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How to Manage Contractor and Subcontractor Risks

May 9, 2024 | Public | 0 comments

Understanding how to manage risks associated with contractors and subcontractors and the importance of safety compliance were just a couple of the critical topics discussed during a recent educational session. Titled “Mythbusting the Top Contractor Risk Management Megatrends of 2024” and sponsored by Avetta, the webinar took place on April 24 as part of Facilities Management Advisor‘s FM Now: Healthy Buildings virtual summit.

Safety expert Jaime Feinberg, vice president of partnerships – insurance, risk & safety for Hound Labs Inc. hosted the session, which featured Scott DeBow, CSP, ARM, principal of health/safety and environmental at Avetta, and Taylor Allis, visionary chief product and marketing officer at Avetta.

Why Is Usage Increasing?

More and more companies are using contract labor. According to Feinberg, “Recent reports indicate a substantial shift with 60% to 70% of contractor work being outsourced to subcontractors. It’s clear businesses are adapting their workforce strategies.” She added that this could be the result of a shortage of skilled workers caused by:

  • An increase in demand
  • Fewer young workers going into the skilled workforce
  • Steady increases in retirement

Additionally, Feinberg notes there are two key advantages of using contract labor: the flexibility to meet changing project demands and cost savings.

Why Manage Them?

However, as companies depend more on contractors and subcontractors, DeBow cautions that “we may see practices of misclassification, compromises in worksite safety and other workplace laws,” which can lead to greater risk as a result of hiring people with less skill than what’s required or contractually agreed on.

As a result, it’s businesses’ responsibility, Feinberg asserts, to ensure contractors and subcontractors align with their safety philosophy, as any incident, accident, or injury can lead to negative public relations.

How Can Companies Manage Them?

DeBow suggests that companies perform audits and adhere to safety management practices to ensure expectations are being met.

Also, Allis believes businesses should roll out a digital subcontractor management program, which should involve communicating the requirements and benefits of the program to participants, determining the number of subcontractors being used, and figuring out how to scale requirements through multiple layers of subcontractors.

“And that, frankly, is where [artificial intelligence (AI)] comes in,” Allis explained, adding, “AI could very quickly validate a document and even faster and more efficiently than a human can.”

Why Is Safety Compliance Important?

Companies cited for worker injuries and deaths often have a history of failing to comply with Occupational Safety and Health Administration (OSHA) regulations, which can not only affect employee safety but also lead to legal action, fines, and penalties.

However, DeBow explained that while compliance is a starting point for businesses, they should also adopt safety practices, such as ensuring injured workers have proper compensation insurance.

How Can Companies Manage Safety?

Allis recommends companies do the following to manage safety at their facilities:

  1. Have requirements like up-to-date licenses and site induction training.
  2. Integrate an on-site badge and gate access system to deny access to those who haven’t completed the training.
  3. Allow workers to take training using mobile apps, or provide safety trainers.
  4. Do a pre-job risk assessment and job hazard analysis.
  5. Use e-mail or mobile app notifications to alert workers to safety hazards.

Learn More

Some of the other topics discussed during the webinar included challenges of the siloed approach, ways companies can manage risk across the supply chain, and how to ensure you have a comprehensive risk management strategy.

To watch the entire webinar, click here, and to learn more about the Facilities Management Advisor FM Now: Healthy Buildings virtual summit, click here.

The post How to Manage Contractor and Subcontractor Risks appeared first on Facilities Management Advisor.


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