Getting the right people to do the job
- Selecting the right contractor is key for social housing providers
- Cheapest isn't always best, even in a hyper cost-conscious environment
- It is vital to risk-manage your relationships and assess the quality of contractors
Contracting out is all about streamlining operations. We all know this. Every organisation working with the public sector is under immense pressure to cut costs and find new ways of delivering services more efficiently.
“But by focusing too much on low bids at the expense of bid ‘quality’ in its broadest sense, social housing providers are opening themselves up to a whole range of risks that may not be obvious until something goes wrong,” says Andrew Ward, Risk Analyst at Zurich Municipal.
“Unless they think ahead.”
Contracting out whilst reducing risk
Managing the associated risks of supply chain management begins before you even start reviewing job tenders. Getting the right price is obviously a key factor, but it’s important to base your decision to hire on an assessment that goes beyond money and starts with the brief.
“Everyone on your team needs to clearly understand what’s at stake when they write the job specification, and what questions to ask of contractors to minimise the risk of something going seriously wrong,” says Andrew.
Start with the firm itself. For example, how can you be sure of the quality of work a contractor will undertake? Have they carried out similar work? Can you see it and talk to their former clients?
To the best of your knowledge, is the contracting company financially stable? Many contractors who slashed staffing levels in the recession are still functioning on thin margins, and can get into difficulties if they take on too much work.
Assessing contractors’ insurance arrangements
In addition, Andrew advises a thorough review of contractors’ insurance provision and on-site risk management arrangements.
Ask them if they have sufficient insurance limits in place. Are their working practices as good as they could be? How will they monitor these practices through the term of the job?
“Failures in health and safety can seriously increase the risk of public liability claims alleging personal injury or damage to property following the unsafe actions or poor working arrangements of the contractor, who is, in the end, acting on behalf of the landlord,” says Andrew.
“While these types of claims will usually be directed back to the contractor and their insurer, you need to know in advance that they have sufficient cover in place to cope.”
Many contractors underestimate their responsibilities, and fail to buy enough insurance. If this is the case, then you could still be liable. And even if you’re not, and the contractor’s insurer settles satisfactorily, just dealing with the back-and-forth of a claim has a cost in terms of staff time, as you investigate and interview both tenants and contract staff.
“It’s far better to know in advance that your contractor will do all they can to avoid claims ever happening, and manage their on-site risk – so make sure you ask,” says Andrew.
“Talk to us. Get advice on how to ask the right questions to shore up the tender process and fortify your risk management of contractors.”
If you don’t ask – you don’t know – and the last thing anyone wants in an expensive contract is uncertainty. Be prepared.