Facilities outsource maintenance and repairs to individual contractors and subcontractors in order to keep everything working effectively. With OH&S, general governance, and duty of care liability at an all-time high, do you ACTUALLY know the person or persons entering your site? Here, we explore the changing facilities management environment and hidden risks associated with known and unknown subcontracting arrangements that are putting your buildings and organisation at risk.
Facilities Managers (FMs) have a difficult job of trying to manage multiple facilities over multiple locations. FMs outsource maintenance and repairs to specialised contractors who have up-to-date skills and knowledge. These contracting arrangements span across various trades including electrical, air conditioning (HVAC), fire protection, to cleaning and general maintenance.
When engaging these contractors, the procurement team reduces and mitigates any contract-related risks they can foresee through the terms and conditions of the contract. The signed contract details the responsibilities for each party including all obligations for working on your site, specifically restriction of subcontractor access and engagement. Whilst legally everything looks sound on paper, many times the actual person that turns up to do the work is not an employee of the contractor. Moreover, the person that turns up has no visibility on the terms and conditions of the original contract and typically a subcontractor is not bound by the agreement.
This creates a significant risk for you and your company as the onsite contractor is unaware of the site requirements and specific details on the scope of the work to be delivered. Further, whilst this is happening, the FM remains completely unaware.
Subcontracting – The Need & The Risks
Subcontracting is a necessity due to Australia’s vast landscape and the geographic disbursement of facilities. Furthermore, with the reliance on specialised trades, lack of resourcing availability, and the need for qualifications and licencing, often subcontracting remains the only option for contractors. Despite contract documentation strictly prohibiting subcontracting arrangements, the reality of the industry is that it is both required and covertly conducted in order to maintain facilities. The risks are amplified even further as subcontractors hire more subcontractors, sometimes five or six levels from the original client contract, often referred to as ‘subbies on subbies’.
Subcontracting arrangements are a result of increasing and disturbing trends occurring in the facilities management industry. Three key factors continue to result in poorly managed subcontracting, unrestricted site access and heightened organisational risk. These include:
- Hiring of Multi-Disciplinary Subcontractors: The engagement of a single, multi-disciplinary provider to cover a range of services, thereby creating a significantly higher dependency on the successful outsourcing of specialised work;
- Skill Shortages: A growing shortfall of skilled labour available to complete work, results in contractors unable to find and employ specialist technicians. Specialised technicians who are employed are also being required to work across multiple head contractors to satisfy the demand often resulting in slow and poor work quality; and
- Lack of Work Order (WO) System & Process Integration: Each contractor continues to utilise their own standalone, non-synchronous, non-centralised WO management system often resultingin original statements of work not flowing down to subcontractors. Technicians remain unaware about the required and agreed outcomes of the job.
Each of the above trends creates inherent risk for the FM, the business, the contractors and building occupants.
An example below demonstrates a typical arrangement across a client’s facilities. A technician working at Karratha, will be delivering work for multiple head contractors across multiple work orders and site locations completing different disciplines at each site. The technician is unaware of the critical contractual obligations of each work order nor the required OH&S policies of each site, thereby creating more risks for the FM.
Example Of Subcontracted Workflow To An Unknown Party
- The person onsite at Karratha logs a repair request to their helpdesk.
- This flowed through to the Facilities Manager, who in turn provided a WO to the contracted provider.
- As the contractor was a multiservice contractor, they activate their own subcontracting arrangements.
- This contractor issues a WO from their own system to a subcontractor.
- The subcontractor could not personally complete the work, so they provided their WO to another subcontractor. There are now 3 separate WOs from different systems in play.
The End Result
Only the primary contractor knew the agreed requirements and standards set out in the original contract and work order. The second subcontractor was unaware of their compliance obligations and lacked sufficient information on the safety obligations. The primary contractor closed the job without any visibility on the quality or completion level of the repair work. The Facilities Manager blindly trusted the primary contractor and approved payment for the repair.
Gaining Sub-Contractor Transparency
Verified ensures the person turning up on your site follows your rules, period. If they don’t, won’t, or can’t , they cannot proceed. Verified provides visibility on these third-party arrangements. Specifically, Verified’s system provides real-time contractor and subcontractor data relating to:
- Who is on site;
- Who they work for;
- How long they are onsite for;
- Their level of compliance; and
- Their status and that of their repair/maintenance work.
Our market leading technology-based solution continues to assist clients to manage their contractors and building portfolios. From simply stopping subcontractors and their subcontractors from entering their site, to not allowing site access to contractors who have not completed the induction process, Verified continues to reduce the operational and reputational risk from 3rd party access.
For further information on how you can have greater visibility on your subcontractors, book a demo here with the Verified team today.