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Best Practices for Managing Subcontractor Risk (Part Three)
Cascading Compliance Requirements
The most effective approach to subcontractor risk management is to ensure that all safety and compliance requirements apply to both prime contractors and subcontractors, at the company and worker levels. Doing so ensures that risk practices flow consistently throughout the supply chain, and are easier to manage, monitor, and enforce by the hiring company (as opposed to unique rules for primes vs. subs).
Company-Level Requirements
Just like with any direct contractor, subs should be comprehensively vetted at the company level, including safety history and statistics, safety and sustainability practices and policies, financial health, and potential cyber vulnerabilities. Directly vetting every subcontractor ensures that the hiring company has the visibility and control to ensure the same standard of quality and compliance applies to everyone working for them.
Insurance Coverage
Insurance is one element that may not be consistent from primes to subs. Prime contractors typically handle most insurance requirements, with liability for work performed by subcontractors remaining at the prime contractor level.
However, every subcontractor must have verified workers’ compensation coverage to protect the prime and hiring company.
Worker- and Site-Level Compliance
Robust worker compliance is especially critical for subcontractors, as so much risk exists at the job site where the work is performed. Any worker on a job site, whether employee, prime, or sub, must meet the same training and compliance standards for entering a site and performing work. Making an exception for one worker immediately makes everyone else on the job site less safe.
Site access controls and security can effectively maintain proper worker qualifications and training, especially when paired with on-demand mobile worker training and on-site hazard management tools.
Clear Expectations and Communication
If your current subcontractor management practice is hands-off, the transition to a more proactive, direct program will require clear expectations and communication to all primes and subcontractors. Once you’ve determined what subcontractor requirements will be and how you will obtain and manage subcontractor information, consider these steps: