Contractor Management

By: Eric Yapp, SVP Business Relations, Crawford Compliance

The role of contractors in property management continues to change significantly.  In the past, many employees of larger property managers performed maintenance themselves.  Over the past twenty years or so, economic pressures and the rise of institutional ownership shifted the market towards outsourced Facilities Management.

Early on, there was a perception that you could outsource risk as well as work – “I don’t have to worry about the contractors’ training and safety since they aren’t my employees.”  However, after the 1992 Westray mine tragedy, governments introduced Occupational Health and Safety Acts which often included criminal penalties and personal fines for directors and officers who failed to meet their duties of care.

Much of this was a reaction to the 1992 tragedy at the Westray Mine in Nova Scotia.  In the Westray case, management knew the mine was dangerous but still sent workers and contractors in.  They failed to exercise due diligence by mitigating risk, something that weighs heavily in subsequent criminal or civil litigation.  For instance, in the 2009 Metron case, a swing stage with six workers collapsed in Toronto on Christmas Eve.  Tragically, four workers fell to their deaths and a fifth was badly injured.  They were not wearing safety harnesses, though a sixth who was wearing a harness walked away unharmed.  Metron’s owner/director was personally fined $750,000 and the project manager was sentenced to 3.5 years in prison.

Jail time and fines are not the only consequences of such tragedies.  In our 24/7 news and social media cycle, the court of public opinion is often more powerful than our legal system.  So how can you mitigate and manage the risk of hiring contractors?  Well, you have three basic options:

  1. Managed Internally – Manually – Though it may be manual and inefficient, some companies obtain critical documents via email as evidence that their contractors are meeting their health and safety requirements is a good first start. This is cumbersome, but it can work if done with care and diligence.
  2. Managed Internally – Automated – Other companies leverage existing IT systems such as their ERP (Enterprise Resource Planning), accounting software or a custom built database to manage their OHSA documentation. But a word of caution here: you will need in-house IT resources and a large budget to build and maintain your own custom systems.
  3. Managed Externally – Service Provider – A third group of companies prefer to stick to their core business of managing buildings and outsource their OHSA needs to a service provider. It’s important that these third parties truly understand your requirements.  For instance, you may want a solution that integrates with other internal data sources to have the best of both worlds: an off-the-shelf product that also ties into your data and process for managing contractors.

Of course, there is a fourth option – doing nothing.  But obviously this would be a mistake.  Among other things, it would deprive you of a due diligence defense if something goes wrong.  Instead, pick the solution that works best for your business, including meeting your duty of care – and take the time to pick the right approach to fit your unique needs.

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