The Rundown for the Subcontractor Pre-Qualification Process

There has been a general slowdown in the growth of property prices in 2018, which has led to a slowdown in the residential construction market. People simply aren’t buying property as they used to before, and the market is reflecting that with snail-paced growth. Prices grew at a tepid 2.6% all over the globe in 2018.

This slowdown has resulted in more competition among contractors and subcontractors over construction projects. Since there is limited space for competition, the competition has become much fiercer. What has occurred as a result is that contractors have had to become more selective with the talent that comes to the table. And while it is true that there will always be some hurdles in the contractor-subcontractor relationship, steps can be taken to mitigate them and ensure that construction administration goes smooth.  Chief among them is the Subcontractor Pre-Qualification Form.

The Subcontractor Pre-Qualification tool is an objective way to approach risk mitigation in any construction project.  Yes, the form isn’t perfect, and no, it won’t eliminate every hurdle along the way, but it will make the entire process much smoother and much more straightforward.  There are tons of Subcontractor Pre-Qualification forms that you can fill out on the internet, and everyone has its own spin.  They do focus on the same basic questions though; otherwise they would yield wildly different and inconsistent results for someone with the same experience and qualifications.

You can also request a summary of their current financial records.  Your surety bond broker can review them for you and help identify key markers that will positively or negatively impact the construction administration in the long run.

Further Investigation

If you want to go a step further, you can engage with the subcontractors themselves and conduct a visit of their site of operation or the site of one of their projects.  That ought to give you a clearer picture of how things are being done aside from the Pre-Qualification forms.  You may talk to some of the employees and gauge their opinion on what is being done.

If you want to dive further still, you should look at the resumes of different key members of the team and ask to select them for the job rather than the team the subcontractors are choosing for you. The people on the job can make all the difference sometimes.

Another key aspect of selection can be an examination of the training program that the subcontractors have for their personnel.  This would include the safety training they are required to have, the equipment that is made available to them, and the yards and facilities they work in.

If your subcontractor is also working on a project that is as large as, or even larger than your own, there is a consideration to be made.  What if the other project is facing challenges and your project becomes a low priority? What if the subcontractor’s attention is so immersed in that other project that they begin neglecting their duties for yours and just start seeing it as something to get out of the way every day?

All these questions need to be considered when a large project is on the line.

Surety Bonds

If you institute a bonding policy for your subcontractors, you will effectively put a second lens on their activities. This will allow you to better gauge their abilities and their conduct. Bonding will ensure that a second opinion is considered before you make your final decision. It will help discern the financially qualified subcontractors that have had the experience in the specific work you need out of them in the territory that you want the work done.

It also puts the subcontractors on their best behavior, because the backlash from a surety is much harsher than it is for non bonded work. If the subcontractor walks off the project, his reputation takes a much bigger hit. And if that happens, the surety has to take the blame of hiring such an unreliable party.

You should also look into the surety. The surety’s rating should be nothing short of the gold standard so that they will be able to judge the subcontractor’s financials and stability objectively, and only after gathering enough data. 

Pre-Qualification forms and the ensuing examinations of subcontractors and third party contributors needs to be thorough so that the project doesn’t face unforeseen problems and is taken to its end without any bumps on the road.

For more help with systemizing your Subonctractor Pre-Qualification, CONTACT US today.