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Webinar: Qualifying Contractors: Risks & Best Practices

ByCanQual Inc. | Published: September 30, 2018
Presented by CQ Network
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Key Takeaways

While compliance and reputational risk frequently are top-of-mind and in the news when considering potential impacts of contractor operations, financial risk and operational risk also pose serious considerations. This is why qualifying contractors is a critical purchaser activity.

Jamie: Hello and a warm welcome to everybody. We would love to wish everyone a good morning, a good afternoon, or a good evening depending on where you are in the world today. My name is Jamie and I’m one of the co-founders of Safeopedia.

Safeopedia’s mission is to support the EHS professionals, operational folks and any safety-minded individuals through free, educational content, tools and resources. A huge shout out to those dedicated professionals for the great work they do on a daily basis.

Today, we’re very proud to present Qualifying Contractors: Risks and Best Practices. This Safeopedia webinar has been made possible by CQN Advantage.

It is now my pleasure to introduce to you to today’s presenter, Ronnie Tallman. Ronnie is an experienced client relations and contractor management implementation specialist with a demonstrated history of working in the information technology and construction services industry. She works with the owner-operators and contractors in the industrial and commercial sectors to assist with their contractor qualification processes and compliance requirement. As Contractor Management and Compliance Advisor at CQN Advantage, she oversees customer implementations and training and ensures that all customers follow industry standards and best practices. In her “spare time” she likes to shuttle her kids from gymnastics to hockey and back again. Join the club, yes, spare time. I now invite you to sit back, relax, and enjoy the presentation. With that, Ronnie, please take it away.

Ronnie: Thanks, Jamie. Thanks, Jamie for having me here today. Big thanks to Safeopedia. To everyone that’s joined in today, thanks for attending. I hope I can provide some really good, practical guidance on qualifying contractors and I look forward to answering some of your questions at the end of our presentation today. With that, let’s get started.

On today’s agenda, we’re going to start off with some key elements in terms of long-term success with contractor prequalification. We’re going to talk a little bit about the reasons behind prequalifying, why it’s important for a purchasing organization to put in place a prequalification process. We’ll also cover off, in detail, in terms of the actual associated risks and the best practices. Then, we’re going to do a quick overview of the importance of sustainability, some common bad practices and what will keep companies successful going into the future.

So where does prequalification fit into the bigger picture? Here, you’ll see the top 5 contractor management activities which have, typically, been declined by numerous associations and thought leaders in the industry. Close to home, for myself, this is common to the Construction Owners Association of Alberta, that would be a co-op, and also a global thought leader that would be Campbell Institute. Just a quick note, if anyone is unfamiliar with the Campbell Institute, we definitely recommend taking a visit to their website. They are known for world-class knowledge on keeping people safe and they emphasize sustainable business practices. It’s definitely a good place to go and check out their information.

A while ago, the Institute published a paper. They did a detailed survey with a review on the topic of best practices and contractor management. This is the list of the 5 key contractor management activities that they suggest and we also support. That would be: prequalification, pre-job task and risk assessment, contractor training and orientation, monitoring of job and post job evaluation. Today, we are going to cover prequalification. It is a very broad topic. We could easily talk for the remainder of this presentation on questionnaire design, on mitigation, also on approval processes, but due to the amount of time we have today, we’re not going to into a vast amount of detail on any one of these elements and we’re going to do more of a broader overview. I hope that provides some good information for you.

With that, let’s define prequalification and why it is important to prequalify your contractor. Prequalification is the preliminary stage in a bidding process where it is determined if the contractor has the requisite resources and experience to complete the job as required. We just thought we’d provide that as the basis to move forward. Plain and simple, if you hire contractors, there is potential risk. It really doesn’t matter how many contractors you hire, you are susceptible to risk and liability. We’re going to discuss some of those risks in our coming section here.

With that as our starting point, why should you prequalify your contractors? Well, there are a couple of reasons, obviously. First, there’s the legal concept of buyer beware, whereas if any product or service that you would consider purchasing, it’s simply good business to know who you’re buying from, where you’re getting your services, where you’re getting your product, you want to know about those providers. Further, OHS laws, for example, require harmonization of safe work practices between employees on a worksite, particularly for high-risk activities. The activity of harmonization of work practices, where it’s practical to do so is, in fact, a contractor management best practice that is required by OSHA.

Why prequalify in terms of potential litigation? Well, lots of prequalification activity can contribute to charges or protection from charges of litigation and, potentially, conviction in the event of high-loss or high potential workplace incidences. There have been many cases cited where a lack of activity in the prequalification area can have fairly significant outcomes. You really want to make sure that you’re establishing expectations, that you’re able to prove that there’s an adequate level of due diligence especially in communicating the occupational health and safety compliance needs. Experts, associations and leading corporations, typically, have led the way in regards to prequalifying contractors. They usually may have gone through various, different processes, find out what may work, what may not and then come up, especially if some of those associations have really good best practices. Most of these will agree and recommend that most purchasing organization should prequalify their contractors and have a standard in place suitable for their operations and their industry. That’s going to be very different across those industries, whether that’s industrial, commercial, residential, even institutional and renovation market spaces. It may look different across all those.

Continuous improvement, definitely, of course. If you’re screening your contractors, you’re fulfilling your due diligence requirements, it’s giving you peace of mind that the contractors that you’re choosing have the knowledge and understanding of the risks, they can complete the job safely and they can maintain a safe working environment for you. These are definite elements that contribute to opportunities for improvement and it helps build relationships within an organization, your industry and also within your contract or lease. Prequalifying contractors is a critical purchaser activity. We’re going to outline 5 major risk types here and we’re going to quickly talk about some activities that can be done to stay clear of those consequences.

Risk 1. You can see down here a few associated with these risks as well. This risk, primarily, you can lose the business opportunities, there can be financial consequences, and that is with improper incident recording. A couple of reference points that can probably go without saying is your WCB rates or your EMR rates and your regulatory compliance responses at a high degree of scrutiny at the client end. It’s really important to make sure that you’re managing those elements and ensuring accuracy in your responses here. These are really highly important to your clients.

As a risk reduction strategy, what we would suggest, and we base this on a lot of experience, there are often times many questions that are completed without knowing the right metrics. If there’s one thing we can stress here, it would be this, that is to know your client’s incident classification standards. Incident classification systems are not the same as workers’ compensation claims acceptability. You may be putting yourself out of work consideration if you are reporting those incorrectly. It is also critically important you report your loss management experience, your first aids, your medical treatment and these sorts of things. It’s really important to be knowledgeable in these areas and be sure that your questionnaire reflects accurate information.

Risk 2. This would be more susceptible financial risks or reputational risks. That is the liability for unpaid contractor WCB premiums. Just to note here, general contractors are at-risk if their subcontractors have not paid their required premiums. Often times, recovery actions by the Board can run up into the $1,000, sometimes $10,000 amount of dollars. This is unfortunate because it doesn’t take a lot of effort to manage this where we see—it’s basic knowledge and the cost is free, being able to make sure that you’re keeping up with this. What we would suggest here, really important, is when you mobilize a contractor, make sure that your contractor is providing you with the workers’ compensation clearance. This ensures that your subcontractor has a valid WCB account. That’s important. As you go through the relationship with your contractor. Get a WCB clearance at the end of each month or every quarter works for you, that may be better timing, but this will ensure that your subcontractor is maintaining that account and keeping that account in good standing so that you’re staying away from that risk.

Risk 3. This would be on the financial side, even loss of business opportunity, and that is due to poor safety performance. Know that if you’re poorly managing your work-related claims, if you’re incurring serious injuries, this will drive up your workers’ compensation insurance rates. That would be where those financial opportunities may be limited because many people will want to be working with safer contractors. Some notes here. It is medium to high to control. There is some cost to that. There are a few things you want to do just to make sure that you’re avoiding this. It’s important to put in place an occupational health and safety management system. If you’re doing that, you’re trying to comply with certain standards, you’ll be more aware of what’s going on. Like we mentioned there, your WC claims and rehabilitating injured workers will help limit your cost, so something to keep in mind there. If you’re not entirely educated on this, you can contact your industry association, you can hire a consultant to help you out or you can educate someone in-house to be able to take on this role and hopefully be able to educate the rest of the organization on this. We just talked about poor safety performance, now we’ll go into poor regulatory performance. This has to be with your violations of OSHA, and your workers’ compensation and insurance requirements. It can result in possible legal actions or penalties from your regulators. You want to avoid these things.

A few things you can do here and some good common practical advice is companies should not ignore the most frequently-cited OSHA violations. Some examples of that, if you’re not too familiar would be hazard communications; machine guarding; trenching; lock-out, tag outs; slips, trips, and falls and electrical hazards, just to name a few.

Some key things. Every employer should go to the OSHA website and type in their appropriate standard industrial classification code. Then, they can discover the top 10 standards for which OSHA is citing in your industry. Once you’ve found that, you can look back at your system or what you have in regards to your health and safety management systems, what you’re currently doing, and see if you’re in compliance with that. So key here is definitely making sure you can audit your system to make sure it’s well-implemented and effective. That goes back to making sure that you’re in compliance with some of these OSHA cites. You can also enroll in the VPP program, that is U.S. construction based, or here, since I’m in Canada, we have the Certificate of Recognition program or COR program. Depending on where you are, there are multiple different industry-sponsored audit programs. So those are definitely risk reduction strategy to manage that.

This is a big one. Many of you may be familiar with this. This can be very costly and can result in legal consequences. That is the liability from unmanaged subcontractor certificates. General contractors, you could be liable for the direct cost and the legal liability if incidents occur and there is no coverage in place. You really want to be mindful of that. There are a few ways you can manage this. Use a database, not a spreadsheet, to manage documents that have expiry dates because they really are the best tool. Ensure that your certificates are being tracked, that expiry dates are being anticipated. Also, if you’re using a commercial database software or a third-party, it will have automated notifications built into the system, so that will be able to give your contractors ample amount of time to know when their documents are going to expire and provide a window of expiry for them. It allows them to get their documents either to you, like in your hands, or upload it into the system. So those are some key things there having to do with some of the more higher level risks that we’ll discuss today.

So now that we’ve covered some of the risks of not doing prequalification or doing it poorly, let’s go over some of the common best practices that can at least help you on the road to success. We’ll treat this more at a higher level, some things that we have seen that have become quite important. If there’s only one piece of knowledge gained from this session, let it be this one: establishing a contractor management standard for your organization that is endorsed by your executive leadership team is a critical success factor in terms of contractor prequalification. Typically, this is a written document that covers the management of contractors from first contact to close out and review of the contracted work scope. Here, we’re talking mostly about roles and responsibilities, required actions, also any practical tools and things such as forms, process, flowcharts, etc. Whatever it is that your organization uses, from a documentary point of view, to keep yourself organized and accountable to your process, it’s highly recommended that this be the starting point for your efforts.

Doing the right things in the right amounts at the right time – very important. There are too many processes and too many systems that tend to impose too much process at the first contact stage. That is where, in our view, many third-parties are making this mistake because it’s definitely not doing the right things at the right times. You really want to be mindful of the amount of process and at what stage procurement and keeping away from implementing process just for process’ sake. Two-tier prequalification, specifically general screening and project-specific screening is something we would definitely recommend. Two-step process is usually quite a bit more business-friendly in terms of weeding the process down to doing what you need to do at certain stages as well as, as you learn more about your contractors. So generally speaking, this would be talking about general screening, so getting a basic amount of due diligence. After that basic due diligence, you’d move into project-specific screening, which is far more fit-for-purpose, typically, linked, also, to the request for proposal. Now you’re considering services that the contracting may be providing to you in terms of actual work scope that is being proposed. These are definitely best practices that we promote and support.

Just a note on that based on some of our findings working within our systems, so in the past 15 years of operations, we find that there’s about 30 to 34 really high-value data points the client will look at, which also, within that, there’s about 60% of page views that are only in 3 subject matter areas and we discussed that back in Risk Level 1. Also important is making sure that your prequalification team has the knowledge and experience to administer questions and analyze prequel responses. So clients, members of those teams to be knowledgeable in the areas they’re evaluating whether that be technology, safety, quality, finance, make sure that they have an expertise in this area and know what they’re looking for or know what they’re going to be evaluating.

Also, contractors should have the right people in place who know how to complete the data responses. That’s typically within questionnaire and the certificate uploads to meet their client’s requirements. It also suggests that both clients and contractors appoint a champion, so the single point of contact. That should be communicated both internally and externally so that everyone within the organization should know who the central hub person is as well as to your contractor or your client. This definitely helps open up the channel for communication and streamlining your process. We see this a lot within our own system, members that need to get in to either complete the data or members that need to get in to view and evaluate the data don’t have access to the prequalification system or the registry, they can’t log in. Important here, they have to be able to access the data whether that’s to review it or evaluate it. If everyone can access what they need, it definitely cuts down a lot of time for everyone involved.

It’s important to make sure that everyone knows how the process is being used. If you’re using a certain system or if it’s an internal process, how is that being worked and when do you need to jump in to do your report. Those are important things here. It also helps to avoid the duplication of gathering data, again, just wanting to streamline the process for both the contractor and clients. Communication is essential in any qualifying process. The contractors need to know what is expected of them and they need to know what standards they need to be in compliance with their clients. They should be able to get the clarifications and the answers to the questions that they may have during the process. Making sure that the clients stay on top of these, and are able to answer those questions, and that there’s clear documentation of the process and also the evaluation process should be communicated.

We also see an important—if contractors are going with you and they do not qualify, it’s a really good process to explain those deficiencies. It really helps the contractor develop their resources for future projects, and they can work on the areas that they’re deficient in and improve upon those. It should go without saying, but contractors should be completing—sorry, I’m skipping ahead here. The use of the database. The use of a database is essential especially if you’re going to be doing anything with dated documents, if you’re wanting to track dated documents. If you want to make sure that your dated documents remain current and that you’re not being exposed to any of the risks, say, for example, insurance coverage, then really a database is the best tool for the job.

Many of you would probably like to default to Excel as the application to manage contractors, but Excel is not a relational database. It cannot track expiry dates and it cannot provide you with warning notifications, so there’s really not database functionality there. Some reference points on that just so you know where there’s lots of errors, things we found. Typically, 15% of documents that have been uploaded to us on the first upload do not meet basic criteria. These errors could be in terms of expiry dates, in terms of improper coverage amounts, for example. Along with that percentage, there’s many dated documents that are either expired or within their 30 days window of expiry, so you really want to stay on top of that. There’s some risk management elements to consider there, that there is exposure and some items to track.

Fit-for-purpose questionnaire design. We’re a huge supporter and we highly recommend that your questionnaires be designed in a more practical and business-friendly approach. You can base that on your contractor category, maybe on the contractor services provided, you can make for high-risk contractors versus low-risk contractors or services. There’s a much better approach to do fit-for-purpose than doing a one-size-fits-all approach to questionnaire content. Also, within here, is the issue of redundant content. Obviously, if there is built-in redundancy in the questionnaires, we’re also building redundancy in the approval mechanism and some of the downstream activities, so you want to avoid that. Fit-for-purpose is definitely the way to go.

Moving on to best practices in regards to document management. We definitely suggest the absolute minimum requirements from our point of view, your commercial general liability insurance and verification of that CGL and, where appropriate, automotive insurance is also an absolute starting point or an absolute need-to-have. Likewise, verification of workers’ compensation is a baseline requirement. Financial and organizational capability is very common, very highly valued, typically, in the area of people-related matters. Does a contractor have enough people? Do they have the sufficient skillsets to do the work in the area? Also, a demonstrable track record with similar scopes of work. Best practice in terms of assessing and approving your contractors. Certainly, budget is included in this section. Does the contractor have a track record of coming in on-budget and on-schedule? Can they execute their work with a high degree of quality? You also want to make sure that they’re in compliance with the health, safety, and environmental standards for the work site or the client. So there are some key elements in that area.

Now moving into more contractor approval basic due diligence. Of course, primarily reviewing safety records, WCB ratings, ensuring adequacy of insurance components. They’re going to give you the widest lot of due diligence. Although, there may be a little bit of work and effort with administrative investment with that. So verifying insurance, whether that’s your commercial general liability or workers’ compensation, taking a look at the contractor’s EMR ratings or workers’ compensation performance versus their industry as a rating group. Then, you want to make sure that you’re obtaining the licenses, certifications that the contractor needs to execute for that scope of work. These are all relatively simple things to provide and they give you a very wide spread of due diligence. We highly recommend this in terms of fundamentals that just about any purchasing organization can implement. It is really quite easy to get this information.

There’s also an importance with moving from, say, a strictly financial prequalification into something more performance-based pre-qual. The financial and bonding of course are absolutely critical and typically perceived as baseline elements of prequalification. What we’re talking about here is the joining of financial prequalification to performance metrics. In this case, you’re looking at project-specific experience of the contractor, looking at their key personnel and then their performance in the areas of quality, health, safety and environmental aspects. At a growing rate, the assessment of the competency of supervisors is definitely important. Your supervisors are on the job site and your frontline workers. They’re out there on the field. They’re doing the work. You want to make sure that you know if they have the skills to run the job or to manage the other works on site, so the skillsets are quite important here.

Post-qualifications is a daily reality for many purchasing organizations regardless of the size or sophistication of the organization. If your business requirements dictate that you can mobilize a contractor without having prequalification done, then we definitely recommend doing a post-qualification. That post-qualification should probably be restricted to the fundamental due diligence aspects. That would be insurance, licenses, permits, that sort of thing. It really doesn’t add any value if you hired your contractor based on availability considerations or pricing considerations and then you’re asking for a significant data request after the fact that you’ve already mobilized them, so just something to keep in mind there. Just quickly to add, if your contractors are signing off on your business practice or following your business practices, it’s a waste of time to ask them to submit their standards for evaluation because they’re already abiding by yours.

So most of those are kind of basic. We’ve gone over the high level there. There are 2 here that I just wanted to bring into view. These are a little bit more advanced activities. That would be: risk mitigation plans and prequalification risk assessment tools. Once you’re doing all the other stuff really well, you can move, then, to something like this and it will help you in the long run. So with work scope-specific risk management and mitigation plan, we find there’s many things that can be covered in corporate documents that speak in a general sense about how a given contractor can go and manage the risk, but it’s much better when they can provide a project-specific risk management plan whether considering where they’re going to be working, the conditions that they’re going to be working in and how they will apply their processes to those specific conditions. You want to make sure those are all in place once they arrive at the workplace.

You may also want to make sure that you have a mitigation plan in place, especially if they may not quite meet your minimum standard or maybe meet the levels of other contractors. Your mitigation tools should be able to evaluate these contractors, identify any gaps and then put in place some steps of mitigation so that you can achieve the expected performance that you are looking for. In many cases, this could be used.

This can also lead into a prequalification risk assessment tool. That’s pretty much applying a risk rating to various services that a client may want to purchase or the contractor may provide for you. This definitely helps determine the degree of prequalification work that may be needed. Ideally, those lower risk contractors should mean less process and vice-versa for the higher risk contractors. The common practice here is using a weighted element approval process where you’re looking at a variety of things. You could be looking at their related experience, maybe the bench strength of the organization. Really what you’re doing is providing a weight for each category and then assessing with a more broader approach. So those are some of the advanced processes. We’re going to have a quick chat on sustainability. It really doesn’t matter about the best practices, if it’s internal or using a third-party registry, just some keys here on what do we mean by sustainability. What we really want to stress here is your guiding principle should be to what you can manage well long term. That is a question: Is the system you’re putting in place able to manage your primary business requirement in a sustainable way.

So with that, you want to make sure a few things are in check before taking on any process. In a moment here, we’re also going to talk about taking on a third-party process and what kind of elements of sustainability will impact that. So, you want to make sure that there’s responsibility that there’s someone there who’s able to oversee and help check the process. Of course, there has to be budget acquired. That’s not just budget for implementing whatever system you’re planning on doing, but that budget has to be in place that will last you the long run for the project, or for as long as you want to be running this process, so that’s important. Then, the oversight, making sure that your system is healthy and providing value to you. You want to make sure that those components are in place, moving into any process. As mentioned, I said we’d talk a little bit about third-party registries. Third-party contractor co-pay registries are normal for many large organizations and even small ones, especially in the high-risk sectors, so construction, mining, that sort of thing.

Your work isn’t really done after the first wave of implementation. It’s, often times, just the beginning. Many organizations perceive the implementation of these systems will be the most tangible and heaviest lift, but, in the long run, it’s really not. It’s not the big picture because sustainability is the big issue. You really need to look at your processes and what you want before you start taking on any third-party registry. I’ve listed a few things here, some common behavior. So if these are common in your organization or in your work processes, then you really do want to think about the use of a third-party or the third-party that you’re choosing. I’ll explain that just a bit here.

Contractor exemptions. If you have to exempt parts of your contractor base from the registry you’re choosing, then there is a problem with the solution you have chosen. This is particularly true for small contractors, DSPs (Direct Service Providers), temporary contractors, moms and pops. Many of these contractors do not have the resources to complete the extraneous requirements, so many times, the client or a general contractor may exempt these contractors and try to alleviate them from the fees or the administration time, if there’s an audit, or just the process in general. You really want to look at that and make sure whatever process you’re taking on can accommodate all your contractors.

This is also common if you are finding yourself frequently having to do workarounds, if you have short turnaround requirements. Again, a lot of this would revert back to use of temporary or small contractors. We see it all the time. If you’re having to do this, then the system or the registry that you have in place isn’t going to be able to adapt to this. If you’re not doing this at the first go, you may be doing this after. This is also where post-qualification gets into the mix. If you’re having a contractor and mobilizing a contractor outside of the registry you’ve chosen or outside your process, and then making them come in and do the work, is what you’ve chosen really the best solution for you.

A big one here is the questionnaire mismatch. Many registries have one set of questions, you know, your typical comprehensive questionnaire. It doesn’t really take into account your contractor service or your contractor risk levels. You really want to make sure that you’re taking a look at how the registry collects the data and does that fit within your contractor base. So just some things to think about there.

Here’s why you want to make sure that you have internal resources for administration. That goes for both clients, you want to make sure that you can sustain the process that you’re taking on, that you have people in place internally to be able to do the work. Also, think about your contractors in this area as well. Do your contractors have internal resources to administrate whatever process you’re putting in place? Just wanted to bring that to everyone’s attention and also move into more of the important things, especially when we’re talking about sustainability. Your business requirement should be the starting point. This should be the base level of what is sustainable for you if you’re taking on a new process.

A couple of things here: realize that not everything is mission critical. Before taking on a third-party registry, you want to make sure that you determine what is important to your organization regarding your contractor’s organization, their capability, commercial aspects, health and safety quality elements, but not everything could be extremely critical for you. That’s why it’s really important to establish your minimum requirements in the areas. It is our experience, and we see this all the time. I talked to many, many clients/contractors, many organizations take on a third-party registry with no statement at all of the requirements that they want. Many times, leading into this next point, the registries will dictate what they should and shouldn’t be doing. You really want to make sure that you really know your requirements and take a real, hard look in how the registry may either be taking over what you’re currently doing or adding to the process, giving you a lot of benefits. Because if it’s not going to benefit you and help you sustain your process, you really may want to overthink things. Just to note here, registries tend to consider those at the top of the food chain, so that’s your major clients, typically, especially in terms of product design and business models, which is kind of funny, it’s kind of ironic. Contractors pay about 90% of registry revenues and yet have very, very little input when it comes to design and business model. I’ll just leave you with those thoughts.

So we talked about some risks, best practices and now I want to talk about some of bad practices. We’re going to call them “anti-best practices” for today. The first one, questionnaires that are not fit-for-purpose for the contractor’s risk or service category. I’ve mentioned that a few times in different sections of this presentation. You want to avoid using a questionnaire that is not fit-for-purpose for your contractors, or their service categories or their risk levels. A long, detailed questionnaire may be required for complex work scopes, but majority, simplicity rules. Simplicity rules the majority of the time, especially at the prequalification stage. Roofing contractors shouldn’t be expected to know how to pour concrete and vice-versa. We see this all the time. You want to stay away from that. A system that requires contractors to create or obtain safety procedures for services they don’t provide is really bad business. We’ve heard of these and we see it. You don’t want to force your contractors to make things up. They shouldn’t have to meet these random prequalification requirements. You know and everyone typically knows there are no contractors that provide all services. You really need to stop treating them like you think they should specially in certain processes. You want to be able to stick to what you know, you want to be able to stick to what your contractor knows and about the services they provide.

Good business, again, simplicity rules the majority of the time. You better ensure that your processes and standards are up to par. If you are going to be starting creating process just to have process in place, you really want to make sure that you have that. There is a point that you’re going to stream that you’re your contractor chain if it really isn’t embedded in the full process, in your process. If your contractors are forced to cut and paste legislation into company manuals, they are not magically embedded with more safety knowledge by using their word processing skills. Safety legislation is done by the state and for the benefit of the workers and employers. You really want to avoid creating legislation in your own image for no reason at all. Just because you have a certain piece of legislation in your manual does not make you safer. Many times you’ve paid a company to input that into your manual or you had to do this to meet some compliance requirement. It’s not making your contractor safer by doing this.

Contractors sending the management team pre-qual information and having to post their information to the database. Like I mentioned before in our sustainability chat, exempting contractors, if you use an electronic database whether that’s manual system or maybe you’re using a third-party registry, you want to use that to reduce duplication. That should serve as the sole source of contractor data to the best degree as possible. If your procurement, or safety or your project management people insist that the contractor sends the same information to them individually and you’ve posted this to your database or your registry, you are doing it wrong. You should be monitoring your people and your database usage, and not adding more administrative work to an already top-heavy process. You want to make sure you’re using one system and everyone should be in there looking at it and not having things sent outside of that to the best of your ability, as possible.

The approval criteria should be easy to explain and be appropriate to the contractor category you are assessing. Frequently changing criteria means frequently frayed nerves for both the clients and the contractor base. None of us like going through the approval process, but usually with professional contractors, they’ll respond more positively if the requirements are reasonable and transparent, so a couple of things to keep in mind here.

Going to go into our future trends. What we see, what I see, what I hear quite often, actually, first is the simpler, more economic third-party options. There are good reasons why most general contractors manage their subs with a manual or semi-automated process. Because, really, given a choice between an internal system at works with minimal implementation friction or, say, having to choose a contractor co-pay system or a registry-controlled process with large fees, in most cases, the general contractors just keep on doing the cheapest thing that works best for them. So we’re really seeing, actually, a fracturing in the market. There seems to be a big pulling away from the conventional registries. There are many more simpler and niche products that are coming into the marketplace.

Absolutely an issue currently is the voice of the contractor. Typically, it is the voice of the client that’s much more heard. As I mentioned before, there’s about 90% of contractors from that registry revenue and yet have very little input, so that’s kind of discerning for any service-based company if your customers don’t have any tangible means to know that their voice is being heard. There’s a problem there. A lot of people are looking for products or processes that take into account that voice of the contractor. The days of the monolithic, one-size-fits all needlessly lengthy questionnaire and processes are gratefully coming to an end. Many users of the third-parties are demanding more flexible options. We see that and we hear that quite often as well.

Last one here is, there is certainly a trend towards more data being requested of contractors, but this is actually frequently at odds with usage. While there’s a very large amount of data being requested, you’ll see that the clear majority of page views are typically done in the area, and I’ve mentioned this before, of their HSE stats, your workers’ compensation, your experience modification rates—your EMR. Those are all frequently looked at, as well as your contractor responses to the regulatory compliance questions. These elements themselves, typically, account for more page views than all the other page views combined, so just a quick reference point there.

To close this off, an intelligently designed prequalification system should conserve your time, it should conserve your financial resources as well with the end result of you want to be able to expand your business opportunities, you want to make sure that you’re getting larger contracts and that you’re using vetted and reliable contractors. That’s the whole point of this. Going through these processes, you’re also going to get a much better visible communication chain within the contractor base and within your organization. That will definitely improve your contractor relationship. We also see, moving into the future, purchasers, being more in control their own processes and determining their own system requirements based on their corporate needs and industry best practices. That’s actually something really good. The industry best practices can help a lot of companies’ OSHA. With that, that closes our presentation today. I’d like to thank everyone who has attended and all of those that have sat through the presentation with us today. I’ll throw it back over to you, Jamie.

Jamie: Great. Thank you, Ronnie. Yes, tons of information. You keep saying it’s high level, but a lot of that is taking a nice deep dive. Again, we’ve got about 10 mins left on the hour, so if you’ve got your questions—a ton have come in, but you’ve got about 10 mins to get them in, so type them right into the console.

With that, let’s get right to the first question. Mohamad has a question. Mohamad asks, “What is the best-case scenario for contractor selection and evaluation?”

Ronnie: At the end of the day, what you’re wanting to do with vetting or having reliable contractors is that you’re putting contractors out on your work site or wherever you may be putting them is they are qualified to do the work for you. You know this for sure, you put them through some sort of process—it’s hard for me to completely answer that without knowing exactly how you’re vetting them or what process they’re going through. At the end of the day, you want to make sure you’re covering your liability, that your risks are minimize and that you have good, solid contractors working out on your job site. That’s the end result for any of the processes I’ve gone over today. If you have something a little bit more detailed, I could probably answer that better.

Jamie: I think that’s great. If you could answer the best scenario, that might be the silver bullet.

Ronnie: That scenario, you have the perfect contractor, right?

Jamie: Yeah, there you go. I’d also like to add, just having some experience in the construction sector, having a way, that initial kick-off with your contractors, or your sub-contractors or clients, really, to set the stage, to make sure that everything’s in place, and also having a means for feedback and a way monitor the feedback and performance. So, no silver bullets here.

Let’s see here. Ellie has a great question here. Can you please explain the post-qualification process? I would love to know how it can be implemented and when exactly would you say it may not be needed? Great question.

Ronnie: Post-qualification, as I mentioned, there are many reasons why companies could be doing post-qualification. A lot of times this has to do with mobilizing a contractor on the site quickly, we may be doing price—they may be the only contractors in that area, so you just kind of have to go with who’s available to you. In many of those cases, what ends up happening is you’re not putting the contractor through the prequalification stage, so there’s no time to get their certificates and have their responses to all the data that you may require previous if you were actually going to go through and vet those contractors.

Post-qualification is actually really important. It’s important for those that are doing prequalification and those that aren’t doing prequalification. Post-evaluation is also valuable—if you’ve already hired and mobilized a contractor, put those guys on site, included in that post-evaluation, you can also do a performance review as well so you know if that contractor—what was good on your site, their strengths, if there was any deficiencies that you need to manage, you know them possibly. This would go kind of to mitigation tool even. You can mitigate with your contractor, making sure that they’re meeting your compliance standards going forward. You have that, I guess, success factor with also doing the post-evaluation.

There are other reasons why you do post-evaluation as well. Many companies, especially if you don’t have a prequalification process in place, a lot of clients or general contractors, in many cases, don’t have a clue of what contractors are on their site. They may not have a clue of what subcontractors of their contractors are on their sites. At that point, then, you’re looking at a post-evaluation or a post-performance review as well.

Jamie: Great. Thanks, Ronnie. Lindy asks an interesting question. How key is a risk assessment?

Ronnie: You’re going to want to make sure that you’re doing kind of any pre-job tasks. Those would be including your risk assessments. Many companies handle these differently. Some of these with higher risk gradings may have higher elements within their risk assessments. They could be using risk matrices. That would bring in lots of different, I guess, components, cost, schedules, securities, definitely other factors in there. You could be doing another process. You want to, maybe, look at hazard assessments within there, making sure that you’re conducting your meetings with your contractor.

Also making sure that anything in your scope of work, the risks, are also assessed and pointed out there so that everyone is on the same page, so they’d know, say, if the client, knows what risks there are and the scopes of work and the contractor can provide their risk assessment or how they would deal with anything going into those conditions and how they would deal with those risks with their own processes.

Jamie: This is a really good one from Catherine. She says, “Are verbal recommendations and experience enough to qualify subcontractors?”

Ronnie: It might be—there’s someone to look into it. If I was to recommend it, I would say no. Not to say that it isn’t common. It happens all the time. This would also—many people just take the word of someone, take a recommendation, their verbal. Problem is, as you are getting into some of those risks that we discussed in the beginning of the presentation, if you’re just doing a verbal qualification of your contractors, you have no idea if their certifications are valid, if they have the certifications that you require. You don’t know anything about their work processes, anything about what they’ve done in similar situations. Have they done any of this work before? How successful were they in this line of work?

A verbal confirmation may work for really small jobs, but I’d say, overall, I’d definitely get something—put a process in place and make sure that you’re collecting your minimum due diligence requirements, so that’s your insurance, your WCB. If you don’t, you’re going to be liable for this and there are lots of consequences that can come from that.

Jamie: Valerie has a great question here. It says, “How do you adapt the contractor safety management system to the size of (a) the employer hiring and (b) the contractors hired?” It’s a question on, in terms of resources, human, financial and time, how much is required to have a functional and sustainable system? Ronnie, I don’t know if you can talk, maybe, about some different size of companies and what might be required from a time and effort perspective.

Ronnie: I think, in the question, you had mentioned something about basing it on the size of the organization and then also how do you adapt that to the size of the contractors. I think that’s what you said, Jamie.

Jamie: Yeah, that’s right.

Ronnie: Your process has to be sustainable to you. This is really key. If you’re going to take something on and if you’re going to implement, say, a third-party registry or any kind of process, you have to make sure that that works for your business, the internal people that you have, the time that those people have to put into managing that system and also the cost. There’s a cost associated with time, not only cost of purchasing your system and your process or whatever you may be creating, but there’s a people time too. How many hours of work and the cost of that to be able to manage that system?

What I would suggest, really, is a fit-for-purpose approach. If you’re a smaller organization looking to manage your subcontractors, go head and place something that you’re able to manage. Don’t take on the largest of the large because, realistically, will you be able to support that. It’s not going to work, probably, for your business or for your contractor base. That’s something to look at there. When it comes to your contractors, fit-for-purpose is, of course, key. If you have low-risk contractors, or no-risk contractors or certain contractors that are trying to qualify—they’re all different. They’re not all going to be at the same risk level, they don’t all provide the same services to you. You can tailor that process. What you’re doing for, say, a low-risk contractor, you shouldn’t be doing the same process for your high-risk contractors.

We see this all the time. I deal specifically with this with one of our products. You can’t expect the same from your small mom and pop than you can with your high-risk, super large corporation. You’re just not going to get that. What you really want to do is tailor the process. Your contractors will appreciate it a lot more. Those small contractors you should take into mind, making sure that you get your basic due diligence, making sure that you’re getting the basic and the data that you need from them. Then, you can tailor your process to adapt to those that are at a higher risk level and also for those that provide different services.

So, I think, in answering that, Jamie, I’d say being able to be fit-for-purpose, tailoring your process to your contractors is key. Don’t implement a process that neither yourself or your contractors are going to benefit from. It won’t last in the long run.

Jamie: That’s great advice. Thank you, Ronnie. I see we’re over time, so I am going to sneak in one last question, if that’s alright. I very much appreciate everyone hanging on the line, so that’s a testament to you, Ronnie. Great information, great presentation.

So the last question of the day. Who is the lucky one here? Hildy. Alright, Hildy, you’re the winner. Let’s see. Do you have any experience in either bonusing a contractor or penalizing a contractor when they do or do not comply with safety requirements and how do you go about that? Do you have experience in that, Ronnie?

Ronnie: Are we talking more about behavior-based safety? Is that where we’re trying to go with that? Or rewarding contractors, you know, if they have the safety record, then there’s a big bonus? If they have bad, then there’s consequences?

Jamie: Yeah, I’m not sure. I wonder if it’s a question of performance metrics. I could see if they—I have to defer. I don’t know the context and I don’t know if Hildy is on the line. Hildy, are you able to clarify if you’re speaking about performance or like if someone has a good safety record, have you bonused them out or have seen that situation? I’m familiar with contractors that do it on performance metrics.

Ronnie: Yeah. My specialty is definitely not behavior-based safety and all the components that are entailed there. I do know, obviously, some of that. If it was getting more into that, I can definitely respond via email with an answer to that. But it’s hard to dictate what a company does in regards to bonusing or not bonusing that company based on their performance metrics.

Jamie: Hildy, I see you’re still on the line. Ronnie, maybe we could talk to Pat. I know he is—he’s got 30+ years in the industry. He knows everything.

Ronnie: Yeah, he would definitely be able to answer that question better than I could. He has a lot of experience in that area. He has been through it throughout his years in the industry and also being in charge of a lot of these things. He would have a better reference point than I would, unfortunately, with that question. We can definitely get back to you, Hildy.

Jamie: Fair enough. Alright, we’ll close it up there. Ronnie, any final remarks?

Ronnie: No. Thanks, again, for the opportunity. I hope everyone got some good, practical knowledge. Thanks to everyone who stuck through to the end. It did get a little bit long. Safeopedia, well, we always enjoy working with you guys. So, thanks. I hope everyone has a really great and safe week.

Sorry, if anyone does have a question and we weren’t able to cover that, my contact information is here. We can either send you an email, respond to your email, or if you want to give me a call, we can also jump into some of those questions if you want to talk further about them.

Jamie: Thank you, Ronnie. I would also like to thank Ronnie. Great job on the presentation. Nice deep dive. I know that you really could talk about any of these points at length, so really appreciate that you did take the time, as far as I’m concerned, covering yourself and doing the right things when hiring contractors. 45 mins to talk about all of these is definitely not enough time, so thank you, Ronnie, for doing this.

CQN Advantage, thank you, guys. Without you, this definitely wouldn’t have happened; and most important is the audience. Definitely, without you, none of this would be happening. We really appreciate you taking the time. We know you have a choice of where to put your valuable time and we’re extremely grateful to have you spend some of those with us.

So we will close the webinar. We want to take everyone for attending. We will be sending out a link to the recording and the presentation slides in just a couple of days. With that, thanks again, everybody. Take care and stay safe.

Ronnie: Thank you.

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EHS Programs Contractor Management

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Written by CanQual Inc. | President

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Patrick Robinson is the founder and President of CQ Network, CQN Advantage, and RISC Management Inc., Alberta-based technology companies that specialize in contractor management and assessment applications.

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