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For general contractors, developers, builders and business owners, hiring a subcontractor is one of the greatest risks affecting business stability, profitability and reputation. Delayed or defective work may result in subcontractor default or failure, which in turn may throw off the entire project and compound project costs enormously. The resulting repercussions may include loss of income, injuries, lawsuits, penalty fees and fines, bad reviews, and even the loss of a contractor’s license.
Prequalifying subcontractors is critical to managing the risk of using a subcontractor. The prequalification process gathers subcontractor information during the bidding process to assess financial resources, operational means, regulatory performance, licenses and experience. So armed with this information, contractors, developers, business owners and builders can mitigate the risk of legal violations, defective workmanship and subcontractor default.
Unfortunately, not all prequalification methods are effective, and the same risk applies even when the prequalification is performed incorrectly, misunderstood or ignored.
Inefficient prequalification methods may lead to poor decisions, including making bad bid awards to subcontractors that:
Manual, in-house prequalification using Excel spreadsheets to collect data is cumbersome and problematic. It creates extra and duplicate workloads, thus wasting staff resources. Expiry dates pass without notification and red flags are missed without proper analytic feedback. For this reason, prequalification software that utilizes a database is a better means to reduce risk.
Additionally, in-house prequalification processes don’t properly evaluate vital financial information for a combination of reasons, including:
In general contracting, prequalification isn’t a one-size-fits-all solution. Your prequalification software must allow you to custom-tailor the criteria to fit the scope of each project. In addition to meeting the required insurance, safety, and financial criteria, each subcontractor will need to meet industry-specific certifications and state licensing.
PreQual is a premium subcontractor, supplier and vendor prequalification service with customizable forms and dashboards, reliable metrics, detailed analysis and tier-rated criteria-specific scorecards on financial, insurance, safety and corporate compliance performance standings.
We provide a customizable, efficient, complete and secure prequalification solution that covers risk management from analysis to assessment. With PreQual, general contractors can set and change the criteria used to complete the qualifications and scorecard. Our analysts use the specified parameters to complete the qualifications, analyze the data and determine the subcontractor rating.
PreQual helps contractors prequalify subcontractors in five simple steps:
Step 1: Custom PreQual form
Step 2: Subcontractor and vendor invitations to bid
Step 3: Data collection
Step 4: Analyze and score data
Step 5: Deliver tier-rated PreQual scorecards
Contact us today to see how you can take charge of your prequalification tasks, with an easy-to-use interface and expert analysis to reduce your risk and prevent your exposure to subcontractor failure.