How to reduce risk when hiring contractors
Hiring contractors on construction projects is unavoidable. It is the most common way of carrying out construction work. Hiring contractors without clear and specific rules can lead to an increase of risk on a project, and we know how important health and safety is on site. When hiring contractors, often project managers are not aware of these risks. This can lead to further issues down the line. There are areas that project managers can consider before hiring contractors to help reduce exposure to project risks.
The problem with contractors
As we mentioned, contractors are an integral part of the construction process. You have to trust that they will complete the work to your satisfaction. Sometimes, unfortunately, it doesn’t always go as intended. As a result of this, the most common threats you as a hiring company will experience are:
- Fiscal and labour risks
- Job site accidents
- Overstepping project deadlines and going over budget
- Risk of receiving low-quality workmanship/products
- Risk of no warranty from contractors
Any issues that arise from these remain with the hiring company. There needs to be preventative action against these risks.
Preventing risks
There are two main courses of action you could consider if you want to reduce the risks to your project. The first is the contracting policies of the hiring company.
These policies can lead to constraints in construction. For example, many companies hire contractors based on their market share or those that offer the lowest price. What they don’t consider is their structure, experience, or the quality of work they provide. This leaves you at risk of poor-quality construction and failure to meet project deadlines or specifications. The best solution is to change the company policy on hiring contractors, but this can prove challenging. It largely depends on the influence the project manager has within the company.
This leads into the second course of action – the project manager’s attitude. The project manager has a lot of control over the hiring and management of contractors. Therefore, it is the project managers responsibility to ensure best practices and risk reduction. If there is a poor project manager, there is likely to be increased risk, due to the level of control they exercise over contractors. If you’re satisfied with the work your project manager is conducting, there are other matters to consider.
How to better manage contractors to reduce risk
Four steps can ensure risk reduction to your project:
- Contract planning – Project managers are so often pushed for time that the need for an immediate start crushes the planning stage. Don’t let this rush you. Take the time to define what will be contracted in which way by which contractors.
- Contractor selection – Better evaluation is needed when selecting contractors. They need good references and past work, a reasonable price, documentation of the company and employees, as well as a good company structure.
- Contract administration – You need to stay in control of contractors and the project at all times. Do this by maintaining excellent communication channels between all agents and being aware of all changes that occur in the projects. Then, you can adjust your contractors’ roles accordingly.
- Corrective actions – The project manager needs to anticipate problems by meeting regularly with contractors to decide what corrective actions need to be implemented. Contractors who continually deviate from plans must have their contracts reviewed or rescinded to reduce the risk to the project.
Hiring contractors can be tricky work and leaves your project at risk of hundreds of shortcomings. That’s why at Inscape we make sure we work with project managers during every stage of construction to ensure the work we are doing is of the highest standard and fitting to the needs of the project. If you’re in need of expert manufacturers, get in touch with Inscape today on 0845 230 8565 for an informal chat about how we can help.