Builders and operators are taking on bigger and more complex projects while, at the same time, schedules have gotten tighter and the expectations for delivering a project on-time and on budget have continued to increase.
In addition, the contracting partners you rely on are in short supply.
The subcontractor labor shortage
In a recent Risk Management Study by the Association of General Contractors, 88% of respondents cited that a limited supply of skilled workers was the greatest risk they faced. And according to new research from the Associated Builders and Contractors of America (ABC), the U.S. construction industry will need to add 430,000 new workers to keep up with the increased demand for construction services in 2021.
The shortage is very real – and it’s not the only factor that’s impacting the market of qualified contracting partners.
According to a recent McKinsey study, about 41 percent of the current US construction workforce is expected to retire by 2031. This means that as the average contractor’s age and experience level decreases, it brings younger, less tenured, less experienced contractors onto your job site every single day.
This puts immense pressure on every part of your process. And while it impacts preconstruction, it most directly impacts your ability to stay on schedule, under budget, and keep your job site safe from unnecessary risk.
Because top-notch contracting partners are in short supply, it’s unavoidable that you’ll have to work with new, potentially risky partners for your projects. This has created two common paths:
Turn down a project, because you don’t want to take on the risk; or,
Accept the project, and don’t fully understand or properly plan for the risk these partners bring.
Neither of these options represents a favorable outcome.
But there’s a third path: Partner Elevation. It’s a framework that the world’s most advanced builders and operators are already using to thrive in this market while their competition sticks to the old way of running capital projects. Partner Elevation is what separates them from the rest of the pack, enabling them to complete the most complex projects with confidence, fewer safety incidents and delays, and doing so under budget. And it begins with how you examine and choose your partners.
Forget prequalification; instead, assess
Treating prequalification as a pass/fail mechanism — you’re in or you’re out — no longer works. Legacy prequalification systems may provide a clear picture of lagging indicators such as EMR and DART, but they don’t tell the whole story. Additionally, it doesn’t scratch the surface of predicting the future behaviors of a contracting partner when they step foot on your job site. For example, how would you account for a contractor who has had unreported near-misses that could have resulted in a fatality? If it’s unreported, it wouldn’t show up in their risk score, and you wouldn’t know the serious risk you were adopting.
In a labor-constrained market where you may have no choice but to hire a subcontractor who brings a heightened level of risk to your project, partner elevation will become your secret weapon. The Partner Elevation framework reimagines the prequalification process completely because it treats it as an assessment, not a test. It’s the beginning of a successful partnership, not a binary decision.
The Partner Elevation framework takes into account the past performance of a contracting partner, but it doesn’t stop there. It focuses on uncovering leading indicators of risk, so you’re able to see the measures and practices that indicate that a contracting partner is serious about safety. In our previous example about the contractor who had unreported near-misses, what if you were able to see that they recently implemented consistent safety training on fall hazards? It would give you more confidence that you’re working with a partner who takes continuous safety improvement seriously.
Partner Elevation exists because the contracting partners you hire become an extension of your team – and it’s designed to give you a scalable framework to get the most out of all of them.
How to assess a new partner
When assessing a new partner, a few of the most important leading indicators you’ll find are the presence of specific safety training programs, the implementation of safety management systems, or a structured return to work program. When these exist, you’ll have an easier time answering these questions:
Does this partner have the right systems in place to prevent future accidents?
Do they take safety as seriously as we do?
Is this going to be a partner who is willing to adopt our seriously safety culture?
By using the combination of lagging and leading indicators as inputs for your assessment, you’ll be able to make the determination of how you should work with a new partner. Notice that we said “how,” not “if.” This is a new reality: no matter what traditional prequalification uncovers, contracting partners are typically awarded a project based on their bid, their availability, and their capabilities. That means that the real value of prequalification should lie in your ability to deeply understand the safety gaps that exist and put a focused plan into place that seeks to mitigate them.
For example, if you discover that this partner has had a history of falls, you’ll be sure to include specific protocols to prevent it from happening again. If they don’t have any safety training programs in place, you should consider hosting training sessions to ensure that you’re clearly communicating and teaching this new partner how to operate on your job site.
The shift from partner qualification to partner assessment and engagement to guide the rest of your process is equally useful when you’re working with contracting partners that you’ve worked with for years. Just because they perform up to your standards when they’re on your job site doesn’t mean they don’t have issues when they’re working for someone else. Their risk score will reflect that, and you’ll have all the insight you need to collaborate with them.
Learn how Skanska elevates their partners
Perhaps the best example of partner elevation in action comes from Skanska. In 2015, they launched their Care for Life program because they recognized the power and benefit of elevating their contracting partners. Their ultimate goal is to create an incident-free worksite where contractor, supplier, and employee safety is the top priority – and their Care for Life initiative is how they’ve shifted their mindset and culture to enable it.
Join Highwire as we have a one-on-one interview with David Watts, EHS Director for Skanksa. He’ll be talking through the exact partner elevation strategies he and his team have put into place to operate in this new, labor-constrained environment.