The construction industry relies heavily on a network of external partners, especially its subcontractors and suppliers. Employing these external partners can give companies a competitive edge and reduce costs, but it also opens companies up to risk with the potential to harm workers and the business. According to OSHA data and statistics, one in five deaths among U.S. workers is in the construction industry.

Some companies may deprioritize management of these external partners (herein referred to as subcontractors). Many construction company managers can relate to the factors contributing to this oversight—the overwhelming volume of safety and compliance documentation for large companies, numerous safety and compliance requirements and lack of resources for small companies.

Working with subcontractors exposes organizations to higher levels of risk, including financial fraud, regulatory breaches, workplace mishaps, reputational damage and sometimes loss of life. Non-fatal workplace injuries result in almost $60 billion annually to U.S. companies, spending more than $1 billion a week on worker's compensation. Direct costs include medical expenses, compensation payments and legal service charges. Indirect costs can involve accident investigation, replacement employee training and lost person-hours.

Subcontractors are seldom indoctrinated within a company’s overall safety culture and are often required to perform non-routine tasks at locations that are not subject to the purview of an official health and safety manager. An unqualified or under-skilled subcontractor performing a high-intensity task can lead to a workplace fatality.

A utility contractor in Canada faced similar challenges with managing its external partners. With growth came the need for greater intuitiveness in its supplier onboarding verification and targeted monitoring. The contractor needed a solution that was fast, seamless and secure.

Increasing Safety With Tech

The good news is federal and international compliance mandates require companies to ensure their external partners safety requirements are fulfilled. The increasing stringency around personnel safety regulations has made subcontractor safety and risk management software a vital component in managing an outsourced workforce.

Avetta conducted research showing reductions of incidents for construction companies using supply chain risk management software. Avetta examined hundreds of thousands of safety data points and supplier performance reports in 20-plus industries over a 10-year period. The research revealed significant improvements in Total Recordable Incident Rate; Days Away, Restricted or Transferred; and Lost Workday Case Rate:

• commercial/residential construction suppliers experienced a 53% reduction in TRIR, a 48% reduction in DART and a 57% reduction in LWCR;
• construction-infrastructure suppliers experienced a 50% reduction in TRIR, a 46% reduction in DART, and a 53% reduction in LWCR compared to industry averages; and
• construction materials companies experienced a 40% reduction in TRIR, a 36% reduction in DART, and a 45% reduction in LWCR compared to industry averages.

Monitoring subcontractor safety through a risk management platform streamlines processes, creates positive change and increases contractor well-being—allowing companies to scale and grow.

When researching contractor safety management software, consider platforms with these key elements:

• contractor selection - providing a vast network of vetted and prequalified suppliers;
• documentation - collecting and assessing supplier documentation to guarantee requirements are met;
• risk assessment - automating processes to identify and mitigate risk;
• OHS/HSE training and orientation - providing online training for faster induction and ensuring qualified individuals are performing the jobs across all functions;
• on-site supervision - identifying high performing contractors and suppliers who are compliant to company standards; and
• evaluation and lessons learned - visibility into leading indicators of risk, which builds on insights and data of past performance.

By investing in risk management software, the utility contractor’s supplier onboarding is now faster and more straightforward because the program is collecting and storing all supplier qualification information. The solution digitizes and expedites the onboarding process, eliminating duplication, reducing errors and streamlining approvals.

The program’s auditing function reduces risks by improving the company’s adherence to standards and best practices. It checks the categories indicated by the supplier to verify certifications and other accreditations, especially to meet the company’s safety program requirements. Easy-to-generate, comprehensive reports keep managers informed and provide suppliers with detailed recommendations for improvement.

The platform’s global database and international clients align well with its growing global presence.

Steps for Implementing an External Partner Safety Management Software

The utility contractor achieved a reduced process fragmentation and onboarding cost with significant savings, centralized supplier information with a 50% adoption rate, independent workflow and delivery, up-to-date reporting and status, increased awareness of the safety requirements and a reduced total recordable incident rate.

Companies of all sizes can increase safety and mitigate risk with the right solution. Here are five steps to implementing a world-class subcontractor safety management software within an organization:

1. Engage With Stakeholders. Involve key company stakeholders in the subcontractor and supplier management program. Reach out to on-site employees who are willing to advocate for the new program. Ensure executives and employees the technology can simplify and automate routine tasks and integrate and expand the functionality of existing platforms.
2. Identify Risk Triggers. Evaluate the organization’s risk tolerance level and determine the corresponding measures to incorporate into the contractor management program. Can the company start with a higher risk tolerance and methodically decrease it over time? Does the company want to specify according to project cost, facility or vendor? Solidify these answers to all these questions before launching the program.
3. Set Proper Qualification Criteria. Manage subcontractor safety successfully by building those efforts into the subcontracting process from the beginning. Determine environment, health and safety purview criteria of prequalifying approved vendors. Outline the subcontractor performance, documentation and training standards and share it with current hired contractors.
4. Obtain Signatures. After establishing all the standards, outline the program and confirm all subcontractors and stakeholders understand and agree to the organization’s expectations. Ask them to read and sign a safety agreement or handbook before they are allowed to go on-site.
5. Reiterate and Future-Proof. After implementing the program, analyze the results and iterate the process accordingly to strengthen it over time. Determine how regularly contractors are required to recertify to legally work with the company. Include this in contract renewals or set up custom vetting criteria. Designate an employee or team to use the program to monitor subcontractor status and check documentation.

Companies can bolster contractor management functions with the right solution even under the tightest budget and resource constraints. Small steps in the right direction can make a significant difference in employee safety, risk and a company’s growth.