Working Paper, University of Utah, Department of Economics 2013-07
This safety-procurement tradeoff can be addressed by setting safety standards and then exempting selected activities and/or contractors. Or this tradeoff can be balanced by an informal or formal best-value point system that weighs, in each case, the relative value of contractor safety capabilities against contractor price and quality offerings. Construction work is particularly difficult to safety prequalify because the ramp-up time to bidding is short; construction uses several layers of subcontracting; and the formation of subcontracting teams comes late in the bidding process. Furthermore, the number of potential subcontractors that need to be prequalified explodes as the layers of subcontracting deepen. This means that the ratio of those who must be prequalified to those who are actually selected rises with every new layer of subcontracting thus raising prequalification costs. The solution to this dilemma is very-large-scale third party prequalification so that whole segments of the construction industry are prequalified for a wide range of hosts.
contractor safety prequalification construction subcontracting