POWER June 2021 - 26

PROJECT MANAGEMENT
Preconstruction Strategies:
Subcontractor Prequalification
Implementing sound prequalification processes has proven to be a winning
strategy for successful power industry projects.
Aman Singh
F
ormal preconstruction phases have
increasingly been employed to control
costs for capital projects in the
power industry, and they are more important
than ever in the current environment,
where COVID-19 has caused market
disruptions. The preconstruction process
grew out of traditional cost estimating,
eventually encompassing forecasting,
bidding, data management, value engineering,
constructability, virtual design
and construction (VDC), and more.
Even before the pandemic, many owners
and their construction partners were
performing more conceptual design and
estimating work, as well as collaborating
more often and earlier in a project,
according to Advancing Preconstruction
conference coordinators. Owners and
contractors alike see the investment as a
way for project teams to develop a wellstructured
plan (Figure 1) and achieve
greater transparency. The result is ontime,
on-budget project completion and
greater client confidence. Many project
delivery methods emphasize the importance
of preconstruction, with early contractor
involvement (ECI)-which brings
contractors to the table at the earliest
stage of a project, typically during the
design concept or schematic phase-
providing a high level of value.
One area that is coming to the fore as
an important part of the preconstruction
process
is
subcontractor
prequalification.
Prequalification is a way of mitigating
risk not only by establishing financial
protections and becoming familiar with
subcontractor performance, but by enabling
productive partnerships before
jobsite work even begins. A thorough
prequalification procedure goes beyond
a narrow focus where risk is measured
only by a subcontractor's financial status-specifically,
their ability to borrow
money and avoid default. At its best,
prequalification is an early opportunity
for a general contractor to find partners
with complementary business values,
therefore streamlining the path to project
success for owners.
26
The Prequalification Process
Ultimately, a contractor prequalification
process helps owners and general contractors
ascertain the competence of a
contractor prior to hiring them. General
contractors should invite subcontractors
to begin the prequalification process by
filling out a questionnaire, preferably
electronically. The questionnaire (and all
prequalification forms) should be simple
and streamlined, avoiding unnecessary
questions or repetitiveness.
Preconstruction qualification processes
have historically included manual
processes, data silos, and disconnected
teams. When utilizing an online tool or
software, the entire team operates from a
single source of information. By removing
barriers, contractors can improve subcontractor
response rate. While questionnaires
frequently need to be customized
to a general contractor's specific needs,
common elements include:
■ Business information, such as business
type, legal structure, and ownership.
■
Past sales and current backlog information.
■
Financial standing information, such
as statements, history, and a surety
letter.
■ Past project references with relevance
to project size/market/complexity.
■ Safety information, such as experience
modification rate, total recordable
incident rate, lost-time incident
rate, violation statistics, safety affiliations,
and programmatic information.
■ Quality/project controls programmatic
information.
■ Trade affiliations, state licenses, and
geographic preferences.
■ References, including owners and
other contractors.
■ Participation in any third-party procurement
systems.
Software or web-based prequalification
systems are now commonly available.
According to a survey by The Associated
General Contractors of America (AGC)
www.powermag.com
1. Bringing owners and contractors to the
table at the earliest stages of a project can
allow the team to develop the best possible
plan. Courtesy: Graycor
and FMI, 58% of construction professionals
expect there to be more technologydriven
change within the next five years
than there has been in the last 50 years.
Several construction technology vendors
offer preconstruction qualification solutions,
and different packages offer a range
of features to meet different needs in the
industry and/or to suit the needs of individual
firms. Key benefits of technologydriven
procedures include:
■ Streamlines process, improves productivity,
and reduces administrative
costs.
■ Provides a central hub for all estimating,
preconstruction, and operations
team members.
■ Maintains current and accurate information
on contractors, vendors, and
suppliers.
■ Ensures compliance with requirements,
such as certifications, insurance,
documentation, licenses,
financial, and safety information.
■ Provides a single source of information.
■ Can be used to automate messages
to subcontractors to update their information.
In
today's construction industry, technology
has a role to play that goes far beyond
prequalification processes; new programs
and tools are found in almost every aspect
of a project. Therefore, a subcontractor's
technical sophistication may be a consideration
when it comes to assessing
their qualifications. For complex capital
POWER | June 2021
http://www.powermag.com
POWER June 2021

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