The step from residential and light commercial work into larger commercial and public sector projects is not primarily about building capability. It is about being able to demonstrate systems, and that is a documentation and governance exercise many capable contractors have not done.
What prequalification asks for
Prequalification schemes and main contractor supply chain assessments cover broadly the same ground:
- Health and safety system — documented, with evidence it is used. Risk registers, safe work method statements, training records, incident reporting and investigation, and evidence of officer engagement.
- Financial capacity — recent financial statements, sometimes a credit check or bank reference. Contractors are assessed on whether they can carry the cashflow of a larger project.
- Insurances at required limits — public liability, contract works, motor, and professional indemnity where there is design input.
- Licensing and competence — LBP licences by class, trade registrations, and records of who holds what.
- Quality system — how work is checked, how defects are managed, how documentation is controlled.
- Environmental management — erosion and sediment control, waste, spill response.
- Relevant experience, with referees who will actually be contacted.
- Employment compliance, increasingly including evidence around subcontractor arrangements and minimum wage.
The recurring reason capable contractors fail prequalification is not the absence of good practice. It is the absence of records demonstrating it.
Building toward it
Start collecting evidence on the work you do now, before you need it:
- Photograph completed work systematically, with dates.
- Keep a project register — client, value, scope, dates, referee.
- Record inductions, toolbox talks and training with dates and attendees.
- Log incidents and near misses, including what changed as a result.
- Keep maintenance and inspection records for plant and equipment.
- Ask satisfied clients for a written reference at completion, when goodwill is highest.
Reconstructing three years of this at prequalification time is difficult. Accumulating it costs almost nothing.
What changes on larger projects
Cashflow. Bigger projects mean bigger work in progress, longer payment cycles and larger retentions held. A contractor who could fund a $200,000 job may not be able to fund a $2 million one, and running out of working capital mid-project is how contractors fail on the way up.
Documentation volume. Larger contracts require payment claims, variation notices, delay notices, progress reporting, quality records and as-builts. That is an administrative function, and businesses that try to absorb it into the owner’s evenings do it badly.
Contract risk. Standard forms on larger projects carry liquidated damages, performance bonds, retentions and strict notice provisions. Missing a notice period can extinguish a valid claim regardless of merit.
Programme obligations. Delay has contractual consequences, and managing a programme is a distinct skill from managing a crew.
The notice discipline
On larger contracts, entitlement depends on notice. Delay events, variations and claims all have notification requirements with defined timeframes, sometimes short.
Diarise the notice periods from the contract at the start of the job. Notify early and generously — notice costs nothing, and an out-of-time claim is worth nothing.
Retentions and payment claims
Retention money withheld under a commercial construction contract must be held on trust in a separate account, and you are entitled to information about where yours is held. Ask, and treat reluctance as informative.
Compliant payment claims under the Construction Contracts Act remain your strongest tool. A payer who fails to respond with a payment schedule within the required timeframe generally becomes liable for the claimed amount in full. Larger contractors know this; smaller ones frequently give the advantage away through casual invoicing.
Do not grow faster than you can fund or manage
The most common failure in construction growth is taking a project that is too large relative to working capital and management capacity. One project that goes wrong at that scale can end the business.
Step up in increments. A contractor moving from $500,000 to $1.5 million projects has a better survival rate than one jumping to $5 million.
MBIE publishes guidance on the Construction Contracts Act and building contracts, WorkSafe publishes health and safety system material, and procurement.govt.nz publishes the government procurement rules.
General information only, not legal advice.
