Business Reporter – Technology – Expert Opinion: Subcontractor Risk Management

The need to assess and monitor subcontractor risk is more important than ever, said Anthony Hanley, SVP of Supply Chain Compliance, Alcumus SafeContractor, opening the Business Reporter virtual briefing. He told attendees — all senior executives working in health and safety — that the rise of ESG and sustainability has given companies even more to monitor.

Meanwhile, organizations are executing complex projects for which the skills are not available internally—or from a single contractor. To access the skills needed, the organization must hire subcontractors and then subordinate levels of contractors, which increases management complexity. Fortunately, there are solutions that can unlock efficiencies and cost savings while improving risk management.

Addressing Communication Complexity to Improve Compliance

Regulations can seem like a burden, said one participant. Long-term relationships with contractors can help manage risk, as each party knows what processes to follow, who to communicate with, and so on. However, many organizations find managing the risks and competencies of supply partners burdensome, which limits time spent on on-site risk monitoring, such as site access and pre-training. This challenge is compounded by the growth in the number of subcontractors, prompting many organizations to turn to third-party accreditation providers, such as Alcumus SafeContractor, to relieve themselves of pre-qualification and administrative tasks.

Contractors and subcontractors are often responsible for passing knowledge down the chain, but they are not communication experts. As one participant argued, the contractor management company must support communication and compliance standards to ensure processes and expectations are being properly implemented. Bringing in a partner like SafeContractor is key to setting standards, providing supply chain mapping and improving data quality, which leads to better decision-making. In turn, this enables organizations to better communicate, build relationships and hold face-to-face events to share information.

Minimize risk by integrating data

Risk management involves communicating the parameters within which work will be performed, such as applicable safety standards and expected behaviors on site. Even then, you can’t just tell people about the standards once because they forget. Supervisors must constantly remind people of the standards and then monitor whether they are being followed.

Of course, monitoring doesn’t have to be done by someone who monitors every activity. An effective outsourcing partner can remove the pressure and allow the organization’s staff to focus their attention where it’s needed most.
But even when the data is collected, the challenge is to aggregate it in a way that can be meaningfully acted upon. One person at the briefing said her organization tracked its safety metrics in different spreadsheets, each owned by a different manager. Putting it together required the kind of organizational knowledge that must be built over time. That’s a challenge for new hires or contractors.

Another delegate said that his ideal would be to have a system that records each subcontractor along with their work, qualifications and when they arrive to do the job they have been hired to do. When that contractor arrives on site, the security person at the gate will be able to quickly verify their identity and that they are expected.

Finding More Efficient Supply Chain Processes

This is exactly the technology solution that companies like Alcumus SafeContractor provide, Mr Hanley said. SafeContractor can handle all pre-construction checks, so access to construction can be managed quickly and efficiently without compromising compliance.

Managing contractor risk is not an easy task to solve, but given the potential for penalties for non-compliance and the damage an incident can do to a project’s reputation, organizations need to have a plan in place.

The challenge is to combine people, processes and technology into a technology solution that allows management to make sure it is meeting its commitments. The starting point, Mr. Hanley said, is to collect baseline data that can be tracked over time. The right outsourcing partner can ensure that this is done in a way that ensures efficiency and compliance, while saving the organization time and money.