Risk Management in Construction Business

Uncategorized Jun 01, 2022

The success of a sourcing project is not just a matter of negotiating a price, respecting specifications and meeting delivery deadlines. When the subcontractor comes from another EU country, the perception of risk is legitimately higher, as both parties need to make an extra effort to adapt and be more vigilant.

Risk management helps to ensure that operations run smoothly in situations often encountered in the field:

  1.  The language barrier is often both overestimated and underestimated.

There's nothing to stop you employing a foreign subcontractor living in another EU country, provided you can trust their skills and that they understand their contractual obligations to you. However, you will need to ensure that the site manager understands the local language, so that he can interact with your project manager or answer questions from local residents. Your compliance tunnel must be adapted to the specificities of the host country and the country of origin, so that you can prove your good faith to the administrative authorities in the event of legal problems, and thus protect your reputation. The Consultant has a network of partners capable of supporting you in setting up an effective compliance process.

  1.  The subcontractor's plan to set up locally was not anticipated early enough.

It is advisable to encourage foreign subcontractors, whose loyalty you are seeking to retain over time, to establish a long-term presence in the host country by setting up a local agency. After 183 days of work, the local tax system applies. It is important for foreign employers and workers to be aware of their obligations. In addition, depending on the country of origin, tax advantages can be very attractive for subcontractors. Nor should we underestimate the time needed for the subcontractor to convince his family and agree to move to another country, taking into account his medium- to long-term objectives. Here again, the Consultant can call on a network of experienced partners to speed up administrative procedures and concentrate on site preparation.

  1.  Site foreman resigns

Despite all the efforts made by the subcontractor to retain the loyalty of its employees, the numerous opportunities available on the job market may motivate site foremen to resign to go and work for a competitor offering better conditions. The consultant can use his network of recruitment agencies to speed up the search for a replacement (bilingual profiles are harder to find). However, it should be pointed out that in the case of foreign subcontractors, who often employ family members, loyalty is generally higher.

If your sourcing project is to be a success, you need to think about how to manage the risks associated, for example, with language barriers, or tax and legal issues.

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