Selecting the right contractors is one of the most complicated aspects of contractor management. It explains why many large organisations devote entire departments to it. While it’s not necessarily difficult to find someone who wants to be awarded the work, you do need to be confident that:
- They will deliver on time
- They are qualified and competent
- They will they adhere to safety legislation
You want the best contractor at the best price and need to ensure the project is signed, sealed and delivered on time. If you get the contractor selection wrong, it can seriously impact project success and increase workplace safety risks.
This is where specialist contractor management firms can help. They are able to compile a pre-qualified contractor list, pre-screened for the right capability, against the requirements of your organisation so all you have to do is choose.
Factors to Be Considered When Selecting Contractors
It’s absolutely vital to select competent contractors, regardless of the size or urgency of the project. Workplace health and safety requirements don’t start once the contractor is on site; they need to be in place through the whole engagement process.
When selecting contractors, you should consider the following:
- Level of industry/business-relevant experience
- Familiarity with the hazards of your industry
- Previous health and safety performance records
- Safety policies, risk assessments and training records
- Insurance cover – Professional Indemnity, Public Liability, Workers Compensation
- Communication methods before and during the work
- Subcontractors and their competence
- Any enforcement actions that have been taken
- Supervision requirements
- Notifications process for problems and incidents
The above is not a definitive list of every consideration for contractor selection, but certainly a starting point that covers your bases. For a more comprehensive guide to contractor pre-qualification and selection please review ‘The Practical Guide to Pre-qualifying Contractors in Australia‘.
You’ll need to ask for references and copies of all documentation for careful evaluation prior to engagement. There is a huge amount that needs to be taken into account, and the success of your project as well as the safety of workers is dependent on it.
Understanding The Risks of Working with Contractors
While you may never have had an accident with a contractor before, the risks are only too real. Contractors are often used for specialist tasks involving high-risk or hazardous activities as well as carrying out non-routine procedures. At the very least, contractors aren’t as aware of your business-specific risks as your own fully inducted and trained employees.
This is why rigorous contractor selection is vital, if the risks are to be eliminated or minimised. The alternative is compromising project delivery timeframes, compliance with safety standards and ultimately profit margins and business reputation.
Methods For Selecting Contractors
Selecting the right contractor greatly depends on the correct preparation of the procurement process. It’s vital that all the needs and requirements of various business stakeholders are precisely defined. Many methods can be used to compare and select contractors:
- Least cost – selection at its most basic, some businesses choose contractors based on cost alone. This should only be a consideration where work is relatively well defined and understood by the contractors.
- Qualification only – at the other end of the scale, contractors are chosen solely based on their qualifications, regardless of cost. Price is only discussed once a contractor has been selected.
- Quality and cost-based – price is considered alongside qualification-based criteria and weighting is given accordingly. This is used when cost is a major factor, but quality is also important.
- Quality-based – Generally, two separate bids are requested, a technical bid and a price proposal. Quality will be more important than price, however price is still a consideration.
- Sole source – sometimes there is no competition, and only one contractor is selected to provide a bid, based on scope and price.
- Fixed budget – contractors adjust the scope of their work to meet the budget.
Evaluating contractors and ultimately selecting one, requires sophisticated knowledge and experience. Due to economic and profit based pressures, the lowest price is often (not always) the chosen selection method, though it needs to be delivered without a reduction in quality or an increased risk of compensation claims.
Responsibilities of Contractor Selection
It’s clear that contractor selection is a huge responsibility, which only becomes more complicated with the more contractors you engage. It involves bringing together directors, project managers and health and safety teams, all of whom will have their own set of selection requirements. Contractors need to be then evaluated in line with current legislation, safety standards and industry accepted best practices in relation to the nature of the project.
To successfully implement a contractor selection process that decreases business risk, a thorough and systematic approach is required. Specialist contractor management companies can do just that, simplifying contractor selection and allowing your business to engage the best providers. You can have peace of mind that safety, legislative and business requirements are being met, allowing you to focus on the project at hand.