Do You Choose Your Contractors Based on Price or Capability?
When you think about engaging contractors on a project, you no doubt hope you’ll find the perfect blend of quality and price. And, the result will be that you can meet your deadlines and deliver on the overall project objectives. Unfortunately, that often isn’t the case. Stories about dodgy contractors can strike fear into the decision-making process. If you pick the wrong one, you could end up with subpar work, mounting costs or worse still, workplace accidents and liability claims. So, the question then is, how do you get value for money and peace of mind when choosing contractor services? Should you focus more on price or capability?
The Danger of Choosing Contractors Based on Price
It can be tempting to simply choose the low-cost supplier. You’ll make sure you’re getting a great deal and that you’ve got everything covered in the contract, right? But, pushing for the lowest price can have undesirable side effects. Any contractor you’re working with needs to make a living. So, to give you a low price, they may provide reduced quality of work or try to move the goalposts mid-project. As a general rule, when a price seems too good to be true, it usually is. Are you sure the contractor has the right licences, insurances and workplace health and safety practices in place?
Choosing based on price alone and not considering capability and experience leaves your organisation open to the risk of having incompetent contractors on site. And, that means that there is a higher chance of incidents, injury and poor-quality outcomes, potentially resulting in brand damage, legal costs and medical expenses. In the long run, choosing contractor services purely based on price is going to cost you time and money.
How to Assess a Contractor’s Capability
Choosing a contractor based on capability is a sensible approach to allow your business to mitigate risk. But, assessing capability isn’t as simple as getting a recommendation from a friend or colleague. To protect the project, and, ultimately, your business, you need to ensure you have spent the time preparing the contracting process, defining what you need and creating selection criteria. When assessing a contractor's capability, you’ll need to consider:
Documentation - do they have the necessary licences, insurances and registrations in place to safely perform the job?
Finances - do they have the financial capability to procure materials and the capital investment to spend on the tools and equipment required for the job?
Experience - do they have a portfolio of previous projects they’ve worked on, and are references readily available?
Standards - do they have the right standards and procedures in place to ensure workplace health and safety?
The problem with choosing a contractor based on capability is often finding the time. Especially at the start of a project, there is a huge pressure to get moving, and decisions need to be made quickly. So how can you ensure you engage capable contractors, without losing valuable time.
The Benefits of Prequalification
Prequalification is the process of reviewing a list of potential contractors in advance of your project. The process involves seeking information about their experience, capability and financial standing ahead of time, so you have a shortlist of potential suppliers at the ready. Prequalification helps you to eliminate low bids from unqualified contractors, reduces business risk and means you are much more likely to get the right contractor for the job.
Once you have a list of prequalified contractors, the process of engaging the right contractor at the right price becomes a lot more straightforward. You know that whoever you choose from your list meets the necessary criteria, and you have confidence in the quality you’ll get. Prequalifying makes sound business sense, but it does need to be managed and a trustworthy system to be put in place.
Outsourcing Contractor Management can Help
With the help of a specialist contractor management provider, choosing the right contractors becomes much easier. There is less paperwork, less work for procurement staff and more standardised processes and procedures, ultimately allowing you to make the right decision faster. What’s more, online systems ensure that all documentation is stored centrally and renewals for licences and registrations are automatically notified to all parties.
Having an effective contractor management system in place is your best defence against hiring the wrong contractor and opening your organisation to risk. You shouldn’t have to choose between price or capability; you should have both. With the right solution, you know you will get the best overall price for your project while delivering quality, safety and peace of mind.
For over a decade, Conserve has helped organisations overcome contractor management challenges. We can help you develop a contractor management service that will be not only effective but will make your organisation safer, while minimising your overall risk. Request a demo now or visit the Conserve page for more great content.
For more information, call +61 2 8883 1501, visit www.conserve.com.au or email enquiries@conserve.com.au