Pre Qualification Management Best Practices. Presented by: Herb Brownett CCIFP
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1 Pre Qualification Management Best Practices Presented by: Herb Brownett CCIFP
2 What is Prequalification Management (PQM)? The process by which contractors are screened and evaluated by General Contractors for inclusion in bid requests for a project For General Contractors it is Risk Management For contractors it is Marketing 2
3 General Contractors Risk Management Typically 80 90% of job cost is subcontracted Most catastrophic project losses are sub related contractor risk management options: Bond Contractor Default Insurance (Zurich Guard/Arch) Self Insure 3
4 contractor Marketing Maintain relationship with current GC s and renew Prequalification as required Monitor market activity and Prequalify with GC s for targeted projects Monitor targeted geography and Prequalify with GC s in targeted markets Strong qualifications are a strategic advantage 4
5 Current Economic Environment Requires Improved PQM Economic environment requires re thinking pre qualification Greater numbers of contractor failures have occurred and are predicted Financial health will change more rapidly than before Significantly increased demand for better risk management Underwriters and financial institutions are demanding improved pre qualification General Contractors all looking for ways to better manage risk Changes in pre qualification needed Obtaining more frequent updates and more data Shifting pre qualification from an episodic event to an ongoing process 5 Confidential
6 In the current economy, assume nothing! We do not prequalify the subs we deal with regularly because we know them so well. CFO of soon to be in trouble GC 6
7 Industry Pre Qualification Manual Process contractors obtain copy of each GC s Prequal Form (some are available online) contractor completes each form and submits (+99% of data requested is the same) GC evaluates data (may involve multiple people) Evaluation and data filed somewhere that is not accessible on bid day 7
8 Standard Data Requirements General Information Business Classification Capabilities Product Service Segments Employees General Diversity Information Geographic Areas LEED Accreditation Union Agreements Licenses Performance Information Bank Information Financial Information Financial Statements References Litigation Information Quality Assurance Bonding Compliance Requirement Automobile Insurance Contractor s Pollution Insurance Employers Liability Insurance General Liability Insurance Professional Liability Insurance Umbrella Insurance Worker s Compensation Insurance Additional Insurance Lien History Safety 8
9 Challenges of Current PQM Process An inefficient mostly manual process contractors provide the same data on different forms to many General Contractors Visibility of collected information at GC is limited Data is not updated as frequently as it should be Monitoring updates is difficult for both parties 9
10 Industry View of Pre qualification Today GC GC GC Confidential
11 Pre Qualification Conundrum General Contractors need to collect more information, from more subcontractors, more often, with less people contractors need to provide more information, to more General Contractors, more often, with less people Something has to change!! 11
12 What Pre Qualification Options Do We Have? Point Solutions GCs or Accounting Software Develop Own Solutions contractors still have heavy burden to learn multiple systems and continue high manual data entry effort General Contractors are limited to their existing subcontractors 12
13 What Pre Qualification Options Do We Have? Best Practice Industry Network Solution Improves pre qualification for everyone Delivers greatest value to everyone Dramatically lowers cost for everyone 13
14 Social/Business Networking Facebook LinkedIn CFMA Connection 14
15 GC Pre Qualification with Network PQM General Contractor contractor 1. Enter Document Templates Into Network 2. Populate Library with Prequal Data One Time! 3. Request s to Prequalify 5. Receive Completed Pre Qual Documents for Approval 7. Automatically Receive Updates N E T W O R K P Q M PQM Data 1. Financials 2. Project Details 3. References 4. Safety 5. Insurance Auto Populate GC Request 6. Enter Updates 8. Generate Pre Qual Documents for Non PQM GC s 15 Confidential
16 contractor Pre Qualification with Network PQM contractor General Contractors One Time Entry: Data Attachments PQM Data 1. Financials 2. Project Details 3. References 4. Safety 5. Insurance 6. PQM Data N E T W O R K P Q M Automatic Generation of: Standard GC Pre Qual Docs with Attachments GC 1 GC 2 GC 3 16 Confidential
17 GC Configure: Requirements & Packages Requirement Objects 1. Financial Information Banking Info Financial Statements 2. Project Details Active Contracts Value Duration / Completion 3. References 4. Safety 5. Insurance 6. Bonding 7. Litigation History Requirement Packages Standard Package # 1, 2, 3, 4 Commercial Contracts Package # 5, 7 Civil Contracts Package # 5, 6, 8 17
18
19 Transact: Fulfilling a Request contractor Invitation Off-System GC Registration Pre-Fill Data in Library Receive Request Enter / Copy from Library 1. Financial Information 2. Project Details 3. References 4. Safety 5. Insurance 6. Bonding 7. Litigation History Auto Build mittal Form Print Electronic Signature (if Req d) mit to Network GC 19
20 GC: Organization Approvals Single Approver Many Approvers 20
21
22 Industry Pre qualification Today GC GC GC Confidential
23 Industry Pre qualification with Network PQM GC 1 GC 2 GC 3 N E T W O R K P Q M Confidential
24 General Contractor Value Proposition Improved Risk Mitigation More frequent updates Improved flexibility to define requirements Better communication internally and with contractors Improved Information Accessibility Easy means to capture contractor project performance Dramatically improved visibility On line history search ability Lower Costs stantial process efficiencies Automated and definable workflow Automated expiration management with reminders Enhanced Capabilities Green paperless pre qualification Search for subcontractors in new geographies Generate bid lists 24 Confidential
25 contractor Value Proposition Greater Effectiveness Satisfy varied General Contractor PQM requirements but only enter the information once Automated PQM package creation Automated distribution Automated update capability Better insight to current status Same process for Network PQM GCs and non Network GCs Significant Cost Savings stantial process efficiencies communication, data entry, document creation / distribution, follow up Enhanced Capabilities Prequalify with more General Contractors with little additional effort 25
26 Will Your Company Survive? It is not necessary to change, as survival is not mandatory. W. Edwards Deming 26
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