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Obtaining a contractor‘s license can be a complex and patient process, which is why so many large construction companies use multiple qualifiers to maintain their license in multi-state territories. No law requires contractors to work only in their home country, which is why industry leaders work on projects all over the United States and abroad.
What is a qualifier?
A qualifier is an entity that represents the work of a company. In the construction industry, it simply means a licensed contractor who can perform work in any state under the “umbrella” of your company. This is necessary because only individuals – not companies – can acquire a contractor’s license. Therefore, companies wishing to expand their operations into multiple states must have a qualifier in each state to ensure that they are operating legally.
The problem of qualifiers
According to Construction Business Owner, “It’s not uncommon for a business to have a single qualifier in a dozen or more states.” This can create pervasive problems for a business if a skilled decides to pack up and leave. Typically, he will have one or two months to select an approved replacement. If a licensed professional is not available, it may be necessary to elect a new person from the company to obtain a contractor’s license. Unfortunately, this process can take time, meaning a company could lose valuable contract opportunities in the meantime.
The solution: a contingency plan for qualifications
To help minimize the chaos of a departing qualifier, business owners can use a qualifying contingency plan – a simple and relatively inexpensive solution that can help protect business interests. A qualifier contingency plan will help companies build a list of “next in line” qualifiers.
Consider Multi-State Licensing Needs
Before a company can develop a qualifying contingency plan, it needs to consider which states it currently operates in and which states it might expand into in the future. Start getting the proper licenses two years before starting any project in a new state. Meanwhile, research licensing classifications, requirements, and timelines. Some states also have reciprocal licensing agreements that can be used to expand a company’s global territory while circumventing certain licensing requirements.
Audit active qualifiers
With a clearer picture of qualification needs, then take a look at the company’s existing qualification team. Determine which states are most vulnerable in the event of a qualifier leaving. Then decide which members of the sales team can step in if needed. This may require the company to pay for another employee to obtain a contractor’s license, and not all employees are cut out for life as a contractor, so these people should be chosen wisely. Experienced construction professionals are usually a safe bet. Ideally, a company should have at least two backup qualifiers for each state.
Fix all weaknesses
Start forming backups for other states that currently have qualifiers but no backups. The key here is to handle each state individually, as building law varies from state to state.
Develop a contingency plan for qualifications
Once the above steps are complete, it’s time to create the qualifying contingency plan. It should be based on the results of your assessment, addressing the following points:
- Strength of backups
- Backup qualifications (try to maintain two backups per state)
- Employees with “qualifying potential”
- Steps to prepare new backups
- Size of the territories compared to the number of qualified
- Clearly defined plan to deal with missing qualifiers
When a qualified person leaves, it’s like a boat with a leak that needs to be plugged. If a company already has the perfect piece in place to plug the leak, it will continue to float and its journey will be uninterrupted.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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