10 Mar How to vet and manage your subcontractors
With a range of services and industries lending themselves to the subcontracting of general and specialist services to fulfil contractual and client requirements, it is more important than ever to have robust vetting and management procedures in place. Subcontractor work falls under your responsibility to monitor and manage and ensure everything is done by qualified, trained and competent staff – equipped with safe and reliable equipment.
It can be overwhelming to work out where to start and stop when it comes to vetting your suppliers. But we have put together a helpful guide to show you the most critical areas in our opinion where vetting and ongoing management is key.
In addition to the following points, we also recommend you have a specific place/file/system to record the following information – so should there be an issue you have everything to hand. Our ComplianceManaged software provides one platform to manage and monitor everything subcontractor compliance – so at the click of a button you can see a dashboard for each subcontractor and where they are currently compliant and non-compliant with your requirements.
- Examine their past and current performance
Request information from the potential customer about their licenses, accreditations, history, and references. Look for any public data on lawsuits, disputes, complaints, or bankruptcies. Ask for the contact information of previous contractors they worked for.
- Look at their queue of work
It’s smart to make sure potential subcontractors can complete the work you need, so you’ll want to examine their log of previous, current, and future work. If the subcontractor seems too busy for their size, your job might overextend them.
- Ask about their safety practices
Unsafe operations can leave you exposed to liability and force an inspector to close the job site, so make sure any subcontractors have clean or reasonable safety histories. They should also have ample safety protocols in place and a crew who is coached to prioritise safety. This could also take the form of mandatory Health & Safety compliance accreditations which you yourself have and therefore ask all subcontractors to maintain the same level of accreditation/certification to work on your contracts.
- Investigate the subcontractor’s employees
Ask the subcontractor about their team. Are they temporary workers, or do they work full time? Have they worked in industry before, or are they new? Does the subcontractor have the proper number of licensed professionals for the site? Do the workers have the right tools and reasonable workloads? Do any have serious felonies or drug problems that might make them unreliable? Answers to these questions will determine whether the subcontractor is right for your job.
- Validate insurance
Contractors are required to have Insurance. If the subcontractor doesn’t have adequate insurance in place, you could be held liable if there is a problem.
- Investigate the subcontractor’s financial health
If your job is large, you’ll want to make sure the subcontractor’s financials are healthy enough to commit. You don’t want their employees to walk off the site one day due to lack of payment, or an inability to purchase materials. Request their annual contractor volume, two years of financial statements, and their total sales and net worth (you might have to sign a confidentiality agreement). Look for signs of poor health, like poor cash flow, a mountain of debt, or declining income.
- Ask about their quality control process
In order to avoid rework and warranty work, you want your subcontractors to certify the quality of their materials and finished work. Every professional business should have a procedure in place to guarantee quality assurance. This procedure is rarely complex, but a successful business will have an answer to your questions.
- Demand a written contract
It is shocking how many people work without a written agreement. As a contractor who is purchasing labour, you need to protect your investment. Every deal should be bound by a contract that clearly describes your expectations, including the scope of work, time frame, and payment arrangements. Describe what you will provide and what the subcontractor will provide in terms of materials, warranties, and clean-up.
Hiring a subcontractor is like hiring an employee: You want someone who will represent your business well without adding drama, stress, or financial burden. If you follow the steps listed above, you’ll find the right candidate and build a lasting relationship.