Sustainable Contractor Prequalification

The Issue:

Sustainability is vital to the long-term success of your contractor management process, especially the prequalification step.

Creating a business system involves writing down principles and practices that deliver value to an organization and its customers. Business systems are implemented for various reasons contributing to an organization's success. And it's a fundamental success factor to implement what can be sustained over the long haul. Here are three key reasons to implement a contractor prequalification business system:

• Consistency of outcomes: There is long-term value in systems that produce reliable results. For example, your business processes work better when each department knows what they are responsible for and what the quality requirements are.
• Meeting client requirements: When a defined approach is used, the organization will tend to assess, measure, and anticipate the outcomes of what their clients want and don't want.
• Reducing costs and improving profits: Using sound business systems tends to reduce costs by scrubbing workflow errors, redundant activities, and rework. So too, with contractor prequalification. A well-defined business system ensures that the team is doing the right things, in the right amounts, at the correct phase of the procurement cycle.

In terms of sustainability, here are three critical success factors for prequalification business systems:

• Designate an individual as the Process Owner, who oversees the prequalification system. Ideally, your Process Owner is supported by a management sponsor that enables prequalification tasking up and down the organization.
• Remember, implementation funding is the initial commitment. Resources are needed to maintain the system year over year. Planning for this ahead of time is vital. Contactor management is a fixed expense in each budget year.
• This involves ensuring the system is healthy and providing value. It's good practice to review things regularly (annually, for example) to ensure the prequalification system works as designed. Few business systems are perfect on initial implementation, so adjustments are part of the process as the organization identifies efficiencies.  

Sustainability and Contractor Registries

Many organizations operating in high-risk industries consider implementing a third-party registry. And while an online service can bring significant improvements and efficiencies through automation, there are many considerations. 

Many businesses frequently make contractor exemptions or workarounds, usually for temporary and small contractors. Ensure that the system you choose can accommodate all your contractors, so you're not exempting some due to excessive administrative burdens.

You'll also want to ensure the registry collects data in a way that works with your contractor database. Many (but not all) registries only allow you to have one set of questions, presenting a problem for businesses with multiple services or risk levels. Understanding your needs in advance ensures that you only consider systems that match those needs.

Be realistic about your resources. When assessing the registry option, determine if you can properly administer the software and the administrative demands placed on your organization and your contractors. Ensuring it's economically feasible and administratively manageable for all stakeholders is a critical success factor with automated systems.

Finally, you must determine what's essential to your organization before looking at third-party registries. Is it just basic information with document storage and verification? Or does the organization benefit from third-party approval of contractors completed by the registry? Establish minimum requirements in the areas that are critical to you. If you know the features you won't compromise on, you'll be able to narrow down your options quickly, saving you time and frustration.

Conclusion

Prequalification is a contractor management best practice. Skip it, and your organization can be open to many significant risks and potentially lost business opportunities. However, do it right, and you will have a system that saves time and resources while gaining the peace of mind that thorough due diligence provides. Ensure your prequalification business systems match your organization's resources and remain sustainable.