What is Best-in-Class Contractor Management?

When we identify key issues facing safety health & environmental professionals, one that stands out among many as an emerging issue for the safety profession, is the focus on global industry trends, indicating a continued growth of outsourcing non-core business activities to third-party contractors, ranging from construction and maintenance activities to security and catering functions. This "contractorization" of operations has become a key strategy pursued by both private and public sectors and is even embraced by the military in some countries. Decades of data compiled by the International Association of Oil & Gas Producers on the Upstream Oil and Gas industry, for instance, indicates that while employee work hours have doubled over the past 25 years, contractor work hours have more than quintupled.

Contractorization allows for more competent, well-equipped and specialized contractors to undertake tasks or projects in a much safer and sustainable manner than could be achieved when simply relying on in-house resources. The challenge and opportunity lies in establishing a robust contractor management strategy to effectively mitigate risk exposures from contractorization, while allowing the owner to streamline its operations and focus on its core competencies.

An effective contractor management system goes beyond a one-time pre-qualification step. It levels the playing field by holding all contractors to established safety and compliance standards and promotes a culture of transparency, accountability, and continuous improvement. In other words, it adds value to the hiring client's overall operations by going beyond simply meeting internal or external compliance requirements to establishing and sustaining a mutually beneficial partnership between a hiring client and its contractors.

In this paper, we outline 10 essential attributes we find in best-in-class contractor management systems. This list of attributes is not intended to be exhaustive, but it presents key items considered to be of strategic significance for establishing effective contractor management processes. Whether you are a hiring client who uses contractors or a general contractor who hires subcontractors, you will find reference points for benchmarking your practices and identifying opportunities for reducing your risk exposure. We focus on the non-commercial and nontechnical aspects of contractor management, though most of our points would also apply to those considerations.

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