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Reducing outsourcing risks


You could be held liable for damages caused by the negligence
of your subcontractor.

Companies don't always have all the specialized employees needed to perform every job. Whether you need particular expertise or work done on ad-hoc or regular projects, it can be a good idea to use a subcontractor.

However, using independent contractors doesn't just have advantages; on the flip side, you could also be held liable for damages caused by the negligence of your subcontractor, their employees, or even their own subcontractors.

Here are some tips to reduce the risks of subcontracting.

1. Insurance certificate
Before signing a contract, ask your subcontractor to show proof of civil liability and professional liability coverage, where applicable. The insurance certificate should come directly from the insurer. It confirms that the coverage is in effect for the duration of the contract. As a general rule, the insurance amount should be at least equal to your own coverage. We recommend
$2 million of coverage.

2. Choosing a subcontractor
While price is an important factor, you should choose a subcontractor mainly based on their expertise and experience. Ask for references. A reputable, honest company will be only too happy to show off their technical skills and put you in touch with previous clients.
Where applicable, it's important to get copies of any legal or professional licenses required (Quebec building council,* Corporation of certified electricians,** etc.) as well as applicable permits (construction, environmental, etc.).

3. Instructions and supervision
Never forget that you are ultimately responsible even if you hire a qualified and insured contractor. You may end up having to pay for damages caused by the subcontractor, his employees or one of his subcontractors, so it's vital to be aware of your responsibilities!
First, it's important to inform your subcontractors of the areas that they can access and to clearly specify prohibited areas. If necessary, one of your employees should accompany the contractor during their visit or work. Have your contractors wear a visitor card and record when they arrive and leave, so your staff can easily identify external or unauthorized people.

4. Outsourcing Risks 
It's also your responsibility to mention the mandatory safety rules and precautionary measures to be followed. For example, fires are regularly caused by subcontractors performing hot work (welding, cutting, etc.). Never assume your subcontractor knows the risks of this kind of work or that they will take the necessary preventive measures.  A number of now bankrupt companies made that mistake, until the day a "reliable" subcontractor doing minor work started a devastating fire. Finally, you're responsible for notifying subcontractors of hazardous conditions at the worksite, such as flammable fumes or liquids, nearby combustible materials, commercial vehicle traffic, etc.

5. Approved subcontractors
Finally, have a list of approved contractors as a guide for your employees, particularly in emergencies. For instance, it can be difficult to find a qualified plumber in the yellow pages at three in the morning while water from a burst pipe gushes from the ceiling. Preparing a list of contractors and subcontractors in advance is a simple, affordable way to be prepared for the unexpected!

In collaboration with JEAN-JACQUES FOURNEL, safety expert

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