Cheri Hanes | April 12, 2019
Subcontractor prequalification is a multifaceted process, and the construction industry has made strides in the last decade toward getting it right. As a result, general and financial prequalification is typically addressed, but many contractors still have challenges around the crucial, nonfinancial side of the prequalification process: operational prequalification. What can you do within your organization to strengthen this process, which is the critical bridge between corporate and project practices?
Subcontractor prequalification generally falls into the following four distinct phases.
Done well, operational review ties together all of the effort that has been invested in a sub to get them through the process. It is where "the rubber meets the road." However, it is not as rare as you may think for the operational review—and resulting award decisions—to be made seemingly independent of the first two phases and without any real documentation of why the sub is a good operational fit for your project. It is important that the processes are considered in concert. If an operational review is done in a silo, the power of your previous general and financial analysis is significantly reduced, and your organization may find itself engaged with subs you would have sworn would be rooted out in your qualification processes.
Because there are fewer clear metrics to apply to this assessment, the operational review is often the most challenging portion of prequalification to execute consistently and well. Many of the steps taken up until this point would be considered "science"; that is, there are clear formulas and requirements for passing the initial review and defined metrics for financial assessment. The operational review includes more "art." It is not simple or clear-cut. It is important to devise a consistent way to assess and document which subs will be the best fit on a given job.
The components of a "best in class" operational review include having the right people, reviewing the right information from the right sources and at the right time, adjusting appropriately, and documenting the output of the process. Let's break that down.
In summary, the operational prequalification process offers an incredible opportunity for a positive influence on your project's success. It is not easy, but it can either magnify or destroy the value of all the prequalification efforts that precede it. Defined and thorough practices lead to greater success and are well worth the effort to develop and follow.
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