Subcontractor Management Plan

Definition - What does Subcontractor Management Plan mean?

A subcontractor management plan (SMP) is a plan used by companies to establish a standard for pre-qualifying, evaluating, and selecting subcontractors. It aims to improve the safety performance of subcontractors working on behalf of the company while also improving general operational efficiency and cost control.

A subcontract management plan establishes a mutually understood set of expectations between the subcontractor and the employer. It also creates a basis for a clear two-way channel of ongoing and predictable communication between the two parties.



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Safeopedia explains Subcontractor Management Plan

Subcontractor management is an administrative process that combines health, safety, and environmental (HSE) management with quality assurance (QA) and operational/configuration management (CM).

In addition to acting as a single standard to subcontracted parties, subcontractor management plans work as a form of quality assurance for large organizations by providing all project managers with a single baseline plan to apply to their subcontractor management activities. This baseline forms a consistent policy to qualify and control health and safety activity, as well as other duties within a workplace. For instance, a standard pre-qualification plan may first assess subcontractors’ basic liability (insurance) and safety accreditations, then assess approved subcontractors’ in-house HSE programs. If their in-house program is either absent or unacceptable, the plan recognizes the employer as having a responsibility to communicate its own in-house HSE program for the subcontractor to follow.

SMP Breakdown

Global criteria applied to all subcontractors within a large firm might include:

  • Assessing their alignment with the firm's code of conduct (compliance)
  • Financial history (credibility)
  • Competitive market pricing
  • Competency certification (quality assurance)
  • Adherence to health and safety management
  • Security standards
  • Project management (performance)

From this global standard, individual project managers may conduct further management of subcontractors based on project-specific and local criteria. Different aspects of criteria may be given more or less importance depending on the needs and requirements of individual projects; however, compliance management is always a paramount part of an SMP.

Contractor Management Software

Subcontractor management plans are commonly run on purpose-built software solutions. This ensures a higher degree of consistency and regularity, while also reducing the risks associated with human error.

Software solutions are especially effective and efficient for projects involving a large number of subcontractors.

These solutions include features such as “check-ins," in which the subcontractor enters data to a cloud service that verifies that they have complied with a specific company policy or HSE standard.

Subcontractor Management via Primary Contractors

In cases where the project owner is contracting with a primary contractor to administer all work associated with the project, including all subcontracting, the project owner may use a subcontract management plan to ensure that the primary contractor follows certain basic safety, competency, and cost criteria when hiring and assigning subcontractors to the company's projects.

Using an SMP in this way gives the company a certain amount of oversight despite delegating the work of hiring subcontractors to the primary contractor. This also allows the company to manage risks while still maintaining the arms-length distance from the projected needed to legally divest OHS responsibilities to the primary contractor.

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