Are you on ‘the panel’?
An array of organisations – from insurance companies to community housing providers and motor accident commissions – maintain their own ‘panels’ of preferred building industry contractors. But how do trade professionals get onto such panels in the first place? And are all panels alike? John Power reports.
For many tradespeople, the idea of gaining extra income from ‘insurance work’, or jobs sourced from similar private and public entities, is a tantalizing prospect… but what are the first steps? How do small building companies, electrical contractors, or plumbers, for instance, achieve the status of ‘preferred contractor’ on an organisation’s panel of trade professionals? Are there any special criteria for selection? What are the mutual obligations? Is it all worth the effort?
In this article we address the above issues in detail, and explore the main options and opportunities available to tradespeople on panels in four major industries: insurance, community housing, defense housing, as well as motor accident commissions.
Let’s start with the largest sector: the insurance industry. All insurance companies involved in building repairs have their own panels of preferred contractors. This makes sense, as contractors appointed by insurers undertake the majority of all building repairs in Australia arising from insurance claims. A readymade database – or panel – of approved, fully vetted trade contractors is necessary to ensure efficient, timely and quality-assured work. A panel also allows an insurer to create great depth of service, based on detailed predeterminations of contractor availability, expertise and territorial coverage. This high level of organisation is critical in the event of a catastrophe, for instance, such as a flood or cyclone, when large numbers of trade professionals need to be mobilised with the utmost speed and reliability, regardless of holiday schedules, conflicting work obligations or sickness. Indeed, even the smallest one-off jobs can be addressed faster and more reliably if an established array of trusted trade professionals is on call.
Panels vary in their composition depending on the size of the insurer, and the level of formality of their agreements with trade businesses. Some small insurers’ panels, for example, comprise lists of individual contractors or trade-based businesses, with terms and obligations privately negotiated between the insurer and each business; larger insurers, on the other hand, tend to favour the appointment (often by tender) of at least one ‘head contractor’ to project manage jobs via the head contractor’s own network of subcontractors, who will hopefully cover all relevant geographical locations. Panels of medium-sized insurers might feature a blend of partnerships with both private contractors and geographically distinct head contractors.
An example of a typical insurance claim might proceed as follows: a customer’s bathroom leaks and destroys a floor; the customer lodges a claim with their insurer; the insurer sends out an assessor to examine the damage and prepare an estimate of the repair costs and a full scope of remedial works; the insurer delegates the project directly to one or more of its panel contractors (or to its head contractor, who then appoints one or more subcontractors); the work is completed and an itemized invoice/task description is sent to the insurer (or head contractor) for payment. NB: if a head contractor is involved, then the head contractor, rather than the actual insurer, usually pays invoices.
This begs an obvious question: Is it better for a trade business to make a direct arrangement with small insurance companies (i.e. aim to be a big fish in small ponds), or would it be easier to become a subcontractor for one or more larger head contractors (i.e. become a small fish in large ponds)?
It all comes down to ‘the right fit’. Certainly, a trade business that deals directly with a small insurance company might be able to negotiate favourable terms and customized flexibilities, which may well suit a small, less ‘formal’ operator in search of occasional supplementary work. The downside is that small businesses dealing directly with numerous small insurance companies might struggle to handle heavy peaks in demand, different kinds of job management software platforms, or conflicts with existing private projects.
Unsurprisingly, the notion of being a subcontractor on a panel managed by a centralised head contractor is becoming increasingly popular, as it allows individual trade businesses to establish preferred work volumes and timetables with greater precision.
One of Australia’s fastest-growing head contractors is Claim Central Consolidated (CCC), which acts as project manager for building repair work on behalf of approximately five medium-to-large insurance companies, as well as a smaller number of agencies and brokers. CCC maintains its own panel of 1,200 trade professionals and building suppliers throughout Australia, and is rapidly expanding its operations into New Zealand, Africa, Europe, and North America in recent years.
Clint Kerekes, CCC’s global chief operating officer, says more and more insurance companies are opting to appoint one or more head contractors instead of becoming bogged down with the logistics of dealing with hundreds or thousands of separate contractors and suppliers. A head contractor, Clint says, can act as a collective agency and streamline day-to-day operations for all parties, effectively creating a “digital ecosystem” that allows all participants to view the status of a given job. The insurer, therefore, can focus on core activities while delegating all repair works, project-related customer liaison, as well as full task management to the head contactor. Indeed, many of CCC’s insurance company clients have incorporated CCC’s proprietary software – ClaimLogik – into their own business management software systems.
Meantime, each subcontracted trade business has the benefit of receiving jobs sourced from numerous separate insurance companies via a single aggregated hub. Another advantage for tradespeople, Clint notes, is that they only have to master one project management and invoicing software platform instead of dozens of different software systems from separate insurance companies.
Not only do tradespeople appreciate consolidated workflows, he adds, but they also benefit from substantial supplier discounts… though there is no obligation to use specific brands of products. Tradespeople can claim these discounts when working on private jobs as well, Clint points out.
Apart from satisfying obvious conditions like licensing requirements and qualifications, trade businesses need to demonstrate a proven track record of professional service and good communication skills to gain admission to most panels – i.e., tradespeople must always remember they represent an insurance company on each job. Reliability and expertise are important, as is the ability to understand complex interactions among different trades.
How much work can a tradesperson expect to receive through membership of a panel?
“Usually, full-time professionals will also be getting work from other insurers, as well as private work,” Clint says. “But about half of our tradespeople would receive regular work from us on a monthly basis based on our normal distribution of work.” A balanced work portfolio made up of private work and projects from a number of different insurers or agencies, Clint advises, is preferable because it prevents a trade business from becoming dependent on a single source of work.
Clint says CCC is always refining its project management software to make it easier for all parties to use, from customers to tradespeople and insurance companies. As insurance companies delegate more and more project management tasks to their head contractors, it is no surprise that user-friendly, fully integrated software systems are being developed at great pace, as mentioned above. CCC innovation, Clint says, includes improvements to its software platform to better handle emergencies and large-scale catastrophes.
Next Step: Trade professionals should make direct contact with insurance companies operating in their area and inquire about joining their panel of preferred building practitioners. If the company maintains a head contractor, then ask for that organisation’s contact details. Be ready to address skills, optimal territories, experience, expertise, qualifications, as well as well-formed expectations of workflows and the ability to cover contingencies like sick staff.
Another sector with its own panels of preferred trade contractors is community housing, which is serviced by scores of Community Housing Providers (CHPs) across Australia. These CHPs are classified into three tiers according to size. Tier 1 CHPs – the largest by portfolio size – might manage several thousand properties; Tier 2 CHPs might manage a few hundred up to a couple of thousand properties; while Tier 3 CHPs might manage 100 or so properties or as few as a handful.
One of Australia’s most progressive Tier 1 CHPs is Compass Housing Services, which operates in NSW and Qld. Compass has a portfolio of 4,600 properties, about a third of which (1,500) it owns. The lion’s share of the balance of the portfolio is leased from the government, while a small component is leased from private landlords and sublet to social housing tenants.
Compass has a presence on the NSW Central Coast, Newcastle, Upper Hunter, Dubbo, Broken Hill and a smattering of other locations in regional NSW. Some 900 properties are in South-East Brisbane.
Each year Compass oversees approximately 20,000 building repair and maintenance callouts (“work orders”), which are funded through an annual budget of about $10 million.
At present a team of four head contractors, each of whom covers a specific region, handles Compass’ sizeable workload. (Typical Tier 1 head contractors in this sector tend to manage 800-1,200 properties, depending on demographics.)
Donald Proctor, Compass’ Executive Manager Strategic Assets, says building repair and maintenance work for community housing, generally speaking, operates in the same manner as the insurance industry, i.e. trade professionals often make one-on-one service agreements with smaller Tier 3 or even Tier 2 organisations to perform routine repair and maintenance works, whereas larger Tier 1 CHPs tend to appoint one or more head contractors to supply and manage a network of subcontractors. Standard projects might include small-to-medium repairs, landscaping and gardening cleanup, as well plumbing and electrical work in response to wear and tear. Upgrades often occur during brief vacancy periods in preparation for the arrival of a new tenant.
There are, however, some unique aspects to community housing that are worth noting.
Regardless of whether a tradesperson is dealing directly with a CHP or indirectly via a head contractor, all tradespeople need to be sensitive to the environment in which they are working.
“We do often house people who have complex needs,” Donald explains. “A small minority might greet contractors with challenging behaviours, and sometimes contractors might need to work through carers to get access to a property.”
Due to these kinds of circumstances, contractors need to be mature, possess good communication skills, and adhere to strict performance criteria.
For example, Compass and most Tier 1 providers have their own codes of conduct, which contractors are required to sign.
A typical code might include a Police Check, a Working with Children credential, and other rigorous induction formalities whenever a new contractor is appointed.
“So, there’s ‘a bar’ that trade professionals have to be able to get over,” Donald says.
Another important point is strict adherence to schedules. Due to the critical nature of community housing, most large CHPs themselves have very firm contractual obligations (through the National Registrar for Community Housing and through their contracts with government) to complete different classes of work according to preset agreed schedules. This responsibility flows down the supply chain to contractors. Compass, for example, has a policy that ‘make safe’ tasks must be completed within four hours; another class of project might have to be accomplished within a time period of 24 hours, another within seven days, etc.
“Time restrictions are very strict and our contractors have to meet them – the turnaround for our vacant properties averages probably six working days,” Donald says.
Compass’ head contractors, regardless of how many other CHPs they might service, have obligations to perform all building tasks without fail and in accordance with all pre-agreed terms.
While Compass’ head contractors are paid according to a fixed schedule of rates aligned to specific job descriptions, other CHPs may issue work based on quotes or hourly rates.
As with the insurance sector, prospective contractors in this sector need to appraise their own strengths and weaknesses when looking for potential CHP partners.
Next Step: Donald advises contractors to contact CHPs in their area. For more information visit the website of the National Registrar for Community Housing (www.nrsch.gov.au). State- and Territory-based agencies may also be useful. For example, visit the website of the NSW Federation of Community Housing Associations (www.communityhousing.org.au) to learn more about community housing and view a comprehensive list of CHPs by location in that State.
Defence Housing Australia (DHA) is one of the country’s largest property managers, with a portfolio of approximately 18,500 properties under management worth around $11 billion.
Approximately 13,150 of these properties are managed on behalf of investors.
The agency, according to a spokesperson, is responsible for all building maintenance, repairs and renovations to properties. Specific DHA State and Territory regions allocate work utilizing a repairs and maintenance panel.
“All our work is undertaken by our preferred contractors in liaison with the DHA regional technical specialists from each DHA region,” the spokesperson says. “We utilise our panel contractors wherever possible, but we also use ‘open market’ approaches where it is deemed to be appropriate. DHA has a lot of long-term contractors that we work with across the country.” These contractors range from sole traders to larger businesses.
Criteria for selection are mainly experience, financial capacity, compliance with the WHS Act, and basic suitability to project design. AS4300 AS4000 minor works agreements apply for construction work. For minor repairs and maintenance most contractors are on a ‘Deed of Agreement’. These agreements are all quite structured and formal arrangements.
Which specific trades are in demand at the moment? DHA has recently approached the market for cleaning, asbestos, grounds maintenance, painting, smoke alarms, and a number of other trades to refresh an existing nationwide panel arrangement.
Next Step: The following link to the DHA website outlines the process for construction and upgrade panel applications: www.dha.gov.au/partnering/development-and-construction
If you are interested in partnering with DHA, email contractors@DHA.gov.au for more information.
Motor accident commissions overseen by State and Territory authorities provide services, including home building modifications, to victims of road accidents.
Relevant agencies are: State Insurance Regulatory Authority (NSW); NT Motor Accidents Compensation Commission (NT); Motor Accident Insurance Commission (Qld); Motor Accident Commission (Allianz) (SA); Motor Accident Insurance Board (Tas); Transport Accident Commission Victoria (Vic); and Insurance Commission of Western Australia (WA).
The purpose of home modifications is to enhance the safety, comfort and independence of people – typical projects might include the installation of ramps, door threshold widening to accommodate wheelchairs, light switch repositioning, installation of bathroom and toilet facilities for disabled users, and similar kinds of mobility-related works.
Dealing with this sector, however, can carry its own challenges and frustrations.
For example, when we contacted TAC (Vic) to obtain information about its home modifications program, the agency would not comment on any aspect of any element of its activities, pending an end-of-year Tender process. Indeed, the agency refused to provide any details about even the most general functions or aims (past, present or future) of its program. Even worse, when asked about how private contractors might make themselves known to the agency in order to discuss work opportunities, a spokesperson responded that, “we just can’t discuss anything. Sorry.”
This kind of ‘Manhattan Project’-level secrecy is, of course, utterly ludicrous: the mere existence of a forthcoming tender does not require the tendering service to become an indescribable, intangible phantom.
We experienced similar frustrations when contacting the NT Motor Accidents Compensation Commission.
Despite multiple requests (phone and email) for information about the agency’s interactions with private contractors for its home modifications program, we received no response at all.
Next Step: Serious private-sector professionals seeking to work with these kinds of mid-level bureaucracies might be better off focusing their efforts on insurance, community housing or DHA work.