Scott Howard, CHST
Lead Safety Prequalification Advisor
A growing number of companies have turned to prequalification as a way to ensure that any contractors on their sites have a solid history of safe practices. Those prequalification practices can involve anything from informal checking to extensive applications and review processes, depending upon the needs and resources of the company.
The key to a successful prequalification program -- beyond ensuring that you use it consistently -- is identifying the factors that will give you the best view of the contractor’s performance history. One of the most commonly used factors is EMR, or the contract’s experience modification rate. This number provides a quick measure of how the contractor’s actual loss history compares to that of its peers. An EMR below 1.0 suggests that the contractor’s loss history is acceptable, while a number larger than 1.0 is a sign that there has been a significant loss claim in the recent past.
While EMR’s are an excellent factor to consider, it’s not the only one. Taking the time to examine contractors more deeply can call attention to situations that simple measurements such as EMR’s may miss.
In addition to benefitting your own prequalification efforts, examining these other factors can often help your contractors to improve their operations and service by making them aware of problems they didn’t know existed. For example, we normally examine OSHA logs to gain more insight into a contactor’s EMR and loss history. Sometimes we’ll discover that a contractor has a high EMR, but there is nothing in their recent OSHA logs to explain that. When we notice that, we point out to the contractor, suggesting they may have been overcharged for insurance premiums, maybe due to a simple clerical error.
A further example often occurs with smaller companies that have fewer than 10 employees. Although they’re not legally required to maintain OSHA logs our client does, regardless of the size of the company. In many cases when we look at the logs, it’s clear that they’re over-reporting because they don’t understand what constitutes a recordable incident, we communicate this to the contractor.
In both of those examples, prequalifying provides a clear benefit to the contractor, in addition to our client. This sends a message that we’re not trying to block contractors from working with our clients. Instead, we want to help them become the safest companies they can.
What are some of the other things we may examine during the prequalification process?
W-9 Forms. When we cross-check the addresses on OSHA logs with those on W-9s, we often find that they don’t match up. Why is that important? It may be that the contractor has many divisions and/or locations, and they’re submitting EMR data from a different division or office to successfully get through the prequalification process. Sometimes that might be a clerical error, but at other times, it will provide insight into the contractor’s business practices and honesty.
OSHA 300 logs. If we notice high recordable incident rates or fatalities, we’ll look more deeply to determine if there is some common cause or pattern. We’ve found that if a company has many hand and/or eye injuries it can almost always be traced back to a weak PPE policy. We’ve also found that if the same injuries are repeated year after year their Accident Investigation and or Disciplinary policy is usually lacking. These are all things that are communicated back to the contractor and client.
On occasion, we’ll see something that raises our eyebrows. Suppose a large rental company signs a contract with our client, checking their 300 logs we notice multiple fatalities. Investigating further, we learn that every one of those fatalities involved that company’s personnel operating the rental equipment on owner sites. In a case such as that, we’d create a stipulation that our client can continue to rent the equipment, but will not permit the rental company’s employees to operate the equipment onsite.
Emerging needs. It always gives us a good feeling when we see evidence that a small contractor is growing because of great service and performance. But with growth comes additional recordkeeping requirements. That’s why we’ll alert companies to OSHA requirements they’ll be expected to meet if they grow much larger, such as a Hazcom policy or detailed training records. Not only does this help the contractor, it takes a proactive approach to ensuring safe work for our clients.
Risk assessments. A key tool that helps us prequalify contractors more effectively is the risk assessment. We ask onsite personnel to complete an online form that details what the company’s scope of work and the hazards to which workers will be exposed to onsite. We then use that information when we audit safety programs. If we see that tasks will involve work in confined spaces, we’ll want to verify that the contractor’s safety program addresses confined spaces. If the contractor lacks the relevant experience or training, we’ll notify our client so they can work with the contractor to put the pieces in place before work begins.
In-force insurance. We keep an eye on contractors’ insurance policies for general liability, auto and workers comp. This gives us the ability to alert our client immediately if a policy expires or is cancelled, ensuring contractors aren’t on our client’s site without sufficient insurance, creating a potential liability.
Scope of training. We take a comprehensive view of sites to ensure that everyone who should receive specific training actually does. Often, personnel are exposed to hazards that nobody notices. I remember standing in a steel mill’s melt shop- an environment in which molten metal often flies through the air and explosions are common. As the crew was preparing to charge another bucket of steel, I looked to my right and saw a vending machine for soft drinks. Were the soft drink company’s delivery personnel trained to refill machines safely in that environment? What about workers from other parts of the mill who have reason to walk through the melt shop on their way to get a cold can of pop? Instead of extra training, it may make more sense to move the vending machine to a less-hazardous location. Otherwise, you run the risk of putting people in situations they aren’t prepared to handle.
Closing thoughts. Keep in mind that a prequalification program, no matter how thorough it may be, doesn’t take the place of a comprehensive site safety program. The only thing prequalification can do is ensure that prospective contractors meet your minimum requirements. It doesn’t prove that the contractor shares your commitment to safety. Once the contractor comes onsite, it’s up to your site safety oversight to verify that they work in accordance with your expectations.
In the simplest terms, the role of prequalification is to verify that the contractor operates as it claims. Beyond that verification, it’s up to the owner, general contractor, or construction manager to decide whether they want that contractor on their site, and what they may need to do to mitigate any risks associated with the contractor’s performance.
It’s also worth noting that there are many options for prequalification. While nationwide databases may claim to simplify the process and reduce the cost, they’re far less likely to bring deeper insights -- and to be willing to look beyond the raw numbers -- than a company offering an approach that’s more personalized to your needs and your jobsites.