Written by: Jordan Hollingsworth, MS, ASP, CHST, CHSP, CRIS®
Safety Advisor, Design and Construction
When you approach many companies’ facilities for the first time, you have to stop at a front gate or a front desk to identify yourself and explain why you’re there. The reason for that security is evident: the company wants to make sure that the only people who set foot in its facility are those who belong there.
That’s the basic idea behind a contractor prequalification program. Having a program in place is a way to ensure that only contractors who can prove that they meet your organization’s standards for safety will be allowed to set foot on your worksites. In addition to protecting the well-being of everyone who works on your site, a prequalification program can protect your organization’s public reputation and help you keep insurance costs under control.
In this article, we’ll explain the reasons for and the benefits of a contractor prequalification program, examine some of the factors you may wish to include in your own prequalification program, and discuss some of the related aspects.
Why have a prequalification program?
Your organization probably has very high standards for every aspect of its operations, and that includes safety. You take compliance with safety regulations seriously, so that your employees will not create or expose themselves to any unnecessary risks.
Is that also true of the many outside companies that perform work on your sites? If you have a large construction project, you probably have workers from dozens of contractors performing potentially dangerous tasks every day. If one of those contractors’ employees is injured, you might suffer through higher insurance rates or legal action for liability. Or, an action taken by a contractor’s employee might put your employees at risk.
A prequalification program gives you a formal, comprehensive way to weed out contractors who fail to meet your standards. It also sends a very strong message that you take safety seriously.
What specifically can your program accomplish?
When a contractor wants your business, you’ll probably hear that its supervisors and workers value safety, and that they will only follow safe practices on the worksite. Of course, you may also hear that they’ll meet all your deadlines and never ask for a change order.
A prequalification program means you don’t have to trust their promises, because it allows you to verify that they follow recognized safety standards. By examining a wide variety of characteristics, you’ll be able to determine whether or not the contractor’s employees belong on your jobsite.
Safety directors for companies with strong prequalification programs will tell stories of aggressive contractors who show up at pre-bid meetings, eager to go after the work. Once they learn that the company has a safety prequalification program or become familiar with the standards they’ll be expected to meet, they quietly disappear. They know they won’t make the cut.
One reason is that a prequalification process demands a certain level of sophistication and seriousness on the contractor’s part. That mom-and-pop contractor may seem friendly, but if they don’t understand today’s safety requirements, they can endanger everyone on your site. The flip side is that you’ll be able to educate those smaller, less-sophisticated contractors who might have avoided OSHA scrutiny because of their size. You can help them understand what they should be doing to ensure employee safety and comply with the law. You can even show them how improved safety practices can make them more profitable by driving down their insurance rates. In essence, you become a “safety coach” who helps them meet your standards.
When you raise the bar for safety on your projects, you can actually improve safety throughout the community. As contractors begin to change their work practices to meet your standards, they’ll bring those same practices to other jobsites and owners. That benefits the contractors, too, because your standards may be seen as a credential in the marketplace. Other owners will know that if a contractor is good enough to work with you, they can hire the firm with greater confidence. Naming your organization as a client can enhance the contractor’s profile.
What factors should you consider?
The goal of nearly every prequalification effort is to ensure that every contractor company has a rock-solid safety culture. That’s why the starting point should be verifying that each contractor has a written safety plan that goes beyond OSHA minimums to meet your higher standards.
But simply having a plan and living up to it are two different things. So you’ll want to look more deeply. Does the plan provide comprehensive guidance? How does the contractor handle safety training? What is the company’s actual rate of recordable incidents? What types of injuries have workers suffered? How many required simple first aid compared to how many had to be rushed to the emergency room? Is there a pattern that suggests an underlying problem such as inadequate personal protective equipment? Verifying those and many other factors provides valuable insight into how the contractor does business.
If a contractor wonders why you’re concerned about activities that take place on other jobsites, explain that it’s an indication of the contractor’s safety culture, and how important safety is to its employees. If their workers are not encouraged to use safe practices elsewhere, do you really believe that they’ll change their behavior for you?
Your prequalification program should study all the factors you need to make a reasonable decision as to whether a contractor shares your organization’s commitment to safety. There are many factors you can review, among them:
– Commitment from the top. If the company’s owners or top managers don’t believe safety is critical, lower-level workers will be less likely to take it seriously. If it’s not already included in the company’s safety policy, you can request a signed statement from the highest-level manager that explains the organization’s commitment to and support for workplace safety.
– The right numbers. Programs typically review a contractor’s OSHA 300 logs to examine recordable incidents going back three years, and how that translates into incident rates and their EMR (experience modification ratio). Although some safety and insurance professionals are paying less attention to EMR data these days, it can serve as a starting point. For example, if the contractor has a high recordable incident rate, it may warrant further investigation to determine the cause. A contractor with many eye and hand injuries may have a weak policy (or poor enforcement) with personal protective equipment.
– Pay particular attention to fatalities, but be sure that a fatality was work-related before you use it to rule a contractor as ineligible. For example, the fatality may have been an auto accident as a worker was leaving the jobsite for lunch, or it may have been a heart attack that had no reflection on the company’s safety practices.
– Source of workers. Does the contractor use a set staff that has been through its training program, or does it assemble workers for each program? I’ve worked with one owner that doesn’t want to work with contractors that depend on the union hall to fill positions on jobsites. Their reasoning is that, no matter how qualified a union member may be, he or she may not have been ingrained in that contractor’s particularly safety training and safety culture.
– In-force insurance. It pays to periodically check contractors’ insurance policies for general liability, auto and workers compensation. If a policy expires or is cancelled, a contractor working on your site might be creating an unexpected liability for you.
– Financial health. While the connection between safety and finances may not seem obvious, a contractor in financial trouble is more likely to cut corners. In addition, a financially troubled firm may go belly-up during the middle of a project, leaving the owner in a difficult situation.
– Industry experience. Some industries have unique safety requirements. A contractor working on an addition or renovation at a hospital must be familiar with life safety standards, while a contractor on an airport project must understand FAA rules governing ground operations. You have to decide whether you want contractors who already have such knowledge, or whether you’re willing to take on the added work and time involved in educating them.
– Training scope. If the work the contractor will perform requires familiarity with a particular area of safety, the prequalification program should address it. As an example, if the contractor will be working in confined spaces, does the company have experience and know how to work safely in that environment?
– Accident investigation. Taking a closer look at past accidents may identify patterns. More important, you should be able to determine whether corrective actions were taken to prevent reoccurrences.
– Disciplinary policies. Contractors’ policies should detail clear steps and progressive procedures for safety offenses, including responses to those who commit multiple offenses. A drug and alcohol policy should be in place, and you should be able to find evidence that it is being enforced.
– Checking paperwork. Cross-referencing the addresses on OSHA logs with those on W-9s can reveal if a contractor with multiple divisions or locations is submitting data from a different division or office to sneak through the prequalification process.
Are national safety registries sufficient?
Some owners have considered using one of the web-based nationwide registries that provide contractor prequalification services. These registries appear to provide an affordable alternative to developing an owner’s own contractor prequalification program.
However, large-scale databases are far less likely to offer deeper insights than an approach that’s more personalized to your needs and your jobsites. A one-approach-fits-all registry might address or neglect issues that are important or unique to the owner’s site and industry. In addition, relying solely on a database may mean missing out on smaller, high-quality local or regional contractors that are unwilling to pay the fees to be included in the registry.
Managing your prequalification program
To ensure that your program will be effective, make sure that the individual responsible for operating it is knowledgeable about safety practices. Some organizations delegate the responsibility to administrative assistants who can collect and review information, but who lack the firsthand experience to spot problem areas or recognize obvious attempts to deceive.
It’s also important to note that a prequalification program is not the single solution to all of an organization’s safety needs. It is one step that ensures that prospective contractors meet your minimum requirements, and it should be part of a comprehensive Contractor Safety Management Process. Once the contractor starts working on your site, it’s up to your safety team to continuously verify that the contractors work in accordance with your standards.
While a prequalification program this thorough may seem complex at first, it quickly becomes a familiar, regular practice for your company. It will also increase awareness of the importance of safety at your site and should lead to a reduction in incidents. All the workers on your site will be safer, and your insurance premiums should stay as low as possible.
