What is Contractor Management
5 min read
Debates over contractor management in the past several years include the amount of oversight a Hiring Client needs to identify the risks associated with contractor use and how to score contractors accurately and consistently.
At a high level, contractor management is the practice of managing outsourced work performed for an individual company. The simplicity of the definition, however, can be misleading in that it doesn’t speak to the types of information that need to be managed, who should be involved and what is considered a best-in-class contractor management program.
Building the Case for Contractor Management
In 2018, ISN surveyed 204 decision makers from 161 Hiring Clients across various industries to gather feedback on the challenges, trends and future of contractor management. Of those surveyed, 95% expect outsourced work to increase or remain at the same rate over the next several years. The International Association of Oil & Gas Producers (IOGP) reports that historical trends of contractor work hour exposure has grown by five times over the past 20 years.
Regulations, legislation and legal requirements are constantly changing, which creates a difficult landscape for Hiring Clients to understand a contractor’s work history and potential risk. For example, Mexico’s Department of Labor and Social Welfare (STPS) in June 2013 published rules outlining an employer’s obligation to develop and implement detailed employee training programs. And in 2017, the Province of Alberta passed Bill 30: An Act to Protect the Health and Well-being of Working Albertans, which was put in place to improve worker safety and modernize workplace standards and practices. A committee of occupational health and safety experts from the International Organization for Standardization released the new health and safety management system standard, ISO 45001, in March 2018. Although a global standard and not law, Australia is one of the first countries to introduce ISO 45001 country wide.
Hiring Clients must focus on their contractor management strategy to keep up with growing work, comply with local regulations and reduce the potential liabilities of their organization. Companies are struggling, however, to standardize their contractor management programs and practices.
Contractor Management Collection and Verification Basics
A major debate for Hiring Clients is what information needs to be collected, verified and managed. If you asked 10 different Hiring Clients, you would likely receive 10 different responses about what information should be included. When building your contractor management program, start with the basics, like information on health and safety, insurance and training programs.
Health and Safety Information
Contractors are required to develop, implement and maintain written health and safety programs as well as document past and present injury statistics. However, Hiring Clients lack the manpower to collect, verify and audit contractors’ health and safety written programs and historical performance. Hiring Clients need a system in place to collect, trend and store these written programs and injury statistics to ensure the organization has a clear picture of contractors’ safe work practices.
The Occupational Safety and Health Administration (OSHA) outlines six key benefits companies will see by implementing health and safety programs:
- Prevent workplace injuries and illnesses
- Improve compliance with laws and regulations
- Reduce costs, including significant reductions in workers’ compensation premiums
- Engage workers
- Enhance their social responsibility goals
- Increase productivity and enhance overall business operations
The financial and risk burden does not fall solely on the Hiring Client. Contractors are required to carry various types of insurance based on the type of work they perform and their company structure. For Hiring Clients, the need to verify a contractor maintains the required insurance policies is a burden. At any time, policies can expire, be cancelled or change during the relationship between the Hiring Client and contractor.
Contractor management does not stop at the company level. A successful contractor management program includes evaluating individual employees to determine if they are qualified to perform their scope of work on a jobsite.
Contractor companies and employees are required to maintain trade qualifications for type of work the employees are performing. It is a duty of the Hiring Client to verify and audit the qualifications of contractor employees to ensure educated, qualified and competent workers are performing work on Hiring Client property.
The ability of the Hiring Clients to constantly maintain and verify hundreds or even thousands of employee qualifications on a day-to-day basis is a significant resource burden for Hiring Clients.
Contractor Management Lifecycle
Once a Hiring Client identifies the priority information in their contractor management program, the next step is to set short-term and long-term goals to drive the program from being reactive to proactive. In a recent publication, The Orange Book, ISN outlines five priorities that drive contractor management goals within a Hiring Client organization.
- Improving safety performance of contractors and employees
- Improving business continuity and operations excellence
- Improving profitability through reduced costs, rework and incidents
- Improving regulatory compliance
- Meeting or exceeding internal management expectations
By changing from a reactionary contractor management company to a proactive contractor management company, Hiring Clients can expect to have a closer relationship with contractor partners.
How Technology Enhances Contractor Management Programs
Once you decide to commit to improving your contractor management program, consider implementing technology to streamline the process. Established in 2001, ISN is the global leader in contractor and supplier information management. Our online contractor management software, ISNetworld, helps companies manage risk and qualify contractors to ensure they meet Hiring Client standards and regulatory requirements.
In coordination with our Hiring Clients, ISN helps identify contractors that need to be included in each prequalification process. Our team then works directly with contractors to subscribe and submit required documentation to ISNetworld. The software allows Hiring Clients to collect, verify and trend documentation for a clear picture of the health and safety practices of their contractors.
ISNetworld’s tools help organizations identify and evaluate the right contractors for each job. And since all tools are included in each Hiring Client’s subscription, we can customize every implementation to support your specific challenges and priorities for one annual fee.
Let us Help
If you’re a current ISN Hiring Client, speak with your ISN team about how your organization’s contractor management program and contractor performance align with your industry peers.
If you’re a Hiring Client interested in learning how a partnership with ISN could support your organization’s contractor management efforts, request a demo of our ISNetworld platform.
If you’re a contractor and need help with your ISNetworld account, contact our Customer Service team for support 24 hours a day during the business week.