When it Comes to Cost, Should You Outsource Prequalification?
Engaging the right contractors can make a big impact on the success of your business, but they can also introduce significant risk. If we choose the wrong company for the project, not only can it impact the timelines and quality of work, but it can affect workplace health and safety. So, it stands to reason that prequalifying contractors is an important step in managing risk and creating a safe working environment. However, like any task, prequalification takes time and resources to get right. If you have a prequalification process or are thinking of implementing one, it’s vital to consider the costs to your business to make sure you have the most efficient system in place.
The Pros and Cons of In-House Prequalification
There are no two ways about it, prequalification is time-consuming and challenging to get right consistently. You are reviewing other businesses' company profiles, insurances, safety systems and employee qualifications. That essentially means investigating and understanding their ways of working, requesting and verifying documentation and ensuring that everything meets your company standards and the broader legislative requirements. Ultimately, you need to be absolutely sure that everything is in order and that you are happy with potential contractor services before approving or, indeed, hiring them.
As a business leader, it can be tempting to keep prequalification in-house. After all, it offers some up-front advantages. The biggest of these is control; by managing prequalification internally, you have total oversight and can ensure the process is managed in line with your industry requirements. It also gives you an opportunity to build up internal expertise. You will gain more knowledge about contractor services and the risks they bring.
However, while in-house prequalification may work on a small scale, if you work with multiple contractors, the costs can quickly escalate as this number increases. The chances are that, if you manage qualifications in-house, the tasks have been added to someone’s existing workload. While that may be manageable for a handful of contractors, it can soon get out of control, with certain checks and validations being missed. And, even with a few contractors, there is a lot to be learnt about the different types of documentation and verification processes. More often than not, you will end up needing to dedicate a full or part-time resource, and then have to manage what happens if that person is absent.
Calculating the Cost of an In-House System
As a fiscally responsible business leader, you need to be aware of the cost of any process you implement. When it comes to verifying documentation for contractor prequalification, this will depend on how complex your requirements are and how many resources you need to dedicate in order to meet this complexity. You can begin to calculate the cost to your business by considering:
Number of contractors - you need to know how many contractors or businesses your company engages in at any one time.
Volume of documents - you need to determine the numbers and types of documents that need to be collected and verified.
Time required per document - you need to work out how much time is required to verify each document.
Document validation time - you need to know when documents will expire and factor in time to re-verify them.
Once you have all of these estimates, you can begin to do the math. But you also need to consider whether your chosen system has the capacity to support business growth. If you bring in new contractors, will your internal resource be able to cope?
Is Outsourcing the Answer?
The alternative to managing prequalification in-house is to outsource to a third-party contractor management provider. If you have done your own due diligence, you’ll know what it is going to cost you to manage document verification in-house with an internal resource. You can then use this figure as a baseline to help you compare outsourced solutions. However, you’ll need to also consider the other services on offer. Some companies may provide document verification, whereas others may just provide software or a comprehensive contractor management solution.
You’ll need to consider the size of your business, your budget and future contractor requirements to help you make the right decision. When you’re comparing solutions, look for experience, flexibility and contractor support services. If you’re going to implement a new system, you need to know how easy it will be to use, and you’ll want to ensure you have ongoing support. Make sure that you ask the right questions when considering any new system or company. By choosing to work with a company that understands your requirements, you will be safe in the knowledge that your chosen solution can grow with your business.
There is no right or wrong answer when it comes to managing prequalification. However, you need to consider the cost, resources and complexity of your criteria. There is little point in juggling mountains of paperwork or multiple systems and creating an unnecessary additional workload. If it’s all becoming too much or too costly, it’s probably time to look at your options. After all, by effectively managing the procurement process and working with approved contractors, you will improve your project outcomes and reduce the overall risk to your organisation.
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