What is Contractor Management?

Definition of Contractor Management

Contractor management refers to the managing of outsourced work performed for an individual company. It is increasingly common for industries to rely upon independent contractors for specialized skills and knowledge. By utilizing outside contractors, companies can achieve three main goals: accessing specialized expertise that is not continuously or routinely required, supplementing limited company resources during periods of unusual demand, and providing staffing increases without the overhead cost of direct-hire employees.

Challenges Associated with Contractor Management

Because independent contractors are not a regular component of the company for whom they work, there are some unique challenges that must be addressed by companies conducting contractor management. Increasingly, companies rely on outsourced contractors for field service work. This poses challenges in maintaining consistency in service delivery and customer experience, as well as in maintaining visibility and sufficient control over scheduling and other facets of service.

Some of the most common day-to-day challenges associated with contractor management include:

  • Senior leadership commitment
  • Project managers’ understanding of their roles
  • Team members’ understanding of expectations
  • Scheduling and task management
  • Control over labor costs

Companies also must determine how to access the independent contractor population and minimize costly penalties that often result from improper classification of workers and independent contractors. Moreover, companies need to consider how to evaluate independent contractors. On-boarding and administration programs must be in place for successful contractor management.

Other aspects of contractor management that must be considered are risk assessment and identification, issuing 1099s on behalf of the client, and document completion, collection, and maintenance. Many challenges associated with contractor management can be overcome by employing best practices for contractor management.

Best Practices for Contractor Management

Freelancing and independent contracting especially are popular among small businesses. Independent contractors are able to fulfill needs that the small business workforce otherwise could not. Contractor management is necessary because of the nature of the independent contractors’ work; independent contractors, particularly field service contractors, often work away from the office and are not under direct supervision. Under these circumstances, even experienced CEOs may find it difficult to manage independent contractors. There are some best practices that help companies and executives handle their contractor management:

  • Clearly define the services that you need to have provided
  • Draft a job description to serve as a reference point when drawing up a contract
  • Determine payment schedules and compensation rates ahead of time
  • Set up a straightforward and clear written agreement at the contract’s start
  • Ensure that you are firmly within legal grounds and document a work arrangement meticulously so that you are correctly classifying your independent contractor
    • Keep in mind that experts recommend that you determine the what and the contractor determines the how – you outline specific goals, but the contractor must provide his own tools, equipment, and facilities to complete the work
  • Guide productivity and ensure that the contractor will produce high quality work while meeting key deadlines by specifying the deliverables in the agreement, making yourself available to answer follow-up questions, and scheduling regular meetings for progress updates

Communication is Key to Contractor Management

Independent contractors, program managers, and company executives not only have a professional duty to communicate effectively, but they must communicate in a way that ensures the contracted work is completed well and in a timely manner. Effective communication is a key component of contractor management throughout the business relationship, from defining services and writing the agreement, to meeting with the contractor throughout the project’s completion. There are several solutions for contractor management available, including mobile management software and solutions, to connect everyone and ensure successful contractor management.

With comprehensive contractor management practices offering visibility and control over the complete service chain, enterprises managing field service contractors and other independent contractors are able to reduce labor costs, obtain proof-of-service, gain real-time visibility into the status of jobs and tasks, and ultimately, provide a more consistent experience that increases end customer satisfaction.

Contractor Management 101: Definitions & Basic Concepts


Contractor Management: What Is It?

Many industries often rely upon contractors for very specialized skills and, sometimes, to accomplish particularly hazardous tasks – often during periods of intense activity, such as maintenance turnarounds.

Such considerations, coupled with the potential lack of familiarity that contractor personnel may have with facility hazards and operations, pose unique challenges for the safe utilization of contract services. A Contractor management system is a set of controls and procedures to ensure that contracted services support both safe facility operations and the company’s process safety and personal safety performance goals. This element addresses the selection, acquisition, use, and monitoring of such contracted services. Contractor management does not address the procurement of goods and supplies or offsite equipment fabrication functions that are covered by the asset integrity quality assurance function. While the most significant contractor safety challenges typically involve workers located closest to process hazards or involved in high-risk occupations, such as construction work, the safety needs of contractors providing simpler and more routine tasks, such as janitorial or groundskeeping services, must also be addressed in the contractor management program.

Why Is It Important?

Companies are increasingly leveraging internal resources by contracting for a diverse range of services, including design and construction, maintenance, inspection and testing, and staff augmentation. In doing so, a company can achieve goals such as

(1) accessing specialized expertise that is not continuously or routinely required,

(2) supplementing limited company resources during periods of unusual demand, and

(3) providing staffing increases without the overhead costs of direct-hire employees. However, using contractors involves an outside organization that is within the company’s risk control activities.

The use of contractors can place personnel who are unfamiliar with the facility’s hazards and protective systems into locations where they could be affected by process hazards. Conversely, as a result of their work activities, the contractors may expose facility personnel to new hazards, such as unique chemicals hazards or x-ray sources. Also, their activities onsite may unintentionally defeat or bypass facility safety controls. Thus, companies must recognize and address new challenges associated with using contractors. For example, training and oversight requirements will be different from those for direct-hire employees. Thus, companies need to carefully select contractors and apply prudent controls to manage their services (Ref. 13.1). Only by working together can companies and contractors provide a safe workplace that protects the workforce, the community, and the environment, as well as the welfare and interests of the company .

Where/When Is It Done?

Contractor management begins well before the issuance of any service contract. Systems must be established for qualifying candidate firms based upon not only their technical capabilities, but also their safety programs and safety records. Orientation and training of contractor personnel must be accomplished before they begin work. Responsibilities for this training must be defined, with some training often provided by the contract employer and some by the contracting company. The boundaries of authority and responsibilities must be clearly set for any contractor that works at the facility. Periodic monitoring of contractor safety performance and auditing of contractor management systems is required. At the end of each contract period, retrospective evaluation of a contractor’s safety performance should help determine whether the particular contractor is retained or considered for future work.

Mining Contractor Management

Case study: Australian Mining Contractor Management

No one can doubt the importance of effective contractor management for the health and safety of workers, particularly contractors. Their importance has often been highlighted by Australian miners, who perhaps face the greatest risk of workplace injury and have a great need for Contractor Management.

To protect workers, the Australian mining industry are re-examining their processes and how they manage every aspect of their operation. They are striving for greater visibility in order to gain a deep understanding of how they work, who works, and their workflow, in particular with contractors. Read More

Vendor Management- Best Practices Checklist

Vendor Management

Vendors and vendor management plays a vital part in the achievement of your business, regardless of what industry you’re in. Utilizing the following vendor management best practices to affirm a solid relationship with your vendors will enhance your company’s total performance in the market. Disregarding these sound seller administration standards will bring about an unworkable relationship that could adversely affect your business.

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Contract Management: Contractor Supplier Strategy

Contractor-Supplier demand and compliance management analysis is moving up the value chain. Organisations now need to adhere to external best practices with a vision and strategy, as well as 1-3-5 year implementation plans. Having a Contractor Supplier Strategy has become vital to the success and smooth running of a project. Moreover, companies need to ensure alignment with the overall business Strategy Commercial intelligence and corporate social responsibility when it comes to managing suppliers and contractors efficiently. Performance measurement & value reporting plays a key role in effectively managing these relationships. 

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OHS Supplier / Contractor Management Guide for Employers

Contractor Management Guide

Some of our clients manage thousands of contractors across 100 plus sites. Imagine trying to store insurance certificates, work permits, SWMS, contract information on these companies and keep them up to date. Over 10,000 documents stored across a hundred site in filing cabinets? Impossible.

This post includes a Contractor Management Guide for employers on what their responsibility is in managing contractors according to Comcare, the ACT, and Safe Work Australia. Where employers engage contractors to perform work, effective contract management is essential to ensuring that they meet their OHS duties both to the contractors and to others, such as employees and third parties.

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Contractor Management

Careful Contractor Management: Responsibilities Of Each Party

A proper contractor management system requires proper management of the safety and health of contractors. This approach protects contractors, employees, and members of the public from Health and Safety harm, and minimizes the risks a company faces. For this to be possible, each party should know and handle their responsibilities as required. An independent individual or organization engaged to perform some work in any trade or profession is a contractor, while a contract supervisor is the one in charge of the procedure.

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Essential Components of an Effective Contractor Management

Contractor Compliance

Your management of workplace compliance is not complete without a proper Contractor Management System to manage contractor compliance. You may have a comprehensive and strong OHS management system but this won’t protect you if something happens and you have non-compliant, poorly trained contractors working on site. Your OHS management plan is incomplete without a compliant, reliable and efficient contractor management system.

Do you have a complete and effective contractor management system in place?

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Pre-qualification: An Essential Component of Contractor Management


Often ignored by most companies in Australia, pre-qualification is an essential component of an effective contractor management system. Not only is pre-qualifying your contractors before they start work a great safety control measure, it can also prevent a very expensive lawsuit in-case an incident occurs. Most contractor companies are non-compliant. When one of Australia’s largest property developers implemented a contractor pre-qualification system, they were surprised to discover that 91% of their contractors were non-compliant.

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Supplier Selection Guidelines For An Effective Contractor Management

Contractor Management

If you are an experienced project manager, then you are familiar with concepts of contractor management and other processes related to project management. However, if you are new to site planning and project risk management, contractor management may sound new to you. You will need to understand this to work effectively with contractors.

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