Which components in the contractor prequalification process, if not addressed, could result in the largest legal ramifications?
Two of the highest value prequalification activities that do the most to limit legal exposure are contractor assessments and adequate insurance. Contractor assessment is essentially determining if the contractor is capable, and has a track record, of safely executing the work being proposed. There are many sub-activities that can be included in such an assessment. The more common activities include a review of previous projects of similar size and scope, financial and industry reference checks, a review of the contractor’s business processes including health, safety, environmental and quality standards and also a review of performance metrics (Workers Compensation rates and experience with health, safety and environmental regulators).
Secondly, ensuring that the contractor obtains adequate insurance coverage when the contract is awarded is a fundamental legal protection activity. Commercial general liability coverage, and when necessary specialized insurance coverages, provide broad protection for both the contractor and the purchaser in the event of a major event.
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