Risk is a normal part of doing business. The risk is compounded when outsourcing work to third-party contractors to perform work rather than using permanent employees. The risk can be increased even more by not having a standard, well planned way to evaluate each contractor's health, safety, and procurement information against their past history as well as against their peers in the industry.

Mitigating Risk

Managing this risk is the most important task in evaluating the safety and viability of a contractor. The amount of data available to perform this evaluation is enormous. Companies must ensure they are able to gather all appropriate data, synthesize the data into information that is usable, and make a decision based on that information.

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There are a variety of ways a contractor can be evaluated. The use of historical and future trend information is often used to evaluate a single contractor. These lagging and leading indicators can be useful in determining the appropriateness of offering a job to a contractor or even keeping them on a job they are already working.

Lagging Safety Performance Indicators

Historical data is used to determine how well the contractor has performed in the past. This information is useful in evaluating the contractor because the past safety performance is assumed to be indicative of how they will continue to perform in the future.

The major key performance indicators (KPIs) used by many companies to evaluate the performance of contractors include health and safety KPIs (TRIR/TRF and DART) as well as insurance claim indicators (EMR).

  • The Total Recordable Incident Rate (TRIR) can be used to determine the rate of incidents that occurred per 100 employees annually. The goal is to achieve a TRIR rate of 0.

  • The Days Away From Work and Restricted/Job Transfer (DART) incident rate is a measure of how often an incident occurred that required the employee to stay away from work, work at a diminished capacity, or required a transfer to a different position requiring a lesser capacity.

  • The Experience Modification Rate (EMR) measures how many claims were made for Workers' Compensation during the previous year.

Leading Safety Performance Indicators

Improving the safety indicators is what the evaluation and ongoing monitoring of a contractor's safety data is all about. An organization can also take into account leading indicators as part of their evaluation of a contractor. Leading indicators include safety & training programs, job evaluations, and audits.

  • Safety programs are an indicator of the processes and procedures used by a contractor to protect themselves and their employees when exposed to safety, health, and environmental hazards. Having a safety program covering all potential hazards and protection processes is invaluable in determining a contractor's dedication to safe work practices and a safe environment.

  • Training programs indicate commitment to implementing safety practices and educating employees on the valuable information contained in their safety programs.

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