
Achieving a best-in-class Subcontract due diligence (or “prequal”) process is no easy feat. Many organizations settle for systems riddled with procedural weaknesses, leading to incomplete conclusions that do not help decision-making. Developing and maintaining such a process requires discipline, expertise, and a commitment to meaningful quantification of risk—three characteristics often absent in less effective approaches. By addressing these gaps, organizations can make more informed decisions and better safeguard themselves against financial exposure.
A robust Subcontract due diligence process must be applied consistently, without exceptions. Discipline is essential; without it, a process becomes merely a recommendation. Without mandates, recommendations lead to incomplete conclusions, which subsequently undermine trust in the results and the entire process. Once doubt creeps in, restoring confidence in the system becomes a monumental challenge. However, consistency does not mean rigidly adhering to procedures at the expense of flexibility. Instead, it ensures decision-makers have all necessary information to weigh risks effectively. While judgment calls will always play a role, these must be based on a foundation of reliable, complete data—a feat only achievable through unwavering commitment to the process.
Effective due diligence relies on expertise, which is often underestimated in Subcontract evaluation. While administrative professionals are vital to any organization, they are rarely equipped with the specialized knowledge required for assessing Subcontractor financial health or project viability. Expertise in construction, financial analysis, and risk assessment is essential. Assigning these responsibilities to individuals without such knowledge is akin to asking a plumber to manage electrical tasks—unfair and inefficient. Without the right tools and experience, even the most diligent administrators can produce misleading conclusions, leaving decision-makers vulnerable to unforeseen risks.
Quantifying Subcontract default risk is paramount for informed procurement decision-making, yet many processes fall short here. Terms like "medium risk," "B+ score," or proprietary scoring systems are too subjective to offer actionable insights. Risk must be expressed in clear, quantifiable terms to allow for meaningful comparisons. This approach enables organizations to weigh the cost of risk against potential rewards, like cost savings. Imagine a doctor describing your blood pressure as "medium" without providing precise measurements—such ambiguity is unacceptable in medicine and should be equally unacceptable in Subcontract due diligence.
To mitigate financial exposure and build a resilient portfolio, Subcontract due diligence must be performed with consistency, expertise, and must be quantified. Every decision should follow a disciplined process and leverage the right resources and tools to yield reliable, actionable insights. Only by addressing these fundamental aspects can organizations ensure their processes are not only best-in-class but also well-equipped to adapt to evolving challenges. The reward is worth the effort: a more transparent, informed, and secure foundation for Subcontract procurement.
Completely Unrelated Trivia Treasure: The “TV Dinner,” developed in 1953 by C.A. Swanson & Sons, was created after the company’s poor Thanksgiving sales left them with a surplus of frozen turkey.
Maple Insight provides a consistent Subcontract due diligence framework, conducted by industry experts and supported by scientific processes. Each risk is measured in dollars and percentages.