Creating solid business processes is critical as a company grows. The more people involved in any process, the more opportunity for error and reduced uniformity – establishing guardrails to protect each processes’ output is key. An effective subcontract due diligence process is especially sensitive to how well these guardrails work. To ensure that due diligence performed provides meaningful and trustworthy insights, a firm must carefully design and employ Standard Operating Procedures (SOPs) to maintain consistency, reduce redundancy, and promote efficiency. A successful SOP has three characteristics: it is as simple as it can be, deployed consistently without any waiver, and meets its goal completely. SOPs take time and effort to deploy but once they are, they should run themselves.
SOPs must be carefully crafted, and crafting takes time. Simplicity should be the main priority - the SOP must be easily digestible, intuitive, and memorable for anyone who follows it. An always-followed three-step SOP with a simple outcome is infinitely more valuable than a sporadically followed ten-step SOP with considerable depth. When process is easy to follow, staff can focus on their work, instead of the rules of their work. Staff onboarding becomes faster, which in turn reduces the amount of unproductive time.
When designing SOPs for Subcontractor due diligence, which is inherently a complex and dynamic process, we must also design these steps to consider the roles, strengths, and capabilities of each involved person or resource. For example, tasking an individual without a financial background to manage financial due diligence component of the process impedes simplicity. Similarly, charging an individual without a construction operations background or familiarity with a project to assess a Subcontractor’s adequacy for a particular scope naturally adds more steps, time, and people to a workflow. Simplicity is key.
The most common point of failure of a Standard Operating Procedure is when it is not strictly Standard. Inconsistent employment quickly turns an SOP into a suggestion and when a team is time and resource constrained, a suggestion becomes a “nice idea but we don’t have the time for it right now.” When a process reaches this point, the SOP has completely failed, and the time invested into SOP development has been wasted. Teams must follow an SOP every time, with no exceptions. Organizations can establish that an SOP applies only to certain circumstances, but a team cannot selectively ignore an SOP when convenient.
The purpose of a Subcontractor due diligence SOP is to generate standardized and consistent analytical outcomes. When the due diligence effort is abbreviated or only partially completed, conclusions are incomplete and unreliable. Knowingly or unknowingly, decision makers then make decisions based on poor information which hurts the organization. For this reason and to maintain consistency, a company culture that supports and encourages buy-in of SOPs is critical.
Lastly, an SOP must meet its goal entirely with every user and end user in mind. If it cannot fulfill its goal with 100% accuracy, it should not be an SOP. Let us examine a common SOP that often struggles to meet this criterion: many Subcontract due diligence processes require Subcontractors to fill out questionnaires intended to be a measure of suitability for a particular project or general partnership. Unfortunately, questionnaire responses (in any circumstance or industry) are often incomplete or inaccurate, whether it is known to the author or not.
Let us suppose that the Construction Manager/General Contractor (CM/GC) has identified several of these instances of incompleteness or inaccuracy. How can the CM/GC then validate every other response with certainty? And if that validation is not possible, can the questionnaire meet its intended goal of identifying whether a Subcontractor is a suitable choice? If the answer is not yes with certainty, then the SOP is valueless, and it is likely that it has become “check-the-box” process. Managers and decision-makers should revisit the SOP and construct a better process that meets the goals of its end users.
SOPs are difficult to create and take considerable time, attention, and resources – designers at any level must be fully committed and users must be disciplined. Subcontractor due diligence SOPs are critical to an organization so that decision makers can support the right partner for the right project. Construction projects are extremely complex, and the wrong choice can be detrimental to a schedule. However, hard work pays off as the SOP’s guardrails promote better staff focus, more consistent inputs, and more reliable outputs.
Completely Unrelated Trivia Treasure: The longest continuous flight was 64 days, 22 hours, and 19 minutes, set in 1958 in a Cessna 172 by Robert Timm and John Cook.
Maple Insight employs a strictly standardized approach to Subcontract due diligence. Our processes follow the same prescribed steps for each Subcontract we assess, so that our determinations and estimates are unbiased, objective, and always dependable.