Prequalification decides who gets invited to bid. Owners prequalify general contractors, and GCs prequalify their subcontractors, usually once a year and again before large awards. A typical subcontractor prequal looks at:
- Safety: EMR (experience modification rate), OSHA logs, recordable incident rates, written safety program.
- Financial: financial statements, working capital, revenue, banking and bonding references, bonding capacity.
- Capacity: current backlog, largest project completed, crew size, single project limit.
- Experience: similar project types, references, licenses.
- Insurance: coverages and limits, often confirmed with a certificate of insurance.
- Legal: litigation history, defaults, liens filed against them.
The result is usually an approval status and a recommended single-project and aggregate limit, meaning the largest contract the GC is comfortable awarding to that sub.
Why it matters
Sub default is one of the biggest risks a GC carries. A subcontractor that’s overextended or undercapitalized can fail mid-job, leaving the GC to finish the work, fix defects and pay their suppliers. Prequalification is the first defense, and if the GC carries subcontractor default insurance, the insurer usually requires a documented prequal process.
Common mistakes
- Prequalifying once and never updating as the sub’s backlog grows.
- Awarding above a sub’s approved limit because they were low bidder.
- Collecting financials but nobody actually reviewing them.
- No check of how much open work the sub already has with you.
How os.construction handles it
We’re building vendor records where prequal status and limits sit next to open commitments, so you can see exposure to a sub across every job before you award another subcontract. It’s in development.