home such as plumber, builder, or electrician, etc. Assessing contractors can be as simple as checking that they have a builders licence, for example, or it can be more complex such as online contractor management systems.

The capability of contractors is not only about licences and safety risk. Contractors need to demonstrate the financial capability to manage procurement of materials, payroll expenses, and relevant insurances. Capital investment in tools, plant, and equipment is also an important consideration when engaging contractors; so too is the competency of their staff.

It’s important to conduct a thorough prequalification assessment of all potential contractors prior to engagement well before they are brought on to site. This can only be achieved using a systematic approach to tender release and submission and selection processes.

The use of a contractor management system can be an effective way to manage the whole contractor selection process. These systems are an extension of your quality and/or safety management systems and can be web-based software. Using a contractor management system can benefit your organisation in a number of ways such as reduced paperwork, reduced workload of procurement staff, standardization of procedures, and cost reduction.

Online contractor management systems also provide an opportunity to further enhance the process by having relevant procedures, contractor certifications and licences all online and accessible from anywhere,. This also provides contractors an opportunity to have a self-service portal allowing them to upload their own licences, certifications, and business registrations, thereby further reducing workload on your staff.

Are you assessing the capability of your contractors? During this article we have provided some insights into the risk associated with engaging contractors in an ad hoc manner and the importance of doing your due diligence when it comes to engaging contractors. The use of an effective contractor management system is your best defense when it comes to mitigating your risk of poor selection of contractors.