CFMA | Subcontractor Prequalification

Owners, GC’s, and construction managers stake their companies’ reputations and success on the quality of their workmanship and ability to complete jobs on tome and within budget. Success or failure rests squarely with the management team and the subcontractors they hire to complete the job.

Total work performed by subcontractors on any constructions job can reach as high as 90%. Just as the management team must survive rigorous interviews and background scrutiny before being hired, so should a key component of the team: the subcontractors.

A formal, standardized subcontractor prequalification procedure and annual update of preferred subcontractors are invaluable tools in contractor selection and retention for long-term success and increased profitability. While this article will focus on the evaluation of subcontractors, it’s important to recognize that GC selection can also follow the same types of analysis and evaluation by project owners.

Establishing the selection criteria is a cross-departmental strategic issue, with priorities coming from upper management along with input from estimating, purchasing, finance, and the field. The CFM can be an instrumental driver in helping to identify the need for a detailed subcontractor prequalification process, establish the specific criteria, and implement the process. In addition, the CFM is the primary source for the financial criteria. The company’s surety or an accounting firm (ideally with construction expertise) can provide additional perspective and ideas in this area.

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