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How General Contractors Can Pre-qualify Subcontractors

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When it comes time to select subcontractors for your project, you’ll quickly learn that not all subcontractors are matched equally. Some are just starting out, and some have years of experience in their chosen trade. Some have done extensive projects, while others focus mainly on small projects. It can be challenging to know which subcontractor will be the best one for your project unless you have experience working with them.
Basing your choice of subcontractors on price alone can lead to problems before, during, and after the project. The process of vetting subcontractors to determine if they will be a good fit for the project is called pre-qualification.
We’re going to look at why you should pre-qualify subcontractors, when is the best time to do it, and what you should be looking for to ensure the subcontractor fits your needs.

Why pre-qualify subs?

The main reason to pre-qualify subs is that it helps mitigate several potential risks on a project. It can protect you from substandard work, payment problems, and schedule delays. Quality concerns, financial issues, and an inability to meet the project schedule can all be discovered and avoided during the pre-qualification process.
Pre-qualifying bidders can make bid day smoother and less stressful for your team. Knowing the bidders can do the work means all your estimators have to worry about is comparing scopes and prices.

When to pre-qualify

You can choose to pre-qualify subs before a bid is due or at the time of bid submission. Accepting applications before an offer gives you a chance to process the information and verify facts and references before a busy bid day. Then your estimators only have to worry about comparing bids and scopes.
If you take pre-qualification applications with your bids, you’ll need to be sure to allow extra time to process and confirm the information. You’ll want to pre-qualify subcontractors before putting their price into the bidding pool, or you run the risk of going with a number from a sub who isn’t qualified to do the project. Ensure that the pre-qualification processing takes place separate from the bidding team, so there isn’t any confusion about who has been qualified and who has not.
Whether you pre-qualify your subs before the bid due date or on bid day, you should consider implementing a re-qualification process every so often to make sure you have up-to-date information on all your subs. There-qualification process doesn’t have to be as strenuous as the pre-qualification method, especially if you’ve worked with them before.

Information to review during pre-qualification

Exactly what information you request will depend on your goals and what risks you are most concerned with mitigating. Here are a few ideas to get you started:
Licensing – Confirm that the sub is licensed, if required, in the state your project will occur.
Project experience – Ask for project experience that is similar to the projects you do. Knowing they have worked on these types of projects will mean they’ve got the skills required.
References – Ask for client references, then reach out to a couple to confirm their experience with the sub. Also, check sites like Yelp and the Better Business Bureau.
Financial statements – If you are concerned about a company’s financial standing or want to confirm that they have the financial capacity to take on a project, ask for two years of financial statements. Your bonding company can tell you some key ratios to look at to help you gauge the company’s financial health.
Resumes of key personnel – Review these for training, experience, and relevant past projects.
Training and safety programs – Ask for copies of these programs for review. When it comes to safety, ask for their EMR(experience modification rating) and a copy of their OSHA 300 log for the last couple of years.
Pre-qualifying subcontractors allows you to screen your bidders, so you know that everyone who submits a bid has the skills and experience to do the job, and the financial backing to finish it. The process doesn’t have to be overly detailed or require a lot of review time to be effective. The goal is to ensure that the subcontractor can complete the project with the quality your customer expects.

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