Contractor documentation and due diligence

Surprisingly, many losses, liabilities, and subsequent insurance claims do not result from a contractor’s negligence on a project, but rather from the contractor’s inability to provide the required details of work performed. This includes the materials purchased, the suppliers hired, as well as the documentation to verify work performed by sub-contractors.

As a contractor, it’s your responsibility to have the documentation and do your due diligence for all contracting services. There are various categories of documentation that contractors need to obtain, maintain, and keep readily accessible for review or audit upon request.

Documentation and procedures

Work is performed by several types of contractors in all sectors of the economy. In this world of due diligence, it’s the responsibility of the contractor to obtain documentation on work performed and materials used to complete a project. Since actions against a contractor can occur many years after project completion, efforts should be made to retain these documents indefinitely. When a system is implemented at the onset of each project, maintaining proper documentation is not as complex or cumbersome as it may seem.

There are many types of documents to obtain and maintain if your work is called into question, such as:

Contracts and construction schedulesContracts and contract drawings including indexes, revisions, and as-built drawingsTechnical specifications, revisions, and addenda

Shop drawings, records, and daily logs

Tenders, material invoices, purchases, and payments
Progress reports, daily logs, inspection reports, and testing reportsProgress schedules and reportsInspection reports and procedures

Equipment service and maintenance records

Meeting notes (management and labourers) and project changes
All correspondence between the contractor, owner, architects, engineers, and sub-trades
Certificates of Insurance from sub-contractors, consulting engineers, etc.

Develop document procedures that are appropriate and specific to your contracting operations or services. Once procedures are in place, it is equally important to ensure that all managers, supervisors, construction forepersons and workers understand and abide by the procedures. A good company practice is to host a workshop on documentation retention procedures with your employees.

You can ask them to sign a document confirming they understand the topic and have received a copy of the procedures.

Understand your role

To determine the types of contracts and documentation to produce, fill out, track, and maintain for yourself and your project contributors, you should be knowledgeable about each role involved. When working in coordination with different parties, it is crucial to understand your role in a project and the responsibilities that fall within it. Stay aware of every aspect of a project that you may be held accountable for and complete them accordingly. Below is a list of different project contributors that may describe your role, or that of your collaborators, as well as the responsibilities that are typically assigned to them in a project.

Owner

Defines the scope, budget, and timeline of the project
Ensures all designs meet applicable codes, regulations, and standards
Secures and manages funding for the project
Selects and hires contractors for the design and construction of the project

Contract developer

Provides guidance on the procedures of contracting
Develops applications for a client on a short-term contract

General contractor

Oversees all the construction from start to finish
Hires and trains sub-contractors
Applies for and adheres to necessary licenses and building permits
Provides on-site guidance and supervision

Project manager

Oversees planning and delivery of construction
Organizes logistics
Delegates work
Keeps track of spending

Architect

Plans and designs the project
Ensures all designs are safe and practical
Provides accurate and detailed drawings for the project

Engineer

Analyses, develops, and negotiates construction contracts
Ensures best practices are used
Recognizes risk and loss prevention strategies
Manages contractors and ensures all contractual obligations are met

Professional quantity surveyor

Prepares cost estimates
Manages finances on large projects
Advises on different forms of contract and procurement routes

Sub-contractors

Performs construction work
Applies specific, technical labour
Follows safety guidelines

This list is not exhaustive, and you may find that you and your team are accountable for more duties. That’s why it’s crucial to have a strong understanding of documents and contracts. It’s up to you and your team to determine which documents and contracts you need for your specific operations.

Be sure to read documentation from front to back to guarantee everything is in order and that you understand your responsibilities so that you can properly fulfil and document their completion. It might also be beneficial to maintain a construction file. This file would contain inspection reports and checklists which list all your duties outlined in the contract, as well as some additional best practices.

Protect yourself and your contracting business with insurance

Despite your best efforts and preparation, there are some things that you simply can’t control. That’s why it’s important for you to invest in the right insurance coverage. Learn more by visiting our construction and contractors’ insurance page today!