Ever increasing numbers of companies like yours are contracting out part of their production or hiring contractors to carry out peripheral activities. Outsourcing management comes replete with multiple benefits but is not devoid of risks. Hence the importance of sound contractor management.
Contractors must be managed efficiently, responsibly and in keeping with the three principles of due diligence, namely foresight, efficacy and authority. To help you manage contractors optimally and attenuate risks, we have drawn up a list of seven tips for successfully managing external contractors based on these three principles.
1. Define the Working Environment and Related Risks
The planning stage is of critical importance and must never be neglected. For each project requiring the hiring of a contractor, you must first draw up a detailed, well structured specifications.
This document defines the context and project objectives, as well as the nature, magnitude and complexity of the work to be outsourced. It also itemizes the scope of planned activities, includes a detailed project calendar, outlines the responsibilities incumbent upon the contractor.
The specifications also make it possible to determine and evaluate project-related risks. As a result, you gain a clear understanding of contractor needs in terms of training, skills and insurance coverage. Prudent planning extends to all aspects of a project and safeguards all stakeholders against ambiguity through proper control and assistance mechanisms.
2. Reduce Risks and Respect Safety Standards
You know your company and can therefore assess and rigorously control contractor-related risks specific to your working environment.
You are indeed responsible for your working environment at all times and must comply with all prescribed safety standards. Thus, in the event of an accident, you can always demonstrate that you operate in full compliance with all regulatory requirements. If needed, you may institute improvements intended to attenuate risks upstream of contractor involvement.
3. Choose the Right Contractor
Your choice of contractor must be based on a series of criteria and not be decided on the sole basis of the best price tendered. First and foremost, you are seeking reliability and the guarantee of a job well done.
By taking the time to detail your company’s standards, it becomes easier to enforce requirements and avoid making wrong choices. Your company’s values, code of ethics and occupational health and safety standards become reference points which define your expectations with respect to contractors.
For each contractor, you must check experience in your sector of activity and its related risks, operating policies, health and safety record, supervisory techniques and training profile. This will point you in the direction of the contractor with the required qualifications and technical capacity to best satisfy your needs and carry out the work to be outsourced.
4. Foster the Sharing of Information with Workers
Once the contract has been signed, but before work begins, arrange to have your project coordinator meet with the contractor’s personnel. This is the best manner in which to convey important information, share the statement of work, and outline requisite compliant procedures and working methods.
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The resource person commissioned to manage the project must be invested with the necessary authority and possess the necessary skills to liaise with the contractor, both in human and technical terms. Through exchange of this nature, you can quickly bring contractor personnel up to speed on your expectations, activities to be undertaken, rules and other company-specific factors.
The contractor must also understand job-related risks to outsourcing management, means of risk control, criteria and modes of evaluation employed, as well as the penalties imposed in instances of non-compliance. Some contractor management software packages include modules which allow you to analyse risks and requisite mitigation measures, and to transmit this information to the contractor with a view to engaging structured dialogue on work-related hazards. Other modules include forms that the contractor must sign to substantiate intended compliance with the safety standards of the hiring organization.
5. Conduct Preventive Monitoring and Take Safety Measures as Required
Even if all stakeholders have been fully apprised of operating specifics, it is important to keep your eyes open and rigorously monitor work for the duration of the project. It is essential to institute a monitoring and prevention procedure to check work carried out and to ensure contractor compliance with the terms and conditions of the contract.
The occupational health and safety requirements and practices that apply to company personnel must apply in equal measure to the contractor and contractor resources. Keeping a log of all incidents and accidents allows you to address problems that occur and take remedial action as they arise.
The frequency with which checks are conducted will vary in accordance with the magnitude and complexity of a project, as well as related risks and hazards. Open, regular communication with your contractor will, without a doubt, positively impact project success.
6. Conduct Investigations
The periodic evaluation of outsourced work is essential throughout the duration of a project. Indeed, detailed reporting provides proof positive of sound contractor management and can be useful for inspection purposes.
In the event of any failings, you must exercise your authority and demand that the contractor at fault take remedial action as required in the circumstances. Once again, it is important to document requests for remedial action and eventual sanctions to demonstrate that the hiring organization did indeed exercise its authority in the matter.
A final evaluation serves to assess work quality and overall contractor performance. You may then use this evaluation to rate each contractor and build up a bank of qualified contractors for future reference.
7. Use the Proper Contractor Compliance Management System
To succeed at outsourcing management, you would be well advised to use a proven, performance-oriented contractor compliance management system designed to meet your needs.
Depending on company size and the scope of corporate activities, you can opt for one or other of internal or external management. To decide which option best suits your needs, you must consider the number of contractors and operating locations, and both the availability and quantity of qualified internal resources.
As your company grows, contractor management can quickly become highly demanding and risk levels can also increase considerably. External management often proves the simplest, most strategic solution over the longer term by allowing you to reduce risks, trim costs, enhance operating efficiency and standardize procedures.
By applying this series of tips, you demonstrate that you are exercising due diligence with your contractors, meaning that you are showing foresight, efficacy and authority in this regard. In so doing, you guarantee your company enhanced contractor management.
You can always call upon external management specialists should needs dictate and you find yourself overwhelmed by the tasks detailed in the six tips above, including tasks relating to detailed documentation and preservation of substantiated proof.
Your company’s success hinges on effective contractor management. By recognizing the importance of effective contractor management and providing the necessary resources, you will be poised to reduce risks, boost performance and profitability, and maintain a reputation beyond reproach within your industry.
