Consequences of Poor Contractor Management

It can sometimes be difficult to delineate between the responsibilities of contractors, and those of the facilities team. While most contractors can be trusted to do the right thing, organisations cannot rely on this as a defence should something go wrong.

Over-reliance on contractors can create risk for the organisation, and it is critical that teams understand their responsibilities with respect to managing contractors.

Below, we dive into some examples of what can go wrong if there is confusion around the division of responsibility.

Contractor licences or accreditations are invalid

When contractors come onto site to perform work, it’s important to check that they hold the correct licences and accreditations, and that these are in date.

Potential consequences

If a contractor performs work on site, and doesn’t hold the correct accreditations, both parties are non compliant. If an incident occurs, and the non-compliant contractors work was involved, the consequences can be severe in terms of legal ramifications, brand reputation, and financial reparation.

Example

Consider a contractor who has been engaged to inspect fire safety systems. This contractor is required to update their professional accreditations annually, to keep up with safety standards and legislation.

The contractor has been engaged to perform bi-annual inspections of the fire safety system at your facilities. On the mid-year inspection, they enter the site to perform the work, however their accreditation expired the month before, and has not yet been renewed.

While their accreditation was checked when initially engaging them, there hasn’t been another check since.

Following the inspection, there is a fire on site where the system has failed to engage, resulting in injuries and significant damage to the facilities. As part of the routine investigation into the incident, it is discovered that while the system check did happen in line with terms of service, the contractor’s relevant accreditation had expired.

The organisation is found liable, with no insurances paid out. A fine is issued, and key stakeholders are found personally liable for damages. The organisation suffers significant financial and reputational damage and is audited by regulators.

Contractors aren't meeting terms of service

As the facility manager, it is your responsibility to understand the regulatory requirements for your facilities and set contractor agreements in line with these.

While in a perfect world it could be assumed that contractors are meeting their responsibilities under that agreement, it is your responsibility to validate that this is happening.

Potential consequences

It is critical that facilities teams have visibility over the work conducted by contractors and a means by which to compare this to terms of service. If contractors are not meeting terms of service, set to support compliance with regulatory requirements, both parties are held accountable.

Example

Consider a contractor with an agreement for monthly checks of temperature regulation valves. Your organisation has had an agreement with this contractor for some time, so you assume that they have been complying with the frequency set out in their agreement.

An incident then occurs, where someone is burned by water that is hotter than it should be. You reach out to the contractor for the inspection schedule, and find that the inspections have been happening every 6 weeks, rather than monthly.

Over the course of the year, meant that the required number of inspections has not been conducted. The result is that the organisation is responsible for the incident.

If these checks are required by regulators, the facilities will also be non-compliant with safety regulation.

Safety inductions aren't completed or recorded

When contractors come to your facilities to conduct work, the organisation is responsible for ensuring necessary inductions are completed. It is critical to ensure there is a record of contractors going through induction before performing work at your facilities.

Potential consequences

Inductions help to inform contractors of potential risk, enabling them to perform work as safely as possible. If a contractor is injured on site, and it can’t be proven that they completed an induction, the organisation is liable for reparations.

Example

Consider a contractor engaged to perform electrical work at your facilities. The work they are doing is occurring at a height greater than 5 meters and requires a specific induction. When performing the induction, both parties treat it as superfluous red tape.

No record is kept of the induction, with both parties assuming the other would file the paperwork.

However, when the contractor goes to perform the work, they suffer a fall, and are injured in the process. With no record to show that the induction was completed, and the contractor stating the induction was insufficient, the organisation is left to pay reparations to the contractor.

Through this process, the relationship with the contractor is damaged, forcing the organisation to go to market for a new contractor. However, the original contractor has since engaged their union, and is considering legal action. Thanks to the incident and these actions, the organisation is struggling to find a contractor willing to engage with them.

Misalignment with service delivery expectations

With an ever-increasing focus on service delivery, many organisations seek to work with contractors who align with their organisational values. This is especially pertinent to sectors such as aged care, not-for-profit, and healthcare, where organisations routinely engage with vulnerable peoples.

Monitoring the behaviour of contractors while performing work around the organisation’s clientele is the responsibility of the organisation. These expectations should be outlined as much as possible within service agreements, but some may be open to interpretation.

Potential consequences

The values of an organisation determine how people operate within the facilities and can be closely linked to brand reputation. If contractors performing work in the facilities are in opposition to those values, it can affect service delivery to customers, and cause reputational damage.

Example

Consider a contractor engaged to perform work at a religious primary school. When the contractors team arrive on site, they are speaking loudly to each other about their weekend. The conversation, overheard by several pupils, involves multiple profanities and discussions that are explicit in nature.

When these students go home, they recount what they heard to their parents. Those parents then contact the school, voicing their concerns to escalate the issue. This issue is then discussed in parent groups within the community, and the school suffers significant reputational damage as a result.

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This blog is not a substitute for legal advice on building and contractor compliance.