Guide to Subcontractor Selection and Control

Subcontractors can present unique challenges for construction companies by adding a layer of complexity to the risk management process. A subcontractor’s safety performance can have a substantial impact on a project’s overall success. It is essential to hire qualified contractors who can safely perform the work. Once pre-qualified and awarded the job, it is also essential to manage subcontractors throughout the construction project. Subcontractor selection and control processes can have a significant impact on a project’s ultimate loss experience.

Subcontractor selection and control - a working model

All construction projects begin with an idea or model of what the finished product will look like. To go from that visionary model to the actual working model, the architect and general contractor must understand the progression of steps that need to take place in order to successfully build the project. In this case, the process comes before progress.

Subcontractor selection and control is no different. The first step toward developing a program is to create a model. Your subcontractor selection and control model should follow the project lifecycle from inception to completion, as an effective program will require follow-through and commitment before, during and after actual construction.

The information contained in this guide has been separated into a six-phase model. Each section describes important elements and best practices to incorporate into your program.

1. Prequalification

During the prequalification phase, the general contractor or construction manager determines which subcontractors will be allowed to actively bid on projects. It is common to review a contractor’s ability to bond the work, if required. This is also a good time to evaluate the subcontractor’s ability to safely perform the work. By prequalifying subcontractors based on their safety performance, subcontractors are alerted to the fact that the general contractor, construction manager or owner are concerned about job site safety and are committed to working with only those subcontractors who share that commitment. This can also save your staff time during the bidding phase since subcontractors with poor safety records may choose to drop out as potential bidders.

As you proceed through the latter phases, the subcontractor evaluation should confirm the information obtained during the prequalification phase and their commitment to safety. Ultimately, the subcontractor’s safety performance should have an impact on their ability to bid future jobs. See the Sample Subcontractor Safety Prequalification Worksheet for more information.

2. Bid specification

Establish project-specific safety, quality and performance requirements to use during the bid specification phase. These specifications help communicate expectations so that potential bidders can accurately estimate their costs. This also helps increase the likelihood of subcontractor compliance and cooperation during construction. Simply stating that contractors “must adhere to applicable regulations” may not be enough. It is critical that bid specifications are clearly written and provide as much detail as possible.

The program elements mentioned in your specifications should be incorporated throughout the remaining phases of the subcontractor selection and control process. See the Sample Safety and Quality Checklist for Bid Specifications (link to sample checklist) for more information.

3. Bid evaluation and contract award  

During the bid evaluation phase, qualified subcontractor bids are evaluated in order to identify the most responsive and qualified contractor for the job. Key elements to review during the bid evaluation phase include:

• Management commitment. Companies that have demonstrated responsiveness and professionalism during the previous phases may be more cooperative and easier to work with once work begins.
• Bid documentation. A competent safety and/or QA/QC professional should review and evaluate submitted bids and any project-specific plans. Use a checklist to evaluate safety and quality programs. See Sample Safety and Quality Checklist for Bid Specifications.
• Prequalification documents. Refer back to prequalification documentation to differentiate bidders during the evaluation.
• Previous experience. Review bidder's experience performing similar work. Consider job type, duration, size, location and owner. Evaluate contractor's experience with unusual materials, products, or installation methods that may be used during the project.

Once bids have been evaluated and contractors have been selected to perform the work, the next step is to award contracts. Before any contracts are signed, consider conducting a pre-award meeting with successful bidders and key members of the project team. This meeting allows the project team to provide detailed site-specific requirements and answer questions before contracts are signed. This is also an opportunity to request any additional information or documentation from the subcontractor. Creating a project start-up checklist that incorporates site-specific requirements is a good way to help ensure these items are covered before work begins.

After the pre-award meeting, the owner, general contractor, or construction manager should be ready to award the contract. Consider meeting with unsuccessful bidders privately to provide the rationale for the decision and provide feedback on improvement opportunities.

Completion of the previous phases should result in a group of qualified, safety-conscious subcontractors. Communicate the important role safety played during the selection process to help reinforce subcontractors’ safety efforts and performance during construction.

A contract should be used to clearly define the project scope, as well as terms and conditions, like insurance requirements and payment. Having clearly defined contracts between the general contractor or construction manager, and the subcontractors, is an important part of the risk management process. Consider using a Subcontractor Risk Management Tracking Form to help manage your contractual risk transfer program on a per-project basis.

If there is a project specific safety and health plan, it should be included in the contract. This also is a good time to answer questions contractors may have regarding topics such as roles and responsibilities, requirements for attendance at project meetings, reporting and other expectations.

4. Project Orientation

Before beginning work, hold project orientations for all subcontractors who will be working on-site. This can be done in group meetings or by meeting with individual subcontractors. A large group meeting has the advantage of allowing contractors to see who else will be working on the project and to emphasize the point that a safe job requires teamwork and cooperation. These meetings should be led by a member of the site management team and a safety professional (if available).

During orientation, it is beneficial to review what may be unique to the project specific safety plan. Items may include, for example, fall protection rules, return-to-work policies, ladder use restrictions, controlled substance abuse and testing, etc. The project owner may also have their own orientation they require contractors to attend and certain policies that workers must adhere to while on the property, such as photo/video restrictions.

Below are topics to consider including in your orientation session:

• Project overview:
  • Type of project
  • Owner and contractors involved
  • How the project is going to be managed
  • Contractor and project owner safety philosophies and values
  • Site layout
• Accountability:
  • Responsibilities of various parties
  • Supervisory accountability programs and expectations for foremen and superintendent-level employees
  • Subcontractor safety progress and follow-up program
• Safety:
  • Detailed explanation of all site safety rules and procedures
  • Current project injury and accident trends
  • Specific hazard safety procedures
  • Incident and accident reporting expectations and procedures

In addition to general orientation for subcontractor management, every worker on the site should complete safety orientation and training. This may be done by each contractor or, in some cases, by the project safety officer.

A solid onboarding program should orient workers not only to the workplace, but also to procedures, policies and culture. Travelers research shows, workers are most engaged during the first six months on the job. Onboarding orientation during this time provides the opportunity to ingrain values, expectations and the worker responsibility for safety, productivity and quality. The benefits of a strong onboarding orientation program are highlighted in Travelers Workforce Advantage^® model.

5. Performance management

The performance monitoring phase can help to ensure there are consistent and ongoing safety and quality efforts on the part of all subcontractors. As work begins, monitor each contractor’s performance to identify and address unsafe conditions, at-risk behaviors and quality controls. These efforts should be coordinated by the hiring contractor and executed onsite by the project manager, superintendent and/or foreman. The performance monitoring process should include:

Safety

• Periodic (weekly preferably, depending on the size and scope of the project) safety meetings between the site safety staff and all subcontractor safety representatives.
• Monitoring and verification of subcontractor training, which could include site orientations, toolbox safety meetings, incident and accident investigations and pre-task/job safety plans.
• Tracking each subcontractor’s monthly safety performance and accident experience.
• Regular job site safety audits and subcontractor operations inspections, those that have been identified as high risk or critical for safety.
• Prompt follow-up on unsafe behaviors or conditions to help ensure that recommended corrective actions are taken.
• Review quality of accident investigation reports along with corrective action documentation needed as the result of accident investigations.

Quality

• Confirm applicable compliance inspections are completed as required (contractor, 3^rd party and jurisdiction having authority).
• Verify that pre-cover-up and pre-enclosure inspections are being completed (ceilings, walls, roofs, excavations, etc.).
• Documentation of all field changes and signoffs, including Request for Information (RFI) and Change Orders (CO).
• Verify that appropriate records are being maintained by the contractor, such as log reports, project documents and digital photos.

Throughout the project, focus on identifying the early warning signs and predictive measures that could reveal potential problems with a subcontractor’s safety and health programs that could lead to accidents. Once leading indicators are identified, establish criteria and set goals, collect and review the data to measure performance and provide re-enforcing or re-directing feedback based on set expectations and subcontractor performance. In contrast, lagging indicators can help you measure the frequency and occurrence of events that have already taken place. They should be used for future safety planning and subcontractor performance evaluations.

5. Performance evaluation

As work on the project concludes, review each contractor’s performance. Having a standardized process for this evaluation can help you identify high-performing, safety-conscious subcontractors and those that should be evaluated further prior to hiring them on future projects. Some of the items to include in a subcontractor evaluation and review process include:

• Subcontractor management and communication
• Effective anticaption and completion of work
• Record of following plans, specifications and delivering the required scope of work and product
• Quality control standards and performance
• Safety management effectiveness
• Delivery of close-out requirements

A formal review and rating of each contractor at the end of the project should be completed and used for future contract award considerations.