How to avoid risk and reputational damage when commissioning contractors
10 June 2013
Gary Plant, Managing Director of Altius Vendor Assessment shares the pitfalls you should avoid when assessing contractors to ensure compliance.
In the words of Benjamin Franklin: "It takes many good deeds to build a good reputation, and only one bad one to lose it."
Some of the key risks that can expose organisations to reputational damage are: health and safety, environmental performance, operational disruption and commercial problems.
While many organisations have these risks well controlled within their own business, there can be cracks in their supply chain.
Key to removing these cracks is complete supply chain visibility and having in place a robust system of standards and pre- qualification checks, particularly when outsourcing to contractors in high risk areas such as construction and maintenance.
It is critical that supply chain visibility and robust assessment applies to sub-contractors as well as contractors. It isn't sufficient to delegate this task entirely to your contractors. If the cracks start to show, your company could be exposed to risk and liability and the reputational damage that follows.
In addition, it isn't sufficient to perform periodic compliance checks. There must be a dynamic system in place to ensure that your supply chain is in good shape 24/7/365.
Some of the common pitfalls that you should check for in assessments, include:
- Do your contractors and sub-contractors have the necessary insurance for working at heights? (this is of course, no substitute for checks and supervision on your site).
- Is your contractor's asbestos awareness training adequate? Have you checked the course content, or has it been approved by organisations such as UKATA or IATP? Is refresher training provided and are all new starters covered?
- Have you checked that your contractors are competent to work with electricity? Do you know if they are a member of a recognised group such as NICEIC or the ECA?
- Does your contractor have a sustainable and ethical sourcing policy?
- Is your contractor disposing of waste responsibly? Do they have the up to date licenses?
- How financially solvent is your supplier? Do you continuously track their financial health to ensure that they can fulfil their work commitments?
- If you are dealing with a large contracting business with multiple divisions, are you certain that their insurance cover applies to the individual business you are dealing with? Can you be certain that insurances are always up to date?
- Is professional indemnity insurance set at the right level for the risks your supplier might face?
- Do your contractors have the records to demonstrate they comply with applicable legislation?
- Do your contractors check their staff are competent to safely perform the work they are asked to do?
Altius is a member of Safety Schemes in Procurement (SSIP) and provides consultancy and advice on supplier management to organisations such as the Rail Safety and Standards Board.
Further information www.altiusva.com