IMPROVE

BUSINESS
OUTCOMES
THROUGH
CONTRACTOR
ASSESSMENT
As a global trend, more organizations in nearly
all sectors of the economy are outsourcing
more work. Currently, contractors fill one in
every five jobs in the United States and are
projected to make up half the workforce within
the next decade. This trend is common across
industrialized and emerging economies around
the world.
The issue:
No or Inadequate
Contractor Assessment
Means Unmanaged Risk
There are many elements of due diligence
related to occupational health and safety. And
contractor assessment is among the highest
value activities a purchaser can undertake.
Understanding the capacity and competence
of your contractor is key to limiting risk and
managing for better performance.

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How Taking Action Benefits
Your Organization:
Assessing your contractors for health and safety
capability and competence is an excellent thing
to do on its own merit. And, in some locations, it's
a requirement under OHS law.
For example, the Province of Alberta requires that
'workplace procedures include criteria for
evaluating and selecting other employers and
self-employed persons at the work site.' This is a
duty typically placed on the Prime Contractor of a
worksite.
By implementing a contractor assessment
process, your organization will:
Stage two assessment is a more detailed look at
a smaller number of pre-screened contractors.
Usually, it involves input from several
subject-matter specialists within the hiring
company, typically representing field
management, HSE, quality, contracts, and cost
control disciplines.
Stage one prequalification actions can include:
Verification of trade or service certifications
Verification of basic insurability
Assessment of lagging indicators relative to
bidders in the same service category:
Experience Modification Rate or Claim Rate

1. meet its legal obligations Regulatory actions like stop-work orders,

citations, or fines
2. manage your organization's risk profile down,
and OSHA rate

DART rate
3. improve contractor, hence business, outcomes.
OHS-related litigation, and
Actions to Take:
Leading indicators:
Implement a formal contractor assessment
process that emphasizes leading indicators and Regular focused observations of high-risk and
measurements of control. high-historical loss work

Ideally, contractor assessment is done in two Management and supervisor HSE training
stages. This approach saves time by quickly
Measurable management participation in
identifying contractors that meet legislated
safety leadership activities like job site
minimum standards and your corporate baseline,
walkarounds, town halls, and written
allowing a more detailed assessment of those
communications
that meet the minimum requirements.
The pre-work hazard assessments
Stage one is a high-level look at the contractor's
fundamentals. As a contained activity, the Near miss reporting
primary intent is determining alignment with
legislation, incorporating industry consensus
standards, and verifying required certifications
and licenses to operate.

Stage two is a deeper dive into the project,

service, or contract specifics. The focus and intent
of the assessment shifts more to contractor
competence, capability, capacity, and previous
track record with similar scopes of work. For
example, a contractor with corporate or trade
certifications does not automatically translate
into consistently well-executed projects and
outcomes.

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Leading indicators are more valuable assessment
metrics as they are predictive and give the hiring
organizations a more valid indication of
contractor OHS leadership and commitment.

Incident-focused metrics like OSHA rates tend to

draw management attention to a small number
of personal injury incidents. Too much focus on a
single area of operations can give a skewed view
of overall contractor performance.

By focusing on the predictive safety measures, the

hiring organization gets a better idea of what
elements of workplace control will likely be on
their projects.

Activities at the second stage of assessment:

Verify the implementation of leading indicators

and evaluate their quality or value to the
organization.

Consider the details of any events related to

citations arising from incidents or inspections
by regulators. The intent is to assess if your
contractor is actively learning from events and
making legitimate efforts to improve business
systems.

Financial stability metrics like:

Bankruptcies

Liens

Judgments or ongoing finance-related

litigation

Third-party financial and insurance ratings

CSR factors (sustainability, resource

management, waste management, fairness
practices, and ethical standards).

Previous client references

Regardless of whether it's legally required,

assessing health and safety systems, capability
and capacity is a contractor management best
practice. Committing your criteria and process to
a measurable standard will assist the
organization in meeting its due diligence
requirements and improve contractor outcomes.

Contractor management is good business.

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