Online Induction >> Contractor Compliance Management
Published 08/11/2021

Contractor Compliance Management

Contractor compliance is a process of making sure that a contractor adheres to the organisation's requirements. In other words, it's a crucial aspect of contractor management focused on the extent to which a particular contractor performs his duties in conformance with the terms of the agreed contract.

The main objectives of contractor compliance are to reduce insurance liabilities, financial risks, safety risks in the workplace, and legal risks, to both the organisation and staff. You are also likely to experience a reduction in operating costs, an overall boost in productivity and increased contractor retention. This forms a core part of the contractor management process and typically first begins with a contractor induction.

Reducing the risks for contractors in your workplace
A contractor could potentially introduce any number of risks to your organisational operations while they are working on site which in turn becomes your risk to manage and mitigate. This might begin with any business or job activity involving any contractor, vendor, supplier, or service provider engaged by an organisation. The poor compliance outcome could mean damages, losses and accidents caused by contractors working at your workplace, site or project and associated with your business operations regardless of the actual fault or liability.

Establishing a centralised contractor compliance criteria
Contractor compliance is all about minimising the risk exposure to the organisation through improved contractor management. Contractor compliance criteria needs to be thorough and complete and should involve relevant stakeholders. Contractors need to fully agree to and understand all compliance obligations before they begin their job task, activity or project and start working on site at your workplace.

What sort of areas contractors and subcontracting companies need to be compliant on?

Contractor compliance is typically fundamental and without it, both the organisation and the lives of the employees are at greater risk. It can be a complex and challenging task to manage contractors, especially when engaging large numbers of them on site. So it's critical to ensure conformity with all the legal obligations, site specific policies and procedures and to maintain any necessary documentation. Contractors must be competent enough and have the following:
Evidence of training
Certifications they hold
Incident and safety history and performance
The safety systems and procedures they have in place

Testing the knowledge of contractors around important site and organisation policies and procedures is done via assessments on compliance, usually focusing on the above factors and verification of new employees hired by a subcontractor, to ensure they also meet the qualification requirements. An organisation commonly will prequalify contractors, ensure contractor document expiries are renewed (i.e. insurances, tickets or licenses) and continuously monitor their operations, site access (how many contractors are on site right now?) all as part of the process of developing and implementing an effective and efficient contractor compliance system. Contractor compliance is a very essential practice as non-compliant contractors and subcontractors can expose the organisation to financial and liability risks. The risks increase when the contractors do not complete the created safety training (such as a contractor induction), that can lead to accidents in the workplace (injury incidents, property damage, near miss incidents, security incidents and environmental accidents).

See an example contractor compliance management system for the full life cycle from start to finish from contractor induction and prequalification through to contractor management tools

Guide for setting up a contractor compliance management system

Using contractor compliance software
Using a contractor compliance tool you can centralise and manage your entire contractor management process. From initial prequalification through to induction, prescreening, insurance uploads, automatic compliance reminders, checks individual licenses through to performance management and subcontractors.

Common areas you would manage
A common life cycle of contractor compliance management starts with contractor prequalification of a contracting company. Examining their safety and risk history in order to verify and validate all their materials, previous safety performance and processes and systems in place for managing the risks relating to their job task or activity. This is followed by a contractor induction for all their staff working at your organisation to ensure they understand and acknowledge everything needed in order to work safe.

Once the contractors are engaged and working with your organisation, the next phase might be tracking which contractors are currently on site right now with a contractor sign in app. This can ensure contractors have extra compliance checks upon arrival on site (i.e. what happens if their insurance expires on the day they arrive at your workplace?). Annual safety reviews of contractor performance, re-inductions, contractor offboarding, contractor ratings, contractor risk management and classifying contractors by risk type are all additional areas in the contractor compliance management workflow.

- Contractor prequalification
- Contractor induction for all contractor staff
- Subcontractor prequalification and induction
- Classification by risk level (high risk construction tasks? low risk worker?)
- Acknowledgement and tested they understand important safety and site policies and procedures
- Site access management, which contractors are on site right now and are they compliant
- Contractor performance management
- Contractor ratings
- Ongoing risk management
- Re-inductions
- Safety reviews
- Offboarding contractors

Contractor Compliance Areas

There are many areas to contractor compliance that you might need to track and manage:

- Insurances: does the contractor have and maintain the right and correct level of cover for the nature of work they are undertaking?

- Evidence of training: does the contracting company and the staff that are arriving on site hold the correct evidence of training and licenses for that job task or activity?

- Systems in place: what systems do they have in place for managing incidents and hazards and do they maintain a registry? Do they carry out audits and inspections?

- Processes and Procedures: what processes and procedures do they have in place around safety, risks management, staff and business?

- Regulatory activity: have that had any breaches or notifiable incidents?

Why it's important to manage these areas online before they start working on site?

Online inductions have emerged to be an effective method of introducing contractor compliance regulations and policies. Contractors are inducted on the relevant safety regulations and the legal aspects of the project in order for them to work safely, ensure the safety of their co-workers and ensure they remain compliant at all times both individually and as a contracting organisation. These online inductions benefit an organisation during the collection of the contractor's documents by easily tracking the contractors who have gone through their inductions and who haven't. Also, all the completed inductions are kept in one place ensuring the recorded documents can be easily accessed.

Online contractor management systems are common platforms for engaging new and returning contractors and making sure they pass through a comprehensive and consistent contractor management process.

In conclusion, it's worth knowing that every aspect of the process of contracting needs strong attention to detail and patience. An effective contractor compliance management system will ensure that the contractor meets the requirements of your organisation as consistently and efficiently as possible. Keep the employees safe, reduce risks in the workplace, and also save on valuable resources, time, and money with contractor compliance management.

Try an online contractor compliance management system

With a dedicated tool for contractor compliance management you can ensure all contractors remain compliant and be alerted to issues in real-time. Try out our platform right here:

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