The Expert View: Managing sub-contractor risk

The need to assess and monitor sub-contractor risk is more important than ever, said Anthony Hanley, SVP of Supply Chain Compliance, Alcumus SafeContractor, opening a Business Reporter virtual briefing. He told attendees - all senior executives working in the health and safety field - that the rise of ESG and sustainability have given businesses even more things to monitor.

Meanwhile, organisations are carrying out complex projects for which the skills are not available in-house - or from a single contractor. To access the skills it needs, the organisation must employ sub-contractors and, subsequently, sub-tiers of contractors, which increases management complexity. Fortunately, there are solutions that can unlock    efficiencies and cost savings while improving risk management.

 Tackling communication complexity to enhance compliance

Regulations can feel like a burden, said one attendee. Working with contractors for a long time can help to manage risk because each side knows what processes to follow, who to communicate with, and so on. However, many organisations find managing supply partners’ risks and competences burdensome, limiting the time for on-site risk monitoring such as  site access, and inductions. This challenge grows with more sub-contractors, promoting many organisations to turn to third-party accreditation providers like Alcumus SafeContractor to offload pre-qualification and administrative tasks. 

Contractors and sub-contractors are often responsible for passing knowledge down the chain, but they are not specialist communicators. As one attendee argued, the business managing the contractors must handle communication and compliance standards to ensure proper delivery of processes and expectations. Adopting a partner like SafeContractor is crucial for setting standards, providing supply chain mapping, and improving data quality, leading to better decision-making. In turn, this enables the organisations to communicate more, build relationships, and hold face-to-face events to share information.

Minimise risk by addressing data integration 

Managing risk is about communicating the parameters within which the work will be carried out, such as what safety standards apply, and what kind of on-site behaviour is expected. Even then, people can’t be told the standards just once, because they forget. Supervisors must continually remind people of the standards and then monitor whether they are met.

Of course, the monitoring doesn’t all have to be done by a person who monitors every action. An effective outsourcing partner can remove the pressure and allow the organisation’s staff to focus their attention where it is most needed.
But even if data is gathered, the challenge is collecting it so that meaningful action can be taken. One person at the briefing said his organisation kept track of its safety metrics in a variety of spreadsheets, each of which was owned by a different manager. Gathering them required the kind of organisational knowledge that must be built up over time. This is a challenge for new staff or contractors.

Another delegate said his ideal is to have a system which logs each subcontractor along with their job, their qualifications, and when they will be coming to do the work for which they have been hired. When that contractor arrives at the site, the security person at the gate would then quickly be able to verify their identity and that they are expected.

Finding more efficient supply chain processes

That is precisely the technology solution that companies like Alcumus SafeContractor provide, said Mr Hanley. SafeContractor can handle all pre-site checks so that access to the site can be managed quickly and efficiently without compromising compliance.

Managing sub-contractor risk is not an easy problem to solve but with the possibility of fines for non-compliance and the reputational damage that an incident can cause to a project, it is vital that organisations have a plan in place to address it.

The challenge is to combine people, process and technology into a technology solution that allows management to ensure they are meeting their obligations. The starting point, Mr Hanley said, is to gather some baseline data that can be tracked over time. The right outsource partner can ensure that this is done in a way that ensures efficiency and compliance, while saving the organisation time and money.