The rise of proactive legal compliance in contractor management
The illusion of control
Compliance is seen in many industrial companies as a necessary evil. Something that must be done because the law requires it, because audits enforce it, and because fines and penalties are a real danger. But those who look deeper see a problem that goes deeper. The reality is that many companies think they have their legal compliance under control, when in reality they are behind the times.
Contractors are becoming an increasing factor in industrial production and maintenance, but they are also a growing source of legal risk. With the complexity of regulations, the diversity of contracting parties and the increasing resistance of contractors to stricter compliance requirements, companies risk losing track. The question is no longer “Are we in compliance?” but “Do we actually have a handle on our compliance?”
This article takes a critical look at how companies handle legal compliance in contractor management. Why do traditional systems fail? How can technology transform compliance from a reactive imperative to a proactive and strategic advantage?
Compliance is not the same as control
In many companies, legal compliance is still treated as a checklist. Documents are collected, registrations are checked off, and audits are passed. But what if those audits reveal only the tip of the iceberg? Deloitte research shows that more than 70% of companies view compliance as a static process, when in reality regulations are constantly changing and legal risks are dynamic. Especially with contractor management, this is a ticking time bomb.
Problems with the current approach
Snapshot instead of real-time monitoring
Companies perform compliance checks at specific times, but do not have continuous insight into the status of their contractors.
Paperwork without context
Much compliance documentation is collected and stored, but is not analyzed for patterns or risky anomalies.
Contractor resistance
Contractors often see compliance requirements as an administrative burden and try to minimize them, which ultimately leaves companies with less control over their compliance.
Case
How 1 mistake shuts down an entire factory
A routine inspection at a European refinery revealed that a contractor was working on a high-pressure pipeline without the proper ATEX certification. What first looked like an administrative error turned out to be a deeper problem: Three subcontractors had outdated or missing certifications. Authorities did not allow an exception, causing the site to shut down for 17 days. This led to huge financial losses, delivery problems and an overhaul of the entire compliance system. A minor compliance omission turned into a crisis with far-reaching consequences.
The consequences
The plant was down for 17 days, resulting in an estimated production loss of more than €41 million.
Suppliers and customers demanded compensation for the delays, leading to contractual disputes and reputational damage.
Emergency contractors had to be brought in to still perform the stalled work in compliance with regulations, further driving up costs.
What went wrong here
Compliance was treated as a one-time process to be monitored, whereas certifications must be monitored on an ongoing basis.
There was no real-time visibility into the compliance status of subcontractors, so outdated certifications were not noticed until it was too late.
Responsibility for contractor compliance was fragmented across multiple departments, with no central oversight.
The shift to dynamic, proactive compliance
The only way to gain true control over contractor compliance is to move from static to dynamic compliance. That means companies no longer wait for audits or incidents, but continuously use real-time data to monitor and predict compliance statuses.
What does proactive compliance mean?
Automatic validation and monitoring: Instead of just collecting documents, data from various sources is continuously verified. For example, a contractor must not only have a valid certification, but it must also be automatically verified with each site visit.
Contractor risk scoring: Through data analytics and machine learning, companies can automatically create a risk profile for each contractor. This allows contractors with higher risk profiles to be monitored more frequently, while reliable partners face less administrative burden.
AI-driven compliance forecasting: Companies can use algorithms to predict where compliance risks will occur. This can be based on historical behavior, changing regulations or operational conditions.
Why resistance from contractors is a strategic opportunity
A common complaint from contractors is that compliance requirements are becoming increasingly stringent and complex. This leads to frustration, delays and sometimes even contract breaches.
But what if this resistance is actually an opportunity? Companies that turn compliance into a collaborative advantage rather than an obligation win in the long run.
How companies are making compliance attractive to contractors
Faster access for compliant contractors
Digitizing compliance and allowing high-compliance contractors faster access to projects creates an economic advantage for companies that do invest in compliance.
Data sharing as an incentive
Some companies offer contractors insight into their own compliance data and how they perform against competitors. This creates an incentive to improve safety and compliance.
Compliance as a competitive advantage
Large industrial players are increasingly choosing contractors who are demonstrably compliant. By making compliance easier and more transparent, companies can help their contractors become more attractive for future projects.
Fact
According to a McKinsey study, companies that digitize their compliance see up to 40% fewer contract disputes and greatly improved collaboration with contractors.
Why document management is a compliance risk without central contractor management
In many companies, the management of mandatory documents such as LIMOSA, DIMONA and A1 forms is still fragmented. HR, legal departments and operations teams each work with their own systems, while ultimate responsibility for compliance is often not clearly defined. This leads to situations where contractors are working on a site without valid registration, without anyone noticing-until an inspection or incident exposes the deficiency.
A contractor management system provides a solution by centrally managing and dynamically monitoring compliance documents. This prevents certifications from being scrutinized only during an audit or crisis. Smart systems link data from multiple sources so that contractors are only allowed access to a site when all required documents are current and validated. This shifts compliance from a manual, error-prone task to an automated process that proactively eliminates risk.
“We recommend Onyx One without a doubt! A lot of our house contractors were already working with the system and this convinced us. We are satisfied with the platform and with the cooperation.”
“Onyx One significantly improved our contractor management. All documents and certificates are now tracked automatically. It is a user-friendly system and they have a strong service desk.”
Diana De Peuter Finance and IT Manager – Monument Chemical bv
“We have excellent safety training (e-Learning) for the contractors through Onyx One and the cooperation is running smoothly.”
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