Subcontractor prequalification: a checklist for GCs

A sub's crew, coverage and safety habits become part of your job the day they arrive on site. A sub who looks fine on a bid sheet can have lapsed insurance, an expired license or a safety record that raises your own costs. Prequalification catches those before the award, and it works best as the same short process for every sub.

Why a written process beats gut feel

You know which subs you trust. That knowledge doesn't carry over to a new trade, a new market or a project manager who wasn't on the last job. A written process applies one standard to everyone, leaves a record if a dispute or claim arises, and gives you a reason to decline a sub that isn't personal.

Owners, lenders and sureties may also ask how you vetted your subs. A prequalification file answers them.

What to check

1. Insurance

Coverage that was valid at bid time can lapse before the sub finishes, so this is where prequalification most often fails later. On a current certificate, confirm:

• General liability with limits that meet your prime contract.
• Workers' compensation for the states where the sub's crew will work.
• Auto liability if the sub drives to or on the site.
• Additional insured status for your company, with primary and noncontributory wording if your contract requires it.
• A waiver of subrogation in your favor where your contract calls for one.

Check the certificate against your contract, not a generic template, and ask for the endorsements it refers to. Then track the expiry dates: a certificate is a snapshot, and a policy that expires mid-project leaves a gap. This is general information, not legal or insurance advice.

2. Licensing and legal standing

Check that the sub holds the licenses its trade and location require, and that they're active. Rules vary by state and city, so check where the work happens; most state licensing boards have a free online lookup. Confirm the business is a registered entity and that it treats its workers as employees where the law says they are. Misclassified workers can become your problem.

3. Safety record

• Experience modification rate (EMR). A workers' comp figure comparing the company's claims with what's expected for its type of work. 1.0 is the baseline; lower is better than expected and higher deserves questions. Ask the sub's agent for the current rating.
• OSHA history. Ask for recent injury and illness logs, and look the company up in OSHA's establishment search, which lists federal and state-plan inspections and citations. Look for patterns rather than one incident.

Ask, too, whether the sub has a written safety program and who runs it. A company that can answer clearly usually runs a tidier site.

4. Financial capacity

A sub that fails mid-project can stall your schedule and leave unpaid suppliers with lien rights against the property. You don't need an audit, but you want reasonable assurance the sub can carry the work: bonding capacity relative to your contract, bank or trade references and time in business. Fast growth, a short history or reluctance to talk about capacity deserve a closer look. On a large enough job, payment and performance bonds move some of this risk to a surety that has done its own vetting.

5. References

Talk to other GCs, and owners where you can, who have worked with the sub. Ask about quality, schedule, how problems and changes were handled, and closeout. Then ask whether they'd hire the sub again. References are where you hear what no certificate or license lookup shows.

The checklist

1. Send one standard packet to every sub, so you compare like with like.
2. Collect and check insurance against your contract's coverages, limits and endorsements.
3. Confirm licenses are active where the work is.
4. Review safety: EMR, OSHA logs and inspections, and the written safety program.
5. Assess financial capacity: bonding, references and time in business against the size of the job.
6. Call references with the same questions each time.
7. Decide and record why, for approvals and rejections alike.
8. Set a re-check date. Re-check insurance at each expiry, and repeat the full review periodically or before a big award.

Step 8 is the one most often skipped. Coverage lapses, licenses expire and safety records change, and a prequalification from a year ago says little about today.

Keeping the insurance part current

The insurance check is the part that goes stale fastest. TradeGuard tracks each sub's certificates, flags expired and missing coverage against your requirements, and asks subs for renewals before their dates arrive.