Red flags that a contractor isn’t a good fit for the job
A contractor’s capabilities, ethics, and experience can make or break a project – particularly when it comes to large-scale, regionally critical infrastructure projects such as roads, bridges, transport systems, and water services. Nationwide, there’s been a concerted push to deliver smarter public transport, boost housing stock in growing urban centres, and shore up utility services that millions rely on daily, making exceptional due diligence increasingly important.
For national-level state officials, municipalities, or contractors looking for subcontractors to assist in major projects, there are a few key warning signs to look out for in identifying whether a potential construction partner may be overextended or simply not the right fit for the task at hand. Spotting these signals early can save project owners, government agencies, and investors a great deal of resources and frustration – not to mention mitigate the reputational fallout from delays and substandard work.
Here are five red flags that should prompt decision-makers to pause and reconsider taking on a contractor or subcontractor – gleaned from the Gap Infrastructure’s (GIC) experience in managing public infrastructure projects with various subcontractors across South Africa:
1. A lack of verifiable references
The first verification check to perform, and often the earliest indicator that’s something’s amiss, is if an applicant contractor doesn’t have a written portfolio or website with substantial evidence of competence in past projects. Another is if they cannot provide a list of references with contact information for similar projects completed.
It’s important to speak directly to past clients, rather than rely on curated testimonials. Real conversations will reveal whether the contractor adhered to timelines, communicated issues proactively, and delivered quality outcomes consistently.
2. A fragile financial backbone
Early in the bidding process, ask the contractor whether they have sufficient internal financing capacity – can they effectively mobilise resources, materials, and skilled personnel for at least the initial stages of the project without demanding significant upfront payments?
While standard practice often requires some form of deposit or partial payment, contractors who insist on large disbursements before meaningful work has even begun may be sending a warning signal. GIC is additionally always careful in ensuring potential partners can shoulder at least part of the operational load themselves – rather than relying heavily on client funds from day one.
3. Insufficient insurance or permitting in past projects
Insurance and permits might simply seem like additional onerous administrative requirements to check off before getting a project off the ground. However, they in fact serve as a bedrock of responsible contracting, and a key measure to ensure contractors can mitigate risk efficiently and better deliver project outcomes. This is especially important for large-scale projects with multiple compliance obligations.
Moreover, without adequate liability coverage, public and private project owners could be left shouldering the risks of on-site accidents, environmental damage, or structural failures down the line. Reputable contractors understand that thorough insurance and regulatory diligence is part and parcel of high-stakes infrastructure development.
4. ‘We do everything’ contractors
Large-scale projects are complex, with many moving parts and specialist requirements. While large firms such as GIC have the capacity to employ specialists from every field, we too sometimes rely on the particular expertise and general assistance from subcontractors. As for smaller contractors, they may not have the staff complement to ‘do everything’.
If a contractor claims universal expertise – electrical, plumbing, engineering, architectural design, project management, and more – it’s wise to press for evidence. Also be vigilant that a contractor does not outsource critical project components to lower-tier subcontractors that may not be up to the task, resulting in cascading inefficiencies.
5. Executive inexperience
Companies looking to grow quickly and secure their share of an infrastructure boom may promote technically-gifted engineers or architects with no practical leadership knowledge or management-level administrative experience to executive positions.
Newly-formed entities, in particular, led by professionals who excel in small-scale works but have never managed complex, big-budget initiatives, may run into issues. Common risks include underestimating administrative obligations that could result in delayed progress payments or other penalties; difficulty balancing multiple concurrent projects, leading to resource shortages and prioritisation conflicts; and an absence of reasonable risk mitigation strategies.
These five considerations are not to dismiss smaller and emerging firms – the construction sector will always benefit from fresh perspectives and healthy competition that trigger higher industry standards. But clients should nonetheless be careful which contractors they entrust with their projects. The need for competent, forward-thinking contractors has never been greater, and it’s up to construction firms to ensure they meet these criteria and the highest industry standards as much as it’s up to clients to demand service excellence.
