The contractor management framework Companies need to build robust in house

The contractor management framework companies need to

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The contractor management framework Companies need to build robust in-house contactor management capability. To do so, they can draw on a comprehensive multifaceted framework that includes strategic activities, planning activities and execution activities (see Figure 1). These three key areas are discussed below. Strategy: The starting point 116 | P a g e
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An effective approach to contractor management needs to start with a carefully thought-out strategy—a step that often gets short shrift at companies today. Strategy work should start early on, when projects are initially being considered and defined. This early start allows time for laying a solid foundation for contracting and avoiding rushed, short-term decision making. Once the decision is made to contract work out, companies use a systematic method to qualifying contractors. Indeed, this is an area that typically holds significant opportunity for improvement, because companies today often take a superficial approach in doing so. Contractors should be assessed against a range of criteria, such as past performance, financial status, certifications and HSSE compliance. This deeper qualification is more important than ever because of the diverse range of suppliers in use today, and the substantial economic and talent challenges that construction and craft companies have faced in the last few years. A clear understanding of costs is naturally a critical part of contractor management. Today, it is not uncommon to see cost evaluations based on a limited knowledge of future needs and a comparison of standard contractor rates. However, with the growing importance of contracting, a more thorough understanding of costs is needed. This more detailed understanding should be developed through the involvement of all stakeholders who are part of contract management process, and these stakeholders should collaborate to take a broader look at the effects of price, usage and process-related costs (see Figure 2). Having a complete view of costs allows the company to better understand what contracted services will cost, and the potential benefit of using a contractor. It also provides a deeper understanding of cost drivers, and opens the door to finding areas where efficiency and productivity can be increased, and where risk can be shared more effectively. Once an outside provider is selected, the company should work closely with that contractor to shape the schedule, scope, methods and sequence of activities. This early engagement gives the company and the project manager an opportunity to align all parties around a set of common goals. It also lets the company and the contractor develop a mutual understanding of the market factors—such as the availability of skilled workers and equipment—driving the project’s cost and schedule. And it lets all parties have input into the development of the contract and key performance metrics, and the identification of enabling capabilities that will be needed, including technologies for work planning, requisitioning, service validation and so forth.
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