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Subcontractor Management Plan

Creating a subcontractor management plan, SMP, will provide you with a beneficial outline of the relationships between the various working aspects and moving parts during a project. It also lays out the methods a primary contractor will use to ensure quality deliverables and secure relationships between companies.

Such a plan is typically prepared by a procurement person but requires input from all key contract management team members. Such input will ensure that any vulnerabilities, risks, or other issues are appropriately addressed. Once the SMP is put together in draft form, it should be shared again with key management team members.

The Plan Provides Guidance For:

  • Safety inspectMake ions
  • Necessary insurance
  • Safety training
  • Recordkeeping policies
  • Prequalification and the bidding process
  • Beginning work
  • Reviews during the work and post-project

Pre-Qualify All Subcontractors

You can ensure the company you hire for subcontract work is experienced and can get the job done well, on time and with minimum risk by pre-qualifying all subcontractors.

Use a questionnaire or other similar method to gather the subcontractor's qualifications and consider this information:

  • Has the subcontractor done similar work?
  • Does the sub have the necessary insurance, licensing, employees, finances and equipment to do the required work?
  • Does the subcontractor have a good safety record?
  • What is the sub's Experience Modification Rate (EMR)?
  • Does the subcontractor have any OSHA violations or EPA violations?
  • Can the sub provide references?
  • Does the company have a history of litigation?

By going through this pre-qualifying process, you will know what to expect during the project. Just keep in mind that not every subcontractor will pass the pre-qualification, so implement minimum requirements that can help you eliminate subcontractors that do not meet your standards.

For example, eliminate a sub who has defaulted on projects previously, has had a license revoked, has committed willful OSHA or EPA violations, or is debarred by any government authority.

Once you have compiled a list of qualified subcontractors, it is time to submit the bid for a project. In most cases, the low bid gets the job, but not always. Lowest-bid contracts can come with issues, like not meeting deadlines, having more change orders, increasing the overall cost of a contract, or unacceptable delays.

The primary contractor, before awarding contracts to subs, should document:

  • A cost control plan and a description of it.
  • A quality control plan and a description of the program and any necessary documents applicable to this plan.
  • A project management team listing who is responsible for field supervision, construction management and technical personnel. You may also include resumes for each team member.
  • The project's schedule, including milestones and the technical approach you plan to take for the project.

Procure Necessary Certificates of Insurance

Prior to beginning work on a project, the subcontractor should provide two certificates of insurance to the primary contractor. These certificates will show the sub has coverage for their entire team. In addition, make sure the insurance provides adequate coverage for any employer or automobile liability and worker's compensation issues.

If an insurance certificate is terminated, the subcontractor is obligated to show proof of replacement insurance. The insurance must come from a company licensed in the state where the work is being conducted. In addition, the insurance carriers must maintain an A.M. Best rating of A- or better.

The certificates should provide a clause giving the subcontractor 30 days' notice for cancellation or termination.

The policy should also list the contractor as “additional insured.” This “additional insured” must apply as primary insurance.

Subcontractors Need Insurance for Various Reasons

Auto Liability

This insurance will cover a subcontractor for auto liability, such as bodily injury or death connected with the maintenance and ownership of a motor vehicle or trailer. This policy should include coverage for all equipment subject to motor vehicle laws.

Workers' Compensation

Subcontractors must procure workers' compensation policies for each job. It covers all employees, executives, sole proprietors, limited liability company members and partners. Subs should also procure coverage that insures for bodily injury, disease, occupation-related illness or even death of an employee that the workers' comp policy may not cover.

Require proof of workers' comp insurance before any work is done.

Commercial General Liability (CGL)

A CGL policy will cover damages due to property damage, bodily injury and personal or advertising injury related to:

Defense expenses above policy limits

The contractor as an additional insured

Subcontractor's products and operations

Liability assumed in business contracts

Liability or responsibility assumed by the sub

This policy should not include endorsements or modifications for risks due to collapse, explosion, pollution, underground property damage, or work performed by the sub.

Excess Liability Coverage

This policy can be purchased to cover damages due to personal and advertising injury, property damage, or bodily injury and should have at least the same terms as other policies mentioned above.

Liability Insurance for Completed Operations and Obligations

“Your work,” in terms of insurance coverage, is defined broadly to include all operations performed by the subcontractor or on their behalf. It includes materials, equipment and parts connected to your work.

And even quality workmanship can become the center for a lawsuit.

So, even if a sub performs work, it is still considered the contractor's work. So, for example, if faulty plumbing causes a building to flood, it could be considered the contractor's liability, but the CGL policy covers it.

Since a contractor could be held liable for defects in a subcontractor's work, many require the sub to carry CGL to cover claims resulting from their work. The typical time frame for the insurance is one to five years. In addition, many contracts require the sub to name the owner, architect and general contractor on the job.

Other “additional insured” parties may also be entitled to CGL coverage. This requires a separate endorsement to the policy.

Because of that, subs can be held liable for claims of bodily injury or property damage caused due to a contractor's work. Failing to maintain this coverage into the future could result in a breach-of-contract lawsuit.

Subcontractors need to understand that the insurance commitment does not end when the project ends. And in the event there is a large claim, subcontractors could face substantial premium increases.

A subcontractor should know all local regulations and document proper performance to avoid litigation due to a claim. Carefully keep records of each process and monitor to ensure everything is being documented.

Starting Work

Each subcontractor awarded a bid should have a legally binding contract that includes the following:

  • Schedule and budget restraints
  • Clearly defined responsibilities and authorities for the sub
  • A subcontractor's requirements are defined for quality, including independent quality inspections for materials and processes
  • A subcontractor's deliverables all identified
  • Appropriate terms and conditions for both the contractor and subcontractor
  • The primary contractor's support to process payments and invoices
  • That there will be adequate facilities for the subcontractor's needs
  • An acceptance process for once the job is completed

General Subcontractor Management

Successful projects all have similar characteristics for managing various subcontractors and their teams.

There are formal and informal interfaces with the primary contractor and the subs and interfaces among the subcontractors. All interfaces are documented.

Each has clear and unambiguous subcontracts established that include an SOW.

Before starting any work, the subcontractors receive authorization to proceed. This should be done in writing on a Work Authorization form.

There should be a cohesive project plan so that all subcontractors know where their efforts fit.

Each should have a formal team-building process.

By including all of these practices, you reduce the risk of any misunderstandings or isolationism of any subcontractors.

The primary contractor should coordinate all subcontractor work to ensure that all are coordinated throughout the project. Develop a master schedule to establish any schedule constraints. Identify any critical milestones or contractual deadlines.

The primary contractor should provide a single point of contact for each subcontractor for all contractual matters. In addition, subs should be free to interact with any primary contractor employees on a day-to-day basis, as needed.

Safety Information Exchange

There must be open lines of communication for the project to run smoothly between the primary and subcontractors, especially regarding safety procedures. The subcontractors must:

  • Have the phone numbers and directions to the nearest hospitals, fire and ambulance service in case of accidents on the job.
  • Provide proof they have the necessary safety training and comply with all owner safety rules.
  • Designate a representative to handle all health and safety issues on the job.
  • Perform a safety hazard assessment, which can address any problems on the worksite before work begins.
  • Ensure that all employees have proper identification.
  • Obtain Safety Data Sheets (SDS) for any chemicals that will be used on the job site.

Pre-Work Meetings

Plan to have pre-work meetings daily before work begins. In addition, the subcontractor should review with their team any specific safety issues for the particular work being done.

Employees should be comfortable voicing any safety concerns before any accidents happen. Also, before any work begins, subcontractors should secure all necessary permits for any lockout/tagout, hot work, confined spaces, etc.

Written Safety Plan for the Work Site

The contracting company will set site-specific rules and the subcontractors and their employees must abide by those rules and regulations. Failure to comply with these rules and regulations could result in disciplinary action up to and including contract termination.

Safety policies typically include these items:

An Introduction

This introduction gives a comprehensive list of all safety goals and emphasizes the importance of following safety rules on the job.

Lists all company philosophies and policies and emphasizes management's commitment to safety.

Encourage employees to follow safety guidelines and report unsafe conditions or injuries.

Different Responsibilities for Various Parties

Explain who, within the team, from management to supervisors and employees, is responsible for the various execution of the safety program.

Management may take on the responsibility to ensure enforcement of the safety program and correct any problems that arise.

Supervisors may be those responsible for taking corrective actions, disciplining employees who don't follow the program, providing personal protective equipment (PPE) and investigating any mishaps.

And employees will undoubtedly be responsible for reporting any injuries or accidents, attending safety training, reporting unsafe conditions and obeying all health and safety regulations.

Safety Regulations and Rules

The primary contractor and subcontractors should outline specific rules and regulations that must be followed on the job, including those from the U.S. Department of Labor's Occupational Safety and Health Administration, OSHA, and the Environmental Protection Agency, EPA.

An example would be spelling out OSHA regulations for lockout/tagout procedures.

You can also include your work site's Hazard Communication Program in this segment.

Disciplinary Policies

This segment explains what can happen if workers break the rules or regulations. Disciplinary action can range from a verbal warning to termination.

Accident and Injury Reporting and Investigation Procedures

Here, you can explain, in detail, how to report an accident or injury on the worksite.

Outline an accident investigator's process in determining what happened and why and what can be done to prevent similar accidents in the future.

Safety Training Requirements

Training requirements for all employees on a project, which may include:

  • Fall protection
  • Aerial lift safety
  • Crane, hoist and rigging safety
  • Hearing protection
  • Fire extinguisher operation
  • Heat illness prevention
  • Excavation and trenching safety
  • Housekeeping
  • Respiratory protection
  • Powered industrial truck safety
  • Ladder Safety
  • Lockout/tagout procedures

Subcontractors should each submit their site-specific safety plan prior to beginning work.

Emergency Response Plan

Employees need to know the proper procedures for responding to an emergency, whether a natural disaster, a fire, chemical spill, or an injury.

Workplace Violence Prevention

Offer ways to avoid violence on the job and outline the risks and warning signs of workplace violence, as well as the consequences.

Safety Training by Subcontractor and Recordkeeping Policies

Each subcontractor is expected to train their team on any site-specific hazards on a job site. Then, they should provide documentation of that training to the primary contractor's representative.

Sub employees need to know proper first-aid procedures and what to do if a medical emergency arises. If the contracting company provides safety information to the subcontractor, the sub's responsibility is to pass that along to employees.

And on the flip side, the primary contractor should train employees on any hazards introduced through the subcontractor work.

Recordkeeping

You can help ensure that a job gets done in compliance with federal and state rules and regulations by having a solid recordkeeping policy. This is also useful if you are audited.

Hired subcontractors should:

  • Keep copies of all forms provided by the primary contractor throughout the length of the contract.
  • Keep records of all safety training employees have completed.
  • Keep on hand a list of telephone numbers for the closest hospital, fire department and ambulance service.
  • Always keep an OSHA recordable injury and illness log for the job, as well as copies of any accident reports.
  • Keep copies of any necessary SDSs or other required information related to chemicals on the job site.

The primary contractor should keep thorough records, also, including:

  • All training records for company employees on hazards that may result from subcontract work
  • A copy of the project contract. Be familiar with its contents, including all health and safety aspects of the job
  • Keep OSHA recordable injury and illness logs. Keep copies of all accident reports
  • Keep copies of any forms related to a specific contract. These are forms that the company must fill out both before and during the project work
  • Keep a daily pre-work inspection checklist
  • Keep documentation of all communications with subcontractors regarding safety issues
  • Keep all documents given by subcontractors
  • All meeting minutes
  • Daily worksite inspection documents
  • Plans, specifications and other contract documents
  • Change work orders
  • Permit forms. Each contract may require different forms.
  • Contract status

Do Regular Safety Inspections

Both the primary and any subcontractors should perform safety inspections throughout the project. According to OSHA, a “competent person” should be in charge of performing these daily inspections, which include all operations, equipment and materials.

That person should document each inspection and any corrective action taken.

A Typical Safety Checklist

  • Is there safe access to the job site for all employees?
  • Is access clearly posted and in good condition?
  • Is suitable edge protection, such as double guardrails, used on all edges where workers might fall?
  • Are fixed covers over any holes or openings and clearly marked?
  • Are all materials stored safely, making for a tidy worksite? Are all slip and trip hazards clearly marked?
  • Is the job site adequately lighted?
  • Is there a proper waste material collection system?
  • Is there a way to avoid work at height, such as using different equipment or a different work method?
  • Are all suitable precautions identified for work at height?
  • Is scaffolding or a mobile elevating work platform needed for fall prevention?
  • Are you reducing the consequences of falls using soft landing systems, nets, or safety decks?
  • Are employees working at heights using the safest methods possible?
  • Are competent people in charge of erecting, altering, or dismantling scaffolds?
  • Do all uprights have base plates, or if necessary, timber sole plates?
  • Have all ledgers, uprights, struts and braces been put in position?
  • Is the scaffold or other structure secured to the building to prevent collapses?
  • Are additional brick guards in place to prevent materials from falling?
  • Are all boards in place and properly arranged on all working platforms to prevent tripping?
  • Are warnings in place to prevent workers from using incomplete scaffolds?
  • Is every scaffold strong enough to hold the materials being placed on them?
  • Is a competent person inspecting and documenting any alterations or damage to scaffolding?
  • Are tower scaffolds being used following supplier instructions?
  • Are all scaffold wheels locked? Are platforms emptied?
  • Are there safer alternatives than using step ladders or ladders?
  • Is work done on ladders low risk and for short durations?
  • Have all step ladders and ladders been inspected for condition?
  • Are all ladders rested against solid surfaces?
  • Are ladders secured to avoid slipping sideways or outwards?
  • Are cleanup procedures being followed?
  • Is valuable equipment being moved to higher areas?
  • Are ladders positioned, so users are not overstretching?
  • Do all ladders rise at least 3 feet above their landing place? Are there added handholds if they are not?
  • Are employees using step ladders or ladders trained in their proper use?
  • Does the site have edge protection so workers and materials cannot fall?
  • Are nets hung safely while workers perform industrial roofing?
  • Are precautions taken to prevent workers from falling through fragile materials such as cement sheets or roof lights?
  • Are people kept out of the area below roof work?
  • Are roof workers on the job trained to know their risks?
  • Has the ground where dump trucks unload been sloped or battered back to a safe angle?
  • Are people working in unsupported trenches?
  • Are barriers in place to stop people or vehicles from falling into the dumpsite?
  • Are there long, secured ladders to gain safe access to the dumpsite?
  • Are there stop blocks in place to prevent tipping vehicles from falling in the dumpsite?
  • Is truck unloading affecting the stability of nearby structures?
  • Are all materials and equipment stored far enough from the dumpsite to avoid collapse?
  • Is a competent person overseeing the unloading process?
  • Have you assessed all manual handling risks?
  • Is manual handling kept to a minimum through the use of trolleys, hoists and other mechanical aids?
  • Are materials being ordered in lower weight increments to reduce handler strain?
  • Are all manual handlers trained on how to lift materials properly?
  • Are they trained in how to use lifting aids and how to handle equipment safely?
  • Does someone check each load to determine if it has destabilized during its journey?
  • Are bystanders kept away from the loading/unloading zone?
  • Is there a specific plan in place for unloading?
  • Are all workers loading and unloading properly trained for that job?
  • Can unloading preparation be done from the ground, or do workers have to access the back of a loading truck?
  • Are you taking steps to ensure workers don't fall off the back of the truck?
  • Are there barriers to separate pedestrians from vehicle traffic?
  • Is there a one-way system for traffic to avoid reversing?
  • Are all vehicles on the job site properly maintained?
  • Are all drivers trained properly and do they all hold proper licenses?
  • Check all loads to ensure they are properly secured.
  • Are passengers in company vehicles only carried in vehicles designed to carry them?
  • Are the right equipment and tools available for the job?
  • Are all equipment and tools in good repair?
  • Have all machine guards been checked for proper functionality?
  • Has equipment been put together by a competent person?
  • Are all equipment operators properly trained and competent?
  • Is the rated capacity of all equipment properly marked?
  • Has the hoist been thoroughly inspected and is there a record of that?
  • Does the hoist have a proper base enclosure to ensure no one gets struck by the hoist?
  • Do the landing gates remain shut except when the platform is at the landing?
  • Are all necessary emergency procedures in place?
  • Have the emergency procedures been shared with everyone working on the project?
  • How do you raise the alarm for an emergency, so everyone on sight hears it?
  • Are you able to contact emergency services from the job site?
  • Have escape routes been determined and shared with workers?
  • Are you keeping to a minimum all flammable materials, gases and liquids? Are they properly stored?
  • Do you return all flammable gas cylinders to a ventilated storage area at the end of each shift?
  • Are you maintaining all gas cylinders and hoses appropriately?
  • Are the valves fully closed when gas cylinders are not in use?
  • Do you regularly remove all flammable and combustible waste?
  • Are there enough fire extinguishers on the job site?
  • Have all hazards on the job site been identified, such as asbestos, lead and silica dust?
  • Do you need a licensed contractor to handle asbestos on the site?
  • Are precautions in place to control any exposure to hazards, such as removing the risk or using fewer hazardous materials?
  • Do workers know the risks at the job site and are they trained to recognize those risks? Do they know how to avoid them?
  • Do you have procedures in place to avoid contact with wet cement?
  • Are you monitoring employees using certain hazardous products?
  • Have you examined noise exposure on the job site?
  • Do workers have the training to recognize and avoid noise onsite?
  • Are you taking steps to reduce the noise level on the job site?
  • Do all workers have the proper personal protective equipment or PPE?
  • Are hearing protection zones clearly marked to keep out workers who do not need to be there?
  • Have you taken steps to reduce hand-arm vibration or HAV, such as using lower vibration tools and techniques?
  • Are workers trained to recognize HAV risks and avoid them?
  • Are vibrating tools properly maintained?
  • Are you monitoring employees exposed to high levels of vibration?
  • Have existing electrical services been identified and measures taken to prevent danger from them?
  • Do workers on the job site use low-voltage tools and equipment?
  • Are you protecting cables and leads from damage?
  • Are suitable plugs used and all connections made to the electrical system?
  • Have you located any hidden electricity cables and other services and clearly marked them?
  • Has electricity to overhead lines been cut off, or other appropriate measures taken?
  • Are there toilets readily available on site and are they being properly maintained?
  • Do you have sinks onsite with soap, towels and hot and cold running water?
  • Do you have a place for workers to change clothes and store clean clothes?
  • Is drinking water and cups provided to workers?
  • Is there a welfare facility onsite and is it warm and well-ventilated?
  • Is the job site fenced off?
  • Are roads separated by barriers and well-lit?
  • Are protections in place to prevent the public from being hit by falling materials?
  • Is the site secured at the end of each workday? This would include immobilizing equipment and machinery, covering openings, securing the boundary and removing ladders.
  • ADD additional items here, as necessary.

Work in Progress and Post-Project Reviews

An essential part of every SMP is Work-in-Progress reviews because they ensure the project remains on track throughout. Conducting a monthly WIP with major subcontractors is a great idea, as are quarterly WIPs with other subs. In addition, each subcontractor can provide the primary contractor or representative with updates on their contractual commitments.

WIPs May Include These

  • Any performance issues
  • Schedule status
  • Project status and progress
  • Any performance changes since the last review
  • Risk management status
  • Status of any critical process evaluations or certifications

If any issues are detected, you may assign members of the contracting company or the subcontractor's company to handle them. If the subcontractor submits specific remedies, try them. Each situation dictates a different corrective action.

Once a project is finished, complete a thorough review of the subcontractor's performance. This can give you insight into best practices for future projects. It could also lead to future collaboration with a sub by fostering a relationship.

Contractor Performance Evaluations Should Cover These

  • Management tactics
  • Quality of the work product
  • Cost controls
  • The sub's ability to stay on schedule
  • Professional behavior
  • Personnel's effectiveness
  • The ability to comply with the subcontracting plan

Consider these when evaluating a subcontractor:

Did the sub finish ahead of schedule?

Did the sub meet the completion date?

Did the sub complete the project within budget?

Were invoices submitted on time and correctly?

Were progress reports submitted on time and correctly?

Did the sub meet all project specifications?

Did the sub follow all project-specific safety regulations and rules?

Did employees of the sub report any injuries or illness promptly?

Did any problems arise and if so, were they handled quickly?

Would you recommend this subcontractor to a colleague?

Would you do business with this subcontractor again?

Did the sub clean the worksite once the job was complete?

If this was a positive experience and the subcontractor and their team performed well, add them to your approved subcontractor list so that you can use them on other jobs.

If the sub was not up to par, consider meeting with them to discuss what went wrong.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.