For many organisations, contractors are an essential part of the business, their specialised skills play a vital role from strategic projects to day-to-day maintenance. Our benchmarking contractor management research identified that 47% of organisations expected to increase or significantly increase their use of contractors in the coming two years.
At Alcumus we work with nearly half of the FTSE 100 so we know what we’re talking about when it comes to EHSQ risk. We’ve put together a guide outlining the Common Challenges in Contractor Management (and how to solve them) to help organisations like you. In this blog, we outline some of the common challenges that organisations face.
What could be riskier than hiring a new, unknown contractor or subcontractor that could affect your project schedule, the quality of performance, and project safety?
Finding the right contractors can be a time-consuming process. If you don’t have an approved supplier list, it can time and resource to shortlist potential suppliers and you never truly know the quality until you can qualify them further through an extended process.
It’s always sensible to have a pool of suppliers that you can access for business resilience. You can build these up yourself, or you can work with a third party to access accredited suppliers.
Paper-based and manual systems
Even in today’s digital world, many businesses continue to manage their supply chains via paper-based sand manual systems to record vast amounts of supplier and contractor data within spreadsheets. These manual processes often result in errors and duplication of effort and nearly 90% of spreadsheets contain significant inaccuracies.
By using an online portal that can be accessed anywhere, anytime, businesses can gain real-time visibility of information for all stakeholders, facilitating better communication with your team and contractors. This replaces paper-based systems which are error-prone and lacking in visibility, with a prescribed digital process.
The onboarding process can be a challenge where often, the process can be ad hoc and inconsistent, which can mean you never really know if contractors and suppliers have met minimum requirements to be in your supply chain. Commercial checks can be missed or bypassed. Alternatively, sometimes the onboarding process can be bureaucratic and resource-heavy, resulting in project delays.
When it comes to choosing the contractors you work with, you need to satisfy yourself that the contractor can do the job safely and without risks. At the same time, respecting the increasing importance of responsible business practices also matters when choosing contractors and suppliers.
You should ideally assess safety statistics, regulatory compliance, past performance, and reputation as well as any necessary insurance and training requirements, so you have peace of mind that they’re a good fit for the job.
Businesses more than ever need to scrutinise their supply chain beyond only health and safety. Some of these drivers include eradicating modern slavery, achieving environmental goals such as net-zero carbon or reduced plastic waste, and monitoring data protection, which requires a certain amount of expertise to get this right.
A conservative estimate to prequalify for just health and safety would be three hours per contractor/supplier – which takes more than 1,200 hours on average. This is before any other aspects such as quality, environment, finances, and modern slavery.
A pre-qualification process using an expert third-party provider sets out a series of questions for potential contractors to answer regarding their level of experience, capacity, and financial standing. Often when companies have their own in-house prequalification process, this is done as a one-off when they first work with a company, however, it can be inadequate with annual insurance, qualifications, and changing legislation.
In our research, we found that 85% of large companies believed that they had contacted their suppliers to ask about their compliance with Modern Slavery. However, when we asked SMEs, they said that just 53% of the companies they work for had contacted them to find out about the steps taken to mitigate modern slavery. So, clearly a disconnect between larger businesses feeling like they are meeting their obligations but SMEs saying they haven’t been asked.
Once you’ve selected and onboarded your contractors, you then need to check that whoever will be working on the site is qualified for the task in hand.
Permit-to-work (PTW) is a documented procedure that authorises certain people to carry out specific work within a specified time frame. It sets out the precautions required to complete the work safely, based on a risk assessment.
With a PTW system, you can identify challenges of managing work activities and permit, save time from moving through multiple stakeholders, increase transparency and visibility of information, reduce risk and administrative burdens. Ideally, an option that has the ability to connect to your onboarding and management systems will help businesses to avoid data silos and enhance efficiencies.
Risk Assessment Method Statement (RAMS)
RAMS are often requested by companies to show that contractors and suppliers take safe working seriously and also a requirement of any health and safety accreditation process. They’re a combination of two documents – a risk assessment and a method statement. Together, they provide details of how you go about your safe system of work.
While a risk assessment is a simple process to demonstrate you’ve identified all of your workplace risks and taken appropriate action to mitigate them, a method statement goes one step further. It’s a simple way to convert your risk assessment findings and control measures into a safe working process.
The contractors you work with will be specialists in their trade e.g., roofing, plumbing, demolition, but are not necessarily experts in health and safety, or for issues such as environment, quality, and modern slavery. This means their risk assessments and method statements may not always be accurate. So, once you’ve selected your contractors, it’s important to consider how they are going to complete the work so that you can stay informed of the risk involved.
You can develop your own templates, or you can partner with a provider who can support you in this process, ranging from how suppliers can write an effective health and safety policy, understanding risk assessments, to what they need to know about COVID-19 deep cleaning. This will help to provide assurances that they can work to a minimum standard, raising the quality of your supply chain.
Audit and Review
If the Health and Safety Executive were to visit, or if an incident were to occur, would you be able to demonstrate that you’ve taken the appropriate reasonably practical steps? Would the information be readily available are contractors only checked once when they were first onboarded, or are they checked annually with records and qualifications kept up to date?
If you fail to demonstrate that you’ve taken the correct precautions and once the work has been completed, it’s equally important to evaluate if the work has been completed as expected, and to a certain standard? If this information is stored on paper or in silo’s it will have limited value across the business.
Having the right audit and review assessments in place will help to clearly demonstrate that you’re following the right legal steps with a robust audit trail of risk assessment management.
To learn more about the impact of these challenges that organisations face, download the ebook here: Common Challenges in Contractor Management.