What's the cost of poor contractor management? Ask BP!

BP's net profit for 2009 was around $5 billion – and that was a bad year. Clearly 2010 is proving to be a lot worse. As of the 17th of June, BP claim the cost of its response to the spill has cost the company $2 billion, as well as a promise to place $20 billion in a fund to compensate victims of the oil spill. So far, that's potentially four years worth of profit. With the spill potentially still months away from being contained and the company's reputation going from bad to worse as their PR campaign makes blunder after blunder, things are likely to become a lot worse. And let's not forget that the explosion cost 11 lives and 17 injuries.

But don't let the big numbers detach you from the idea that it could happen to your company. Most of us don't need a giant oil spill to soak up four years of profit. It's worth doing the maths and seeing what it would take. At the very least, it will get you thinking about where your weak spots might be found.

So who's blaming the contractors?
Well, no one... yet! But internally you can guarantee that BP's contractor management systems and procedures are coming under a barrage of gunfire. When the incident that caused the spill is externally investigated, it will be one of the first things looked at.

The point is, at this stage of the game, BP execs are likely to be asking themselves, could we have avoided this with a better contractor management system? How much did we know about each individual contractor involved in this incident? You can also bet they'll be looking at ways to improve their contractor management, even if the final result shows all contractors to be without blame. Because now, all too late, they have an acute understanding of the risks involved!

What should a contractor management system provide?
No matter what individual issues you company may need to consider regarding contractor management, there is a specific set of information that you should be recording and keeping track of at all times. These include:

Insurance details
Workcover registration
Induction status
Personal details and current ID
Company details

By simply verifying and tracking contractors through a contractor management system you will be able to improve your control over contractor quality.

How do I find one?
It is possible to find contractor management software solutions that enable OHS professionals to easily check, record and track all the above details, but there's not a lot. A Google search using the keywords, “Contractor Management Systems” or “Contractor Induction Systems”, should provide you with links to relevant solutions.