News & Insights

Why do we need contractors?

All businesses and employers have specialist requirements from time to time, and fulfilling these requirements is often most effectively achieved by outsourcing works or services to specialist, external providers, or “Contractors”. Engaging contractors is therefore essential for the successful operation of many businesses, and can underpin the success of an organisation’s activities, business model, brand, and culture.

What are some of the outcomes of poor contractor management?

The proper management of contractors forms a critical part of ensuring people are kept healthy and safe when working at, attending, or visiting a site or premises on behalf of a business. Given that a diverse and dynamic group of contractors may be engaged by a business at any one time, applying and ensuring consistent and robust contractor safety management strategies and compliance strategies can be challenging.

The consequences of failing to implement robust contractor safety management systems can be severe. There are numerous examples of serious injuries and even fatalities which have occurred because of the inadequate management of contractors, as well as legal and financial penalties which follow. It is therefore imperative that Persons Conducting a Business or Undertaking (PCBUs), Employers and shared duty holders implement robust governance frameworks, management systems, pre-qualification processes, and monitoring and review strategies that facilitate the successful procurement, engagement and management of contractors. This then enables an organisation to deliver services and business activities in a manner that aims to prevent risks to health and safety.

Elements of a mature Contractor Management Framework

The engagement of contractors comprises several stages, each of which is crucial in the development and implementation of a successful and effective end-to-end framework. A sample framework may incorporate the following stages and considerations:

Contractor procurement

• Clearly defined health and safety obligations and expectations in contract specifications and work scopes to ensure transparency and clear alignment of health and safety standards between the contractors and the engaging business/PCBU
• The embedding of contractor management within standard procurement and purchasing processes, with elimination, as far as practicable, of any process that may allow a worker to breach contractor management engagement systems

Contractor selection and pre-qualification

• Defined types of contractors engaged with creation of risk profiles for each, based on possible work activities that may be provided for the engaging business/PCBU
• Risk assessment of contractor health and safety suitability as part of a pre-qualification process
• Selection of contractors that align with the engaging business/PCBUs values and safety vision

Onboarding and induction

• Verification that all relevant processes and health and safety documentation are in place, and has been reviewed by a competent person, prior to engagement and commencement of works
• Establishment of rigorous induction process, for completion by contractors, to verify knowledge of health and safety obligations, site specific hazards or risks, and the engaging business/PCBU’s health and safety expectations

Supervision and monitoring

• Verification of ongoing currency, relevance and health and safety compliance of contractor systems, processes, and controls
• Implementation of a program of periodic contractor performance reviews to ensure poor performance is addressed or that contractors who fail to address non-conformances are managed appropriately
• Tracking of non-conformances, with contractor evaluations conducted to ensure contractor performance is reviewed and the engaging businesses/PCBU’s expectations have been met which will facilitate ongoing engagement opportunities or offboarding where required

Common Opportunities for Improvement

Some of the opportunities for improvement of a contractor management framework that are commonly observed by Greencap’s Health & Safety consultants are:

• Procedures or frameworks that require clear accountabilities to be defined and set up for overarching contractor management processes
• Contractor procurement and onboarding processes across an organisation’s operations that need to be embedded within the standard procurement and purchase order systems/processes
• Implementation of thorough onboarding and induction process to ensure contractors are fully aware of the health and safety obligations and expectations, site specific hazards and risks specific to the engaging business/PCBU
• Failing to verify adequacy of contractor processes prior to commencing works
• Verification or review of submitted contractor documentation at engagement stage by a competent person to ensure contractors are doing what they said they would do

Emerging trends in contractor management

As businesses transition to AS/NZS ISO45001:2018 Requirements with Guidance for Use: Occupational health and safety management systems, consideration of how contractors manage opportunities as well as risks is being closely monitored and built into contractor frameworks. Businesses are integrating health and safety systems with risk and quality management systems which is facilitated by the alignment of the AS/NZS ISO 45001:2018 with other established international standards such as AS ISO 31000:2018 Risk Management Guidelines and AS/NZS ISO 9001:2016 Quality Management Systems – Requirements enabling businesses to analyse outsourcing requirements and determine a risk appetite for the use of contractors.

The COVID-19 pandemic and the associated rapidly changing legislative and operational environment has forced organisations to act quickly to adapt to new ways of working and implement new mandated health and safety protocols relating to infection control. Businesses and employers have striven to implement robust COVIDSafe ways of working and this has ‘stress tested’ existing contractor management systems and strategies. In many cases, this increased pressure has highlighted gaps and or system weaknesses, and therefore a need to reassess and refine contractor management frameworks to ensure processes are unambiguous, easily communicable, and not overcomplicated.  For instance, many businesses have had to modify or amend the frequency of monitoring activities for contractor engagements to verify the implementation of COVIDSafe protocols. Others have had to adjust and increase rigour to their prequalification and onboarding processes for contractors to ensure only entities with demonstrated COVIDSafe systems in place are utilised for necessary works. Disruptions to established supply chains and contractor usage associated with the pandemic have also forced businesses to reconsider the type, location, and scope of their contractor portfolio.

With increasing numbers of digital support tools and platforms now available to businesses and employers for contractor management, implementing consistent pre-qualification, training and monitoring across complex contractor portfolios has become considerably less data and time intensive. The focus of establishing well-built end-to-end contractor management solutions should be on the architecture of the framework to ensure simple, practical, and robust management from selection, through procurement, pre-qualification and onboarding, through to verification and evaluation.

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