Subcontractor Management: The System a Head Contractor Needs

Under the WHS Act a person conducting a business or undertaking owes the primary duty of care to its workers, and the Act's definition of a worker includes a contractor, a subcontractor and the employees of a contractor or subcontractor. A head contractor therefore owes a duty to the people its subcontractors bring to the job, to the extent that it engages them or influences or directs their work.

The subcontractor has its own duty for the same work. Where more than one person has a duty for the same matter, each must discharge it to the extent of their capacity to influence and control the matter, and each must consult, cooperate and coordinate activities with the others, so far as is reasonably practicable. A term in the subcontract saying the subcontractor is responsible for safety does not remove the head contractor's duty: the Act does not allow a duty to be transferred or contracted out of.

On a construction project worth $250,000 or more, the principal contractor has further specific duties, including preparing the WHS management plan and obtaining a SWMS before high risk construction work starts. Victoria reaches a similar position under the Occupational Health and Safety Act 2004, which treats independent contractors and their employees as employees of the engaging business for matters over which it has control.

A working program follows the subcontractor from selection to the end of the job:

1. Prequalification. Before a subcontractor is engaged, assess its safety management, incident history, licences, insurances and capacity for the work. A scored questionnaire keeps the assessment consistent and gives a record of why one business was approved and another was not.
2. Insurance and licence verification. Sight current certificates of currency for public liability and workers compensation (and professional indemnity where the work involves design), and the trade and high risk work licences the scope needs. Record expiry dates and follow them up.
3. Contract and scope. State the safety requirements in the subcontract: the site rules, the documents required before starting, reporting of incidents, and the right to stop unsafe work.
4. Pre-start documents. Receive and review the subcontractor's SWMS for any high risk construction work, its risk assessments, safety data sheets, plant registers and worker competencies. Reviewing means reading it against the actual task and site, and returning it if it is generic.
5. Induction. Induct every worker the subcontractor brings to site: site hazards, rules, emergency arrangements, permits, and who to report to. Keep the induction register.
6. Monitoring. Inspect the work against the SWMS and the site rules, at a frequency matched to the risk. Record the inspections.
7. Non-conformance and stop work. When work departs from the SWMS or the rules, stop it, record it, agree the correction and verify it before work resumes. Escalate repeat breaches.
8. Close-out and evaluation. At the end of the job, record the subcontractor's safety performance so that it informs the next engagement.

A prequalification questionnaire that separates competent subcontractors from the rest asks for evidence, not assurances:

• The safety management system or plan the business works under, and who is responsible for it.
• Sample SWMS for the kind of work being tendered.
• Lost-time injuries, notifiable incidents and regulator notices in the last three years.
• Licences: contractor licence, high risk work licences, and any specialist licence such as asbestos removal or electrical.
• Insurances and their limits and expiry dates.
• Training and competency records for the workers who will attend.
• Plant and equipment inspection and maintenance records.
• Whether the business will itself subcontract any of the work.

Scoring each answer against written criteria makes the result defensible. It also makes it repeatable when the same subcontractor is assessed again in twelve months.

A subcontractor that passes part of its work to another business creates a second tier that the head contractor has not assessed. The duty of care still reaches those workers, because they are carrying out work for the head contractor's business. A subcontractor management program deals with this in the subcontract and in practice: the subcontractor must tell the head contractor before engaging anyone else; the same prequalification, insurance and licence checks apply to the second tier; and every person who comes on site is inducted and signed in under their actual employer, so that the head contractor knows who is there and who they work for.

When a client audits the program, or a regulator asks after an incident, the questions are about records. A subcontractor management system keeps:

• an approved subcontractor register with prequalification scores and review dates
• an insurance and licence register with expiry dates
• signed subcontracts with the safety schedule
• the SWMS and risk assessments received, with the review record
• induction registers
• site inspection and monitoring records
• non-conformance reports, stop-work notices and their close-out
• incident reports involving subcontractors
• end-of-job performance evaluations

The test of the system is whether these records exist for the subcontractor who was on site last week, not whether the procedure describing them does.

The program can be run from documents and registers or from software. Software earns its cost when the number of subcontractors makes expiry tracking and document collection unmanageable by hand, typically past fifty active subcontractors or across many sites. Below that, a document-based system of a procedure, a prequalification questionnaire with scoring, registers in a spreadsheet and standard forms does the same job, and it is what the software would be configured to hold in any case. Either way the procedure comes first: software stores the process a business has defined and cannot define one for it.

The failures that appear in incident investigations and audits are consistent: insurances checked once at engagement and never again; SWMS filed without being read; workers arriving on site who were never inducted because they came with a second-tier subcontractor; no inspection of the subcontractor's work after the first day; and unsafe work noticed and not stopped because nobody was sure they had the authority. Each one is a step of the program that was written down and not carried out.