5 Mistakes We See in Subcontractor Risk Scoring (and How to Avoid Them)

Subcontractor risk scores can help streamline decisions—but only if they’re built on solid foundations. Unfortunately, we see the same scoring mistakes made again and again. If you're relying on these scores to guide procurement or manage project risk, here’s what to watch for:

1. Scoring Based on Outdated Data

If your data is six months old, it may as well be six years old in this market. Construction businesses change quickly—new awards, delayed receivables, shifts in leadership—all of which affect risk.

Fix it: Use up-to-date financials and refresh operational data regularly. Otherwise, you’re reacting to the past, not preparing for the future.

2. No Peer Benchmarking

A $2M backlog might be great for one firm and disastrous for another. Without industry or regional benchmarks, you’re not scoring risk—you’re just comparing apples to hammers.

Fix it: Benchmark against similar trades, sizes, and markets. Context is what gives data meaning.

3. Overreliance on Single Metrics

We often see clients zero in on one data point—like total revenue or working capital—as a proxy for strength. But size doesn’t equal stability, and liquidity doesn’t guarantee delivery.

Fix it: Build a multi-dimensional scorecard. Risk isn’t one number—it’s a pattern.

4. Ignoring Operational Red Flags

Financial health is critical, but so is operational performance. If a Sub can't meet schedules, coordinate trades, or hold key staff, financials won’t matter for long.

Fix it: Pair financial insights with field intelligence. Past performance, team continuity, and responsiveness matter.

5. Treating the Score as the Final Word

Scores are helpful indicators—not absolute truths. A Sub might score poorly but be a perfect fit for a specific project with the right safeguards.

Fix it: Use scores as a conversation starter, not a verdict. Apply judgment, context, and risk-adjusted planning.

Bottom Line:

A good risk score doesn’t just tell you what to worry about—it helps you understand why. Avoid these five mistakes, and your risk process will be smarter, faster, and a lot more defendable.

Completely Unrelated Trivia Treasure: Guinea pigs are such social creatures that in Switzerland, it is illegal to own just one. Guinea pig owners must have two or more.