We’ve spent over a decade working with some of the world’s most sophisticated, forward-thinking owners, operators, and contractors. Today they’re building and operating bigger, more complex projects on more aggressive schedules than ever.
Yet, the contracting partners that they rely on to get the work done are in short supply. In a recent AGC survey, 88% of respondents cited a limited supply of skilled workers as an area of increasing risk. On top of that, 67% cited a lack of field supervisors. Labor shortages have become top of mind for builders and operators across the country.
Completing a project on an aggressive timeline while working with inexperienced labor introduces five make-or-break, and interdependent, risk factors:
- Safety. Employees with less than one year on the job pose the greatest injury risk, representing 33% of workers comp claims, according to AmTrust Financial Services.
Finance. If one contractor unexpectedly defaults, it creates a scramble to find a replacement, which directly impacts the completion schedule and can destroy profit margins.
Quality. A less-skilled workforce is more likely to produce lower quality work which results in rework and repeat exposure to hazards as work is removed and put back in place
Sustainability. Not all contracting partners share the same devotion to sustainability and may fall short of helping you achieve your sustainability goals and the goals set by your client.
Schedule. These factors put your schedule at risk, and McKinsey estimates that a one-year delay results in a nearly 50% drop in the project’s net present value.
Even if you diligently assess a contracting partner’s risks upfront, it’s highly likely that you’ll award the work based on other factors such as their bid, specialized capabilities, and their availability to do the work. And of course, personal relationships may trump all of these factors.
But as we have been helping the world’s most successful organizations manage their risk over the past decade, we’ve observed that the most successful organizations are taking a radically different approach: they’re collaborating with their partners to dynamically mitigate risk together.
It’s really a shift in mindset: From contractor qualification to Partner Elevation.
Instead of just vetting contractors upfront, they’re actively working with partners to help them become better performers. They don’t view them as just contractors but as strategic partners.
This shift is happening because elevating partners creates a clear, undeniable, and sustainable competitive advantage:
- You have fewer safety incidents and financial defaults;
Which lowers the cost of insurance and litigation;
And results in fewer project delays;
This means your profit increases;
You generate a higher ROI on investments; and,
Ultimately, you expand the ecosystem of partners you can work with.
Consider the alternative: If you hire a contractor and don’t elevate them, you risk catastrophic failure. And today, your contractors’ failure becomes your failure, which can be brutally public in an instant via social media.
It’s become clear to me that Partner Elevation is fundamentally changing the game for everyone on a construction or operations team. When an entire organization focuses on elevating partners and abandons the old, tired way of prequalifying partners, look at how their job fundamentally changes:
I’ll be the first to acknowledge that elevating partners isn’t easy. Over the years, as I’ve worked with countless risk and safety professionals, they ask the same questions:
How do I discover the highest potential partners?
How do I work with partners to identify and prioritize risks and to build risk mitigation plans?
How should I monitor partner performance once they’re on the job site?
How do I know when a project’s risk suddenly increases?
How do I work with partners to create a better risk management culture?
Unfortunately, the old software tools they’ve used for years weren’t built to address these questions:
Compliance networks are good for papering over liability but don’t allow you to improve the outcomes of your partners;
Safety inspection tools help you identify hazards on the job but don’t help you to identify high-potential partners in the first place;
Project management systems have become the system of record for documenting RFIs, submittals, and change orders, but they increasingly limit the important conversations that help elevate partners; and,
Legacy prequalification systems just look at historical, lagging indicators – leaving you searching for answers when it comes to assessing real-time risk and predictions of future risk from the partners you’ll be relying on.
And that’s why we started Highwire: The Partner Elevation Platform for capital projects and operations.
Don’t qualify contractors. Elevate partners.
Highwire helps you help your partners do great work by dynamically mitigating risk throughout every phase of every project.
Here’s how it works. Start by engaging the partners with the highest potential and assessing the risks that they introduce. Then, collaborate with them to design and deliver risk mitigation plans. And then, as each project progresses, review risk signals to continuously learn and improve.
Let’s break down each of those steps in detail.
It all starts with a commitment to deeply engage partners at the beginning of the process. At this crucial step, a few things are happening:
First, you identify potential partners within our marketplace. This includes identifying potential partners that you’ve already worked with in the past, as well as discovering new partners with high potential. Even if you think you know your existing contracting partners well, it’s critical to understand their performance as a whole, the current state of their financial health and capacity to complete your next project, and to continuously consider and evaluate their performance on your past projects. With Partner Elevation, you’ll engage with them on a deeper level than ever before.
And in a labor-constrained economy, you need an effective resource to discover new partners, especially when moving into new geographies where you have not worked before.
During this engagement phase, you’ll identify and quantify each partner’s risk across a rigorous set of both lagging and leading indicators. Legacy prequalification systems simply look at lagging indicators, like experience modification rates (EMR), which can be manipulated and are by definition, “old news.”
For example, lagging indicators don’t provide a complete picture of how a contracting partner may perform as any newly implemented safety management systems or safety programs developed to improve performance are not captured and considered. These leading indicators are a powerful advantage in discovering partners who will perform better in the future, as well as those who may have simply been lucky in the past.
Finally, our Partner Elevation Platform uses artificial intelligence and machine learning algorithms to predict adverse outcomes and acutely identify the specific areas of risk that each partner brings to your project. This new level of insight sets you up to collaborate with them on a deeper level and to focus your risk mitigation efforts more sharply than ever before.
In this next phase, you’re collaborating with your partners to finalize risk mitigation plans that are developed based on a specific understanding of safety-related, financial-related, quality-related, or otherwise-related risks. The output is a focused plan that helps you and your partner dynamically mitigate risk together.
For example, if you’ve identified that your masonry contractor has a history of scaffolding incidents, you can ensure that the contractor has a competent person on site each day inspecting the scaffold, you can verify that each employee that will be working from the scaffold has been trained to recognize scaffold-related hazards, and you may choose to have a company that specializes in scaffolding erect the scaffold instead of having the masonry contractor erect the scaffold themselves
Meanwhile, if you’re working with a partner who is world-class at their craft but has anemic cash flow, you may develop a specific financial risk mitigation plan that involves more frequent payments or directly purchasing materials yourself. This not only prevents the partner’s cash flow issues from impacting your project but may also have a positive impact on your partner’s overall financial position.
Without developing a deep understanding of these risks in the Engage phase, it would be nearly impossible to develop effective risk-mitigation plans to elevate your partners. Understanding risks and developing risk-mitigation plans is even more important when you’re working with new partners.
As risk mitigation plans are finalized and work begins, the focus of your team along with your partners shifts to ensuring effective execution of the collaboratively developed risk mitigation plans. Instead of being viewed as a safety cop, you’re viewed as a safety mentor. Facilitating data-driven discussions as real-time risk signals are captured. Plans and approaches evolve to ensure that the project stays on budget, on track, and that the work is executed safely. The engagement that you’ve had upfront allows you to focus your efforts and the efforts of your partners helping them to deliver their best work until their scope is complete.
Last, but certainly not least, you review the project’s overall performance and the performance of each partner. Partner Elevation is a virtuous cycle, and the end of a project is a new beginning for the next stage of the partner relationship.
First, you’ll assess how the partner performed and how the project went. Where did each partner excel and how should you recognize them for that? Where did they struggle and how can you engage with them on how to improve performance for next time?
A Partner Elevation Platform enables you to benchmark a partner’s performance against their expected performance and against other partners that have performed or are performing similar scopes. Also, you can benchmark a project’s performance against past projects or current projects. You’ll document outcomes against your goals to ensure and you’ll be able to document how a partner has performed over time.
Importantly, these benchmarks can also make a powerful case to management that your risk management efforts are working, and are worth further investment.
Sharing feedback with a contracting partner after they complete their scope or work is critical. You are helping them to understand where they excelled and recognizing them for doing their best work. Additionally, highlighting areas where they struggled through the lens of consistent improvement strengthens your relationship. Elevating your partners in this way, helping them grow to become better performers, expands your pool of available partners for the next project, and in turns elevates your partners performance as a company.
Who’s doing this today?
The world’s most admired organizations use Highwire to elevate their partners:
- Skanska pioneered the idea of elevating partners on global construction sites through their “Care for Life” initiative.
- Google is building advanced data centers to compete with Microsoft and Amazon, but is passionate about building an effective risk management culture along the way.
- Tesla is erecting Gigafactories in a race against climate change and is disrupting the entire automotive industry in the process.
- Merck is producing life-saving medications and vaccines by building new laboratories and manufacturing plants.
And in turn, these companies’ partners are building a better safety culture, improving their financial security, saving on insurance, improving their project performance, and winning more ongoing business with you and because of you.
When I built the first version of what is now Highwire, it was 2008 and I was working at Harvard University as Associate Director of Occupational and Construction Safety. I recognized that we needed a platform that would allow us to not only assess but also elevate our partners.
The impact of what our team built provided such a dramatic improvement in how we elevated our contracting partners that Harvard agreed to spin out the technology into an independent company.
But there was one stipulation: Consistent with Harvard’s mission to educate the citizens of the world, they insisted that our company maintain our focus on elevating partners and as a result elevating the entire industry. And that’s been our mission ever since.