When it comes to the construction qualification workflow, the term “successful” can mean many things, so let’s be clear: as the landscape for construction management firms continues to shift towards a heavier focus on data-driven decision making, success hinges on the positive collaboration between risk management and operational teams.
Many contractors fail to implement this type of workflow for a variety of reasons. Each company’s unique structure, the inherent nature of decentralized office locations, long-standing relationship-driven decision making, and many other reasons factor into resisting change. Nonetheless, effectively managing this important risk requires the ability to communicate and work together across departments.
Achieving success, as we’ll explore below, is not about reorganizing the workflow, but rather through the strategic use of technology and adherence to a few key principles. Likewise, for each new principle, we are faced with many of the same challenges that created a barrier to implementation in the first place. The difference this time is that with thoughtful technology, there is indeed a path towards success.
Here, we’ve identified three key principles of a successful workflow, and for each, we’ve outlined the requirements that influence and ultimately drive our technology-based solution.
Principle 1: Be comprehensive
This sounds fairly obvious, but it’s nonetheless true: evaluations are most effective when they leverage a comprehensive profile of information and data. With subcontractors, that means project history, past safety performance, backlog position, and quality of work are all key indicators of potential risks, in addition to the traditional analysis of financial health.
What it requires: Efficiency
Efficiently collecting more data was a huge reason TradeTapp found inspiration in Intuit’s TurboTax. What we love about TurboTax is its ability to keep things simple, collect a lot of information, and do so efficiently. They do a great job at making sure nothing is missed — but also not wasting anyone’s time. We’ve carried these same principles into our data collection module.
Sidebar: One of the first things we often hear is that it’s frustrating to chase down all the data necessary from subcontractors. Typically, contractors have a fair amount of back and forth before receiving all the data they need. So it begs the question: how can contractors be comprehensive without slowing down the process even further? The answer: this is why a user-friendly and thoughtful data-collection platform is so important!
Principle 2: Be project-based
We encourage our clients to be project-based on their evaluations. While it’s certainly important to understand a company’s financial or safety standing independent of any other variables, it lacks the context of assessing the actual fit with the award they’re being considered for. The specifics of the project (i.e., it’s duration, location, award size, market sector, ownership type, etc.) are significant factors to be considered at the time of award.
What it requires: The right tools and speed to analyze
The primary reason it’s difficult to be project-based in each evaluation is that contractors typically rely on a third-party for their subcontractor vetting. One of the major downfalls of relying on a third-party for subcontractor vetting is that the analysis is general. The demand on time and resources is too high, so project-specific parameters are rarely considered in the evaluations. Furthermore, the information may even be out of date by the time it’s being used to drive a decision.
Technology can help change this reality twofold. First, data is collected annually and then updated where applicable at the time of award (all web-based). This can facilitate a continuous qualification cycle and also allow for a specific evaluation at the time of award or bid. Secondly, what we’ve done with TradeTapp is give users a tool where they can plug in the specific scenario of a subcontract award and run an evaluation of that project in real-time.
And that’s the key: timing. Having project-based evaluations that don’t create bottlenecks for the purchasing and award teams is fundamental to having a collaborative workflow that works for both parties. Ultimately, decisions need to be made quickly and communicated with enough time to be considered during the bid leveling process. TradeTapp’s project-specific underwriting tool does effectively this, allowing for a fast evaluation of a potential award, and then also facilitating the communication from one stakeholder to the next.
Principle 3: Be practical
Without a doubt, the most important principle of the qualification workflow is that it needs to be practical. Far too many existing vetting “solutions” are absolute in their nature — with outputs like “approved,” “disapproved,” “yes,” or “no.” Being absolute in qualification puts operational teams in a corner when they are handling the realities of project budgets, ownership demands, or the like. Instead, we propose a “yes, but” approach for each evaluation, which is to say “yes we can make this award, but here are the risk management controls we need to implement to do so intelligently.”
What it requires: Sophistication and communication
Creating a “yes, but” approach requires sophistication in the analysis — the ability to leverage the comprehensive set of data described in principle #1 in order to drive decisions. In addition, being sophisticated means an ability to factor industry data as well as trending performance into our overall evaluation. Only when we properly understand the specific risks of an award can we accurately devise a plan to mitigate those same risks.
Finally, having a practical “yes, but” approach requires effective communication from the risk management teams to their operational counterparts. In the construction industry, almost everything is two weeks behind schedule, so something like reviews from risk management teams will easily be swept aside if they only compound the problem. With an effective technology solution, communication can occur clearly, in a timely manner, and be accessed from anywhere.
By Justin Levine