GOOD PRACTICE NOTE

Managing Contractors’ Environmental

and Social Performance
© International Finance Corporation 2017. All rights reserved.
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October 2017

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Table of Contents

List of Acronyms v
Acknowledgements vi
Executive Summary vii
1. Introduction 1
2. Purpose of this Good Practice Note 3
3. Intended Audience 5
4. Contractor Selection 6
4.1 Prequalification 8
4.2 Solicitation 8
4.3 Proposal Evaluation and Contractor Selection 13
4.4 Contracting 14
4.5 Subcontracting and Procurement 20
4.6 Existing Client-Managed Contracts 20

iii
 5. Project Performance 21
5.1 Construction 22
5.1.1 Mobilization 22
5.1.2 Main Construction 23
5.1.3 Demobilization and Site Handover 24
5.1.4 Client Monitoring of Activities 25
5.1.5 Contractor Monitoring and Reporting 25
5.1.6 Approving Invoices for Payment 28
5.2 Operations and Maintenance 29

Annex A. Sample Questionnaire to Include in Requests for

Expression of Interest or Prescreening of Contractors 31
Annex B. Further Resources 35

iv | Good Practice Note: Managing Contractors’ Environmental and Social Performance

List of Acronyms

CMP Contractor Management Plan

E&S Environmental and Social
EBRD European Bank for Reconstruction and Development
EHS World Bank Group Environmental, Health, and Safety Guidelines
EITI Extractive Industries Transparency Initiative
EPC Engineering-Procurement-Construction
EPCM Engineering-Procurement-Construction-Management
ESAP Environmental and Social Action Plan
ESHS Environmental, Social, Health, and Safety
ESIA Environmental and Social Impact Assessment
ESMS Environmental and Social Management System
FIDIC International Federation of Consulting Engineers
GBV Gender-Based Violence
GIIP Good International Industry Practice
GPN Good Practice Note
GRI Global Reporting Initiative
HR Human Resources
ICMM International Council of Mining and Metals
IFC International Finance Corporation
KPI Key Performance Indicator
MDGs Millennium Development Goals
NEC New Engineering Contract
O&M Operations and Maintenance
OHS Occupational Health and Safety
PSs Performance Standards on Environmental and Social Sustainability (IFC)
RFI Request for Information
RFP Request for Proposal
SDGs Sustainable Development Goals
SEA Sexual Exploitation and Abuse
WBG World Bank Group

List of Acronyms | v
 Acknowledgements

This Good Practice Note: Managing Contractor’s Environmental and

Social Performance (2017) is part of a series of good practice materials
from the International Finance Corporation’s Environment, Social and
Governance Department.

This Good Practice Note was written by Raymi Beltran (IFC Senior
Environmental Specialist), Jack Mozingo and Kate Harcourt (consultants
to IFC). Reviewers included John Graham, Diana Baird, Samir Besirevic,
Paola Castillo, Sofie Fleischer Michaelsen, Susan Holleran, Paolo
Lombardo, Larissa Luy, Lama Mosad El Hatow, Justin Pooley, Pablo
Taborga, and Wenlei Zhou (all IFC). In addition, this publication
benefited from input from Robert Montgomery and Michael James
Hall from the World Bank and Kate Wallace from the Multilateral
Investment Guarantee Agency.

Finally, we would like to thank the Environment, Social and Governance

Department’s Sustainability Leadership Team, led by Jamie Fergusson,
and especially Fiorella Facello who consistently and diligently supported
the development of this Good Practice Note.

vi | Good Practice Note: Managing Contractors’ Environmental and Social Performance

Executive Summary

International Finance Corporation (IFC) clients often rely on contractors

for the implementation of their financed projects. Many clients, however,
find it challenging to ensure their contractors implement the necessary
environmental and social (E&S) requirements for their projects.

As established in Performance Standard (PS) 1: Assessment and

Management of Environmental and Social Risks and Impacts, paragraphs
2 and 14, IFC clients are responsible for managing their contractors’
E&S performance: “Contractors retained by, or acting on behalf of
the client(s), are considered to be under direct control of the client
and not considered third parties. . .” and the E&S management “. . .
programs may apply broadly across the client’s organization, including “ IFC clients are responsible
contractors and primary suppliers over which the organization has for managing their
control or influence . . .” contractors’ E&S
It is the client’s responsibility to comply with IFC Performance Standards performance: ‘Contractors
on Environmental and Social Sustainability (PSs); relevant World Bank retained by, or acting on
Group (WBG) Environmental, Health, and Safety (EHS) Guidelines behalf of the client(s), are
requirements; loan agreement commitments; Environmental and Social
considered to be under
Impact Assessment (ESIA) requirements; local laws and regulations; and
permits and standards; and to ensure that all contractors providing any direct control of the client
type of services to the client duly follow these requirements throughout and not considered third
the duration of the contract.
parties. . .’”
Clients are aware of this responsibility. However, it can be challenging for
them to manage the E&S performance of contractors and subcontractors
who are often perceived as “separate entities” or “third parties” not
related to the client or to their organization.

This Good Practice Note (GPN) is aimed at helping clients implement

sound, consistent, and effective approaches in compliance with IFC
requirements, to manage the E&S performance of their contractors,
subcontractors, and other third parties working for the project. This GPN
provides practical guidance to clients and contractors on the process of
prequalification, solicitation, evaluation, contracting, and procurement
to ensure adequate E&S management during construction, operation,
and demobilization activities. Finally, it provides recommendations

Executive Summary | vii

 on how to manage project performance during the different phases of the services being provided by contractors
(i.e., from mobilization to construction, operations, and maintenance) and how to monitor and report on contractor
performance effectively.

A RISK-BASED APPROACH TO CONTRACTOR SELECTION

E&S risks in the contracting process are most effectively addressed by integrating the risk management requirements
of the contractor into the contract. Following the construction risk assessment process, clients should identify the
risk management measures that will be demanded of the contractor, formalize these as “Contractor Management
Plans” or “Contractor E&S Requirements” and integrate these plans into the procurement process.

The Contractor Management Plans or Contractor E&S Requirements should describe in a comprehensive and
structured manner the various E&S considerations, controls, and commitments related to the main activities that
the contractor will be required to implement as part of its scope of work. They should include all relevant E&S
requirements, commitments, and provisions derived from the various source documents (e.g., E&S policies, regulatory
requirements, E&S commitment registers, ESIA documentation, supplemental assessments, etc.) and it should be
an integral part of the contract.

These plans help improve the contractor’s understanding of the E&S requirements and provide an overall framework
of the client’s expectations on E&S matters. With a better understanding of these, the contractor can determine from
the onset the resources and related associated costs that will be required for executing the work.

As a result, the bidding process, the selection of the contractor, the contract, and the execution of the work itself
will include the client’s (and project’s) E&S considerations from the outset. By including all relevant provisions
in these documents, and by making the Contractor Management Plans and/or the Contractor E&S Requirements
document an integral part of the contract, the client will have better tools to manage the E&S performance of their
contractors and will be in a better position to adequately control and mitigate the identified risks and impacts of
the project or activity.

The contractor selection process should involve a multidisciplinary team, with one or more qualified E&S professionals
responsible for the project’s E&S-related aspects, including E&S performance; worker and community health,

viii | Good Practice Note: Managing Contractors’ Environmental and Social Performance
safety, and security; and human resources. This will ensure that E&S
matters and variables are considered early in the process of selecting
a contractor.

MANAGING THE PROJECT PERFORMANCE THROUGH

PROACTIVE MONITORING

The client is responsible for managing E&S risks in the project, and
it must, therefore, proactively monitor the E&S performance of their
contractors and subcontractors. On a day-to-day basis, contractors should
monitor their own E&S performance and that of all its subcontractors
throughout mobilization, the main construction phase, operation, and
demobilization.

Clear responsibilities and reporting lines are essential to avoid duplication

of effort and/or gaps in monitoring. Clients should agree on reporting
metrics (which shall include relevant information and data from
subcontractors, as applicable) and require contractors to report on
E&S performance at an agreed frequency. Timely reporting of E&S
performance and results enables the client to identify opportunities for
improvement, prevent poor performance issues, and assist contractors
if remedial action needs to be taken. Regular meetings between clients
and contractors, and contractors with their own subcontractors, are
essential to ensure contractor performance is satisfactory and that
project specifications are being met. Throughout this process, clients
should ensure that contractors employ qualified E&S personnel to
oversee E&S performance, and that contractor staffing and resources
are commensurate with the magnitude and timing of work and potential
E&S risks.

A proactive monitoring of the contractors’ E&S performance is key

for the success of the work and service being provided, and for the
overall E&S performance of the project. A successful contractor will
foster good client E&S performance.

This GPN provides recommendations on how to monitor contractor

performance from mobilization, to main construction, demobilization
and site handover, including guidance on how to conduct site visits,
how to perform E&S inductions and trainings, and how to assess
E&S conditions and overall performance. This Good Practice Note
further provides examples on monitoring and reporting requirements
for contractors and suggestions on how the client can perform the E&S
review of contractor invoices to ensure the fulfillment of contractual
obligations.

Executive Summary | ix
1. Introduction

1
1. IFC clients often rely on contractors for the implementation of
the financed project. IFC clients are responsible for ensuring that their
contractors are aware of and meet IFC’s Performance Standards on
Environmental and Social Sustainability (PSs) relevant to their activities,
as well as the World Bank Group (WBG) Environmental, Health, and
Safety (EHS) Guidelines (See Box 1). The contractors also must meet
specific project environmental and social (E&S) requirements detailed
in the project documentation and in the Environmental and Social
2
Action Plan (ESAP).
“ IFC clients are responsible
2. IFC clients often find it challenging to ensure that their contractors
are implementing E&S requirements effectively. As a result, contractors’
for ensuring that their
E&S performance may fail to meet project-specific commitments and contractors are aware
fall short of good international industry practice (GIIP), as required of and meet IFC’s
by IFC PSs. These performance challenges can occur anywhere, but
Performance Standards
are particularly acute in countries where construction practices and
operating procedures do not typically meet international standards for on Environmental and
E&S performance and where local regulatory oversight and enforcement PSs relevant to their
are limited. activities, as well as the
3. E&S opportunities and issues of concern include all aspects of WBG EHS Guidelines.”
IFC PSs, which include, but are not limited to, occupational health and
safety (OHS), community health and safety including sexual exploitation
and abuse (SEA) and gender-based violence (GBV) prevention, labor
conditions, safety and security, resettlement, biodiversity, cultural
heritage, stakeholder engagement, procurement, and supply chain
management. It should be noted that some of these, such as labor
relations, OHS, and management of private or public security forces, may
be the responsibility of departments other than E&S within the client’s
organization, but all aspects must be considered equally throughout
the process of selecting, appointing, and managing contractors.

1  IFC clients include direct investment clients as well as clients of the financial intermediaries IFC lends to.
For purposes of this Good Practice Note, E&S requirements include the applicable requirements of IFC PSs and the WBG EHS Guidelines. These include the
2 

management of risks and their impacts, occupational and public health and safety, labor and working conditions, pollution prevention and control, emergency
response, use of security forces, land acquisition and resettlement, biodiversity protection and natural resource conservation, cultural heritage protection,
protection of indigenous peoples, stakeholder engagement, and grievance management. They also include the requirements of national and local laws and
of the ESAP.

Introduction | 1
 Box 1.

IFC Performance Standards on Environmental and Social Sustainability

• The PSs provide guidance to clients on how to identify E&S risks and impacts, and are designed to help avoid, mitigate,
and manage risks and impacts so as to conduct business in a sustainable way.

WBG Environmental, Health, and Safety Guidelines

• The EHS Guidelines are technical reference documents with general and industry-specific examples of GIIP.

IFC Clients are Responsible for their Contractors Associated with the Project
• “Contractors retained by or acting on behalf of the client(s) are considered to be under direct control of the
client and not considered third parties for the purposes of this Performance Standard.” (PS1, paragraph 2).

• “The [E&S management] programs may apply broadly across the client’s organization, including contractors
and primary suppliers over which the organization has control or influence” (PS1, paragraph 14).

2 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

2. Purpose of this Good Practice Note

4. IFC developed this Good Practice Note (GPN) to help clients

provide sound, consistent, and effective approaches for managing
the E&S performance of contractors to ensure compliance with IFC
requirements. The document will also assist contractors in managing
their subcontractors.

5. IFC PSs require clients to identify E&S risks and impacts,

typically through an Environmental and Social Impact Assessment
(ESIA) process, which should ensure that the design and layout of
the project are optimized and the mitigation hierarchy is applied to
3
minimize negative impacts. The process typically results in a number
of documents, including an impact assessment, a commitment register “ IFC developed this GPN
(including project approval and permit conditions from the authorities), to help clients provide
and/or an Environmental and Social Management Plan or similar sound, consistent, and
document containing a series of project-specific management plans and
effective approaches
procedures that can be implemented through an Environmental and
4
Social Management System (ESMS). Environmental design criteria for managing the
and/or engineering design principles may also be developed, either as E&S performance of
part of the ESIA process or separately.
contractors to ensure
6. The ESIA process specifies that construction, operation, and compliance with IFC
decommissioning activities are managed to avoid, minimize, and offset requirements.”
negative impacts or compensate for them, and that residual impacts
are predicted. The management of impacts will be included in the
various documents listed in paragraph 5, as well as in lender and equity
agreements and conditions attached to project approval at the national
level, depending on jurisdiction. The ESMS is comprised of a series
of policies, procedures, plans, programs, and standards that enable
the client to operate focusing on E&S protection and a safe working
environment. It is the vehicle through which the mitigation hierarchy
management measures are described and controls are developed to

As per PS1, mitigation hierarchy means to anticipate and avoid, or where avoidance is not possible, minimize, and, where residual impacts remain, compensate/
3 

offset for risks and impacts to workers, affected communities, and the environment.
4 The ESMS can be integrated with the OHS Management System, quality management systems, and a security management plan for the workforce to form an
integrated management system.

Purpose of this Good Practice Note | 3

 eliminate or reduce risks and impacts to acceptable levels. While the implementation of an ESMS can provide a
good indication that management is on the right track, the existence of an ESMS in itself is not sufficient to ensure
5
compliance with IFC or other E&S requirements.

7. IFC requires clients to adopt and implement an ESMS for “managing environmental and social risks and impacts
in a structured way on an ongoing basis” (PS1, paragraph 1) and to ensure that contractors and subcontractors
similarly adopt and implement an ESMS. This GPN is intended to support clients in ensuring contractor compliance
with this requirement, support alignment of the client’s and contractor’s ESMSs, and ensure that contractors have
6
an ESMS suitable for the business activities being carried out by each contractor.

8. The GPN provides practical information for each step in the contractor management process, from preparing
the request for proposal (RFP) to contract termination. For additional good practice materials on addressing and
managing E&S risk related to security forces, stakeholder engagement and other themes or issues mentioned in this
document, refer to Annex B.

A fully functioning and accredited Environmental Management System (for example, under ISO 14001:2015) does not guarantee environmental performance in
5 

compliance with regulatory, IFC, or ESAP requirements, as the accreditation only covers the management system, which can be fully compliant in terms of the content
and the procedures in place but does not guarantee that the various elements, programs, and mitigation measures and plans have been implemented effectively on
the ground to address environmental performance.
See IFC. 2014. Environmental and Social Management System Implementation Handbook: Construction, rev 2.2. Washington, DC. https://www.ifc.org/wps/wcm/
6 

connect/c03aa6804493c5bba71aafc66d9c728b/ESMS+Handbook+Construction.pdf?MOD=AJPERES.

4 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

3. Intended Audience

9. This GPN is intended primarily for companies that hire contractors

that take part in construction, and operations and maintenance (O&M)
activities in projects that are financed by IFC, and for financial institutions
that receive IFC financing. Contractors are often hired for specific
“ This GPN is intended
activities, such as design and construction as engineering-procurement-
construction (EPC), engineering-procurement-construction-management
primarily for companies
(EPCM), or design-build contractors. Contractors may also be hired that hire contractors that
for operations, including as design-build-operate, O&M, or operator take part in construction,
contractors. Separate contractors or subcontractors may also be hired
and O&M activities in
for security, transport, or other specialty services.
projects that are financed
10. The document is also intended for (i) personnel involved in and by IFC, and for financial
responsible for procurement, contracts, legalities, engineering and
institutions that receive
design, and management as well as contractor and subcontractor
E&S staff; (ii) contractors themselves, including when they engage IFC financing.”
subcontractors; (iii) clients’ engineers and other parties involved in
supervising contractors and approving contractor invoices; and (iv)
staff of IFC and other lenders involved in reviewing and monitoring
the E&S performance of projects involving contractors.

Intended Audience | 5
 4. Contractor Selection

11. The contractor selection process should involve a multidisciplinary team, with one or more qualified E&S
professionals with primary responsibility for the project’s E&S matters, including E&S performance, worker and
community health, safety and security, and human resources (HR). The participation and engagement of the E&S
professional in the contractor selection process is aimed at providing an early consideration of E&S matters and
variables when selecting a contractor.

12. The first step in the contractor procurement process is the preparation of a RFP preparation. This RFP is typically
prepared by procurement staff with input from the project manager, technical specialists (for example, engineers
and E&S specialists), and lawyers.

13. A good international industry practice for EPC contracts is for the client to prepare Contractor Management
Plans (CMPs), which describe in a comprehensive and structured manner the various E&S considerations, controls,
and commitments related to the main activities that the EPC contractor will be required to implement as part of its
scope of work. These management plans spell out E&S requirements to proactively manage risks and impacts in
their activities including clear definitions of responsibilities, training needs, performance measurement tools, and
reporting requirements. In sum, the CMPs describe the mitigation and performance improvement measures and
7
actions that address the identified E&S risks and impacts of the project.

14. Having a set of CMPs addressing all relevant E&S matters improves the understanding by the contractor of
the E&S requirements, and provides an overall framework of the client’s expectations on E&S matters. With a
better understanding of these, the contractor can determine the resources required for executing the work with due
consideration of the client’s E&S requirements. As a result, the bidding process, the selection of the contractor, the
contract, and the execution of the work itself includes the client’s (and project’s) E&S considerations from the outset.

15. For other types of contracts (i.e., contracts different in scope to EPC and EPCM contracts), clients may choose
to develop a consolidated “Contractor E&S Requirements” document summarizing the general expectations in
terms of occupational health and safety, and E&S for all of their contractors and subcontractors. This is a common
industry practice that helps clarify the client’s main Environmental, Social, Health, and Safety (ESHS) requirements,
conditions, and provisions that every contractor or subcontractor must follow when entering into an agreement with
the client. A high-level definition of ESHS expectations allows the contractor to better understand the minimum
requirements that must be met. It also helps the client to set basic expectations of the ESHS framework that will
govern the client–contractor relationship from the outset. A Contractor E&S Requirements document fosters a better

Examples of Contractor Management Plans include those for footprint management, erosion control and reinstatement, restoration, transportation, community
7 

health and safety, environmental monitoring, pollution prevention, stakeholder engagement, and local hiring and purchasing, among others.

6 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

understanding of expectations and helps the contractor to know from
the beginning what is required and deemed necessary to match the
requirements and associated costs. This can be particularly helpful
during the bidding and procurement process.

16. These documents (the CMPs and the Contractor E&S Requirements)
must include all relevant E&S requirements, commitments, and provisions
derived from a number of source documents, including as applicable:

• IFC Performance Standards;

• WBG General and relevant industry-specific EHS Guidelines;
• Commitments included in the ESIAs, and E&S related permits;
• ESHS Commitment Registers;
• Legal obligations and applicable codes and standards; and
• Company policies and internal procedures.

17. By including all relevant provisions in these documents, and by

making the CMPs and/or the Contractor E&S Requirements document
an integral part of the contract, the client will have better tools to
manage the E&S performance of their contractors, ensuring compliance
with E&S requirements and being in a better position to adequately
control the identified risks and impacts of a project or activity.

18. Sometimes a request for information (RFI), “expression of interest,”

and/or a qualification questionnaire is issued prior to an RFP. RFIs
are typically brief and include limited information. They are used
to determine market interest and solicit preliminary information on
potential vendors or contractors, and potentially to create a short list
of contractors from whom to issue RFPs.

“ ...by making the CMPs and/or the Contractor E&S Requirements document an
integral part of the contract, the client will have better tools to manage the E&S
performance of their contractors, ensuring compliance with E&S requirements
and being in a better position to adequately control the identified risks and
impacts of a project or activity.”

Contractor Selection | 7
 4.1 PREQUALIFICATION

19. The contractors should be asked to provide details including

(but not limited to) past EHS performance; status of ESMS; number
and qualifications of ESHS personnel; occupational health and safety
procedures and controls; HR policies, codes of conduct, and grievance
mechanism controls, including means to address harassment and other
forms of GBV; and supply chain management as criteria for inclusion
on such lists. The number of documents and level of information and
detail that are requested to contractors shall be commensurate to the
scope of work and other specific features that the contractor is being
prequalified against.

20. Prequalification may be established by several means, including

a simple questionnaire based on a selection of relevant PS criteria
such as those presented in Annex A. This generic questionnaire can be
adapted to a specific project and context. Responses to the questionnaire
should include information not typically presented by contractors,
which may be useful indicators of the contractors’ understanding
of ESHS management in general and their capacity to manage E&S
matters, including existing and potential issues specific to a project.
Contractors may also be encouraged to present details of their community
engagement and grievance mechanism programs and to note their
willingness to contribute to the client’s E&S policies and programs
at the construction site.

4.2 SOLICITATION

21. In the interest of sharing of project-specific E&S requirements,

clients are encouraged to include the following in their RFPs or other
solicitations to prospective contractors:
“ The number of
i. Documentation showing compliance with in-country ESHS legal
requirements. documents and level of
information and detail
ii. The client’s corporate E&S policy and other relevant policies,
that are requested to
such as those for human resources, anticorruption and bribery,
procurement, and stakeholder engagement. contractors shall be
commensurate to the
iii. The client’s Contractor E&S Requirements that define the main
scope of work and other
expectations in terms of occupational health, safety, E&S, and
community aspects. specific features that
the contractor is being
iv. Other governance frameworks or industry standards the client has
prequalified against.”
publicly committed to comply with are also helpful information

8 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

 for contractors. These could include, for example, the Equator Principles, Global Reporting Initiative (GRI)
standards, Millennium Development Goals (MDGs), Sustainable Development Goals (SDGs), Extractive Industries
8
Transparency Initiative (EITI), International Council of Mining and Metals (ICMM) 10 Principles.

v. Where there is not an ESIA prepared or permitting requirement in place for the project, the following documents
may be used as sources of information about E&S concerns and sensitivities: (a) IFC’s Environmental and Social
Review Summary, available on IFC’s website in the event that IFC is involved in the project and has concluded
its appraisal process; (b) due diligence and independent engineer/E&S specialist reports; (c) gap analyses; (d) an
assessment of security risks; (e) general E&S risk context of the project location(s); and (f) country legislation.

vi. Project-specific E&S requirements that are part of an ESIA or included in permits and approvals, and that will
be included in the contract are also helpful. These may include environmental design criteria (the environmental
parameters for aspects such as water quality, air quality, and noise) to which the project must adhere; specific
social and labor issues that must be addressed (for example, protection for migrant workers); and relevant
management plans. Where appropriate, the sustainability and/or certification of materials to be used should
9
be included as a requirement. A commitment register, or extracts from it, may also be useful. The project’s
ESAP, if available, should also be provided, the information should be tailored to the contract activities as
closely as possible.

vii. Relevant requirements of the client’s ESMS, including any project-specific E&S management plans that have
been prepared, are also helpful to potential contractors.

8 For more on these initiatives, see the respective websites. Equator Principles, http://www.equator-principles.com/; GRI, https://www.globalreporting.org/Pages/
default.aspx; MDGs, http://www.unmillenniumproject.org/goals/; SDGs, https://sustainabledevelopment.un.org/sdgs; EITI, https://eiti.org/; ICMM, https://www.
icmm.com/en-gb/about-us/member-commitments/icmm-10-principles.
9  For example, as in the GreenGuard, Forest Stewardship Council, and BRE GreenBook Live listings.

Contractor Selection | 9
 22. If a site visit is planned during the bidding phase (as should always be the case for significant construction
contracts, or if the features, location, or specific characteristics of the service in the bidding process may require so),
the solicitation should include a site visit. All information shared on the site visit should be made available to all the
bidders. A client’s E&S representative should always be present during the site visit(s) to present the E&S framework
within which the project is operating, answer questions, and provide clarification to bidders. Whether a contractor’s
E&S representative attends the site inspection will depend on the significance and complexity of the E&S issues.

23. Gender should be addressed in the contracting process. Proactive promotion of gender equality and diversity
can enhance the economic output, performance, development, and reputation of a project or business. Socially
inclusive workplaces can increase productivity yields, flow and transparency of information, and quality of service;
encourage adherence to rules and policies; and attract diverse points of view and opinions. It is important, therefore,
that contractors’ internally facing human resource policies and procedures actively seek to address all forms of
deliberate or unintentional discrimination against women in the workplace.

24. It is often found in large-scale construction projects that contract and subcontract employees are predominantly
male, well paid in the local context, and often from outside the host community and project area. These circumstances
elevate the risk of SEA and GBV by contract workers. Such SEA and GBV can range in severity from sexual harassment
to exploitation and abuse of women and children. Contractors should put in place measures, including codes of
conduct, to address such risks. Different codes of conduct will be relevant for contracting companies, contracting
company managers, and individual workers.

10 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

25. Contractors benefit from identifying areas and procedures where a more equal and diverse workplace can be
developed. Contracts can include specific language, targets, and objectives around recruitment, hiring, training,
management, and promotion of a diverse and competent workforce. Inclusiveness helps to ensure that all activities
associated with a project respect and meet the needs of the workforce in a dignified manner, while ensuring equal
pay for equal competencies and work. This includes ensuring all planning and implementation processes consider,
for example, differences in training, communication, housing, personal hygiene and use of lavatories, personal
protective equipment, and adherence to codes of conduct.

26. Contracts should explicitly integrate language, terms, and conditions for enabling equal opportunity and diversity
in the workforce in each phase of the contracting and procurement process. Recruitment and hiring policies should
strictly prohibit and discourage discrimination or exclusion based on gender or diversity. Finally, for the client to
assess performance, contracts and contractors will need to include a means for reporting and measuring results and
outcomes of having a socially inclusive workforce, considering both the formal and informal sectors, which are
often important components of socially inclusive and diverse construction environments.

27. Concerning E&S Requirements, RFPs, and other solicitations when involving IFC finance prospective contractors
should be required to do the following:

i. Submit information on their ESMSs, if any, including any certifications and recent modifications.

ii. Identify one or more E&S staff members, including personnel who will be responsible for E&S performance,
HR, and/or safety, as key personnel, and define minimum qualifications and experience. (Qualifications and
experience should be determined by the client’s evaluation panel to be appropriate to the nature and scale of
the work to be contracted.) In projects deemed at a high risk of SEA or GBV, the prospective contractor should
demonstrate capacity to identify and manage these types of risk.

iii. Provide information on past E&S performance. Such information could include but not be limited to past
violations of E&S regulations; worker accident and injury rates; reports of sexual harassment or discrimination
and how those reports were addressed; lists of accidents and incidents involving workers; awards for safe
working conditions or environmental performance; environmental incidents in previous projects or services;
E&S training records, including training on anti-sexual harassment; labor inspection reports; summaries of
material incidents involving worker-management relations (i.e., strikes, demonstrations, security incidents);
any SEA or GBV-driven contract cancellations, suspensions, or calling of bid bonds; and material sanctions or
fines from labor, health, safety, and/or environmental authorities.

iv. Provide information on existing E&S policies and capacities. This may include any policies related to sustainability,
biodiversity, water management, stakeholder engagement, HR (including workplace antisexual harassment
policies), codes of conduct which should include specific provisions against SEA and GBV for the contracting
10
company and the contractor’s managers and direct and subcontract employees, grievance processes, and so forth.

v. Provide summary descriptions of past projects and/or references, highlighting E&S performance.

Examples of such codes of conduct may be found in Annex 5 of the July 2017 report “Working Together to Prevent Sexual Exploitation and Abuse: Recommendations
10 

for World Bank Investment Projects” which may be accessed at http://documents.worldbank.org/curated/en/482251502095751999/Working-together-to-prevent-

sexual-exploitation-and-abuse-recommendations-for-World-Bank-investment-projects.

Contractor Selection | 11
 vi. Provide client references, which should be checked to validate
claims regarding E&S performance.

28. Many or most of the contract conditions listed in the preceding

paragraphs and paragraph 50 may be defined in more detail in the
solicitation, and/or the solicitation may require prospective contactors
to provide more detailed information on how they intend to meet these
E&S requirements. In those cases, this information would inform the
development of specific contract conditions, including details of the
elements listed in paragraph 50.

29. Solicitations should request an affirmative statement or other

commitment by prospective contractors that they will be responsible
for E&S performance of their subcontractors and suppliers.

30. Solicitations should ask for information in a consistent format,

so that all contractors can be evaluated on the same basis.

31. The client’s E&S representative should provide the materials listed in
paragraph 21 to procurement personnel who are responsible for issuing
the solicitation. In addition, if they have not participated in developing
the solicitation, one or more of the client’s E&S professionals should
review the solicitation prior to issuance to prospective contractors and
determine if requirements consistent with paragraphs 21 to 27 have
been included. If changes are needed, the E&S professional(s) should
work with the procurement department as necessary to ensure that
appropriate E&S materials are solicited from prospective contractors.
Prior to the solicitation package being issued to prospective contractors,
it is recommended that the solicitation package also be cleared by the
client’s E&S representative.

32. If the solicitation defines line items to be used by the contractor

in estimating costs and for payment, the costs and timelines must be
adequate to allow the contractor to effectively implement the various
E&S commitments related to E&S performance. Payment for the
completion or partial completion of work milestones shall be based
11
in part on satisfactory performance of related E&S requirements.

11  Other aspects might be meeting technical specifications, safety performance targets, and time schedules.

12 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

4.3 PROPOSAL EVALUATION AND CONTRACTOR SELECTION

33. It is recommended that the evaluation criteria be established alongside the bid packages and that these are
included with the package so that prospective bidders can see early on the relative weightings of the environmental,
social, and health and safety aspects of their proposal.

34. Evaluation methodology, criteria, key performance indicators (KPIs), and weightings need to be established in
discussion with the rest of the project team. The following questions should be asked when developing the weightings:
What answers are we looking for? And what KPI scores are acceptable? Significant E&S records and safety metrics
are important, and poor records related to these matters should preclude the contractor from qualifying, regardless
of technical aspects or price.

35. The contractor’s existing systems, its capacity to implement E&S requirements, and the contractor-supplied
information on past E&S performance should be among the key criteria used to evaluate contractors. Capacity
may be judged by past performance, existing or projected management, technical ability, and resources. The latter
can include solutions or options proposed by the contractor to implement the mitigations described in the E&S
documentation, such as management plans that are contained in the bid package. A lack of capacity to establish
an ESMS (if one does not exist), implement E&S requirements, and meet applicable standards should disqualify a
contractor from further consideration. Referees should be asked to validate claims regarding E&S performance.

36. As the client evaluates proposals, past E&S performance and key personnel can be evaluated either on a pass-fail
basis or on a numerical basis, which can then be included in overall comparisons (including technical and financial).
If a numerical basis is selected, weightings should be carefully considered, with significant E&S sensitivities and
safety being the highest priorities and the basis for passing or failing.

37. While the evaluation methodology will vary according to the project, scope of work of the activity, and any
project-specific feature, it will need to be agreed on by the project team. It is recommended that the following be
12
considered grounds for disqualification:

i. Failure to provide information on past E&S performance, including health and safety records;

ii. Reports of past performance deemed unacceptable for the current project;

iii. Notices of material labor issues between workers and management;

iv. Fines and sanctions imposed by E&S and labor regulators and authorities;

v. Poor security management records from previous projects; and

vi. Material community grievances and high profile adverse press reports on E&S matters.

12 Failure to respond to questions or requests for information usually is not a cause or condition for a bidder’s disqualification, but increases the likelihood of a low
score in its overall qualification (i.e., if the bidder does not provide information pertaining to a specific E&S requirement, then the score obtained for that selection
criteria will be “zero”).

Contractor Selection | 13
 38. It is strongly recommended that the team evaluating proposals includes at least one qualified and experienced
E&S professional who has been involved in the development of solicitations and the establishment of the criteria
that should be used to evaluate bidders’ E&S qualifications.

39. Should interviews with key personnel be part of the evaluation of prospective contractors, clients are encouraged
to require that prospective contractor E&S personnel be interviewed by client E&S personnel. As this will be a
contractor expense, it should be made clear early on that this is a requirement.

40. Should a prospective contractor propose to substitute personnel for any proposed key E&S position(s) at any
stage of the selection and or contract negotiation process, clients should require that the replacement(s) have at
least equivalent qualifications and experience of the previous professional and that they be approved by the client,
or the entire proposal may be reevaluated using the substitute personnel.

41. At the end of the evaluation and selection process, clients should issue a letter of intention to place a contract
subject to certain conditions, including E&S requirements and conditions, which should be listed. These could
be over and above those in the solicitation, but they must have been discussed with the contractor during the
selection process.

4.4 CONTRACTING

42. Types of contract. Clients may use any of a variety of contracts to procure various types of engineering and
construction services. Widely used international contract templates and model contracts include those from the
International Federation of Consulting Engineers (FIDIC), various forms of which are color coded (Table 1 and
Figure 1); the New Engineering Contract (NEC) or NEC Engineering and Construction Contract (NEC3) contract
suite; and the International Chamber of Commerce. Many companies, especially those with international experience,
also have contract templates that are used on individual projects by their project companies and other subsidiaries.

TABLE 1. FIDIC CONTRACTS

Type of Contract Template Description

Recommended for building or engineering/construction works
FIDIC Red Book, 1999 (i.e., SMP, piping, E&I installation, civils, earthworks, etc.), design
provided by the client or others (not the contractor).

Recommended for the provision of electrical/mechanical

equipment and for design and execution of building/engineering
FIDIC Yellow Book, 1999 works (i.e., mills, crusher, fuel farms, flotation cells, thickeners,
etc.), design by the contractor. Generally, also used where the
contractor is to provide process performance guarantees.

Recommended for building/engineering works of relatively small

FIDIC Green Book, 1999 capital value and/or relatively simple/repetitive type of works.
Generally, design provided by the client.

Recommended for the appointment of consultants to provide

FIDIC White Book, 2006 services such as feasibility studies, design, contract administration,
and project management.

Source: www.fidic.org

14 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

FIGURE 1. CHOOSING AN FIDIC CONTRACT

Source: www.fidic.org

43. Standard E&S clauses. Model international contracts and many companies’ model contracts have conditions
13
relevant to E&S performance, but these are general in nature and vary between the various types of contracts.
These contracts also allow for inclusion of project-specific special conditions, although in the past most special
conditions have been related to engineering and payment for work completion. Requirements in the model contracts
may require international good practice or a variant for some E&S requirements, such as on footprint management,
erosion control, hazardous materials and hazardous waste management, site restoration, general pollution prevention,
biodiversity management, and other general controls. They also may include requirements for worker safety and
worker accommodation. Only rarely do these include requirements for stakeholder communication or community
protection, and they do not include project-specific requirements needed to control site-specific impacts as described
in the preceding paragraphs.

44. Contract template review and revision. Regardless of whether a contract is based on an international model, the
client’s E&S manager or other qualified person should review the contract to assess any general E&S requirements
present and determine how such requirements need to be modified to fit the client’s needs.

45. E&S organization chart. An organization chart illustrating reporting lines on E&S to the client and subcontractors
is a key aspect of the contract negotiations and may be included with the contract documentation.

There are a number of elements related to labor and working practices that are not covered by the FIDIC Red and Yellow Books. Elements not explicitly covered
13 

include: HR policy, child labor, forced labor, nondiscrimination and equal opportunity, migrant workers, workers’ organizations, grievance mechanisms, and
nonemployee workers.

Contractor Selection | 15
 46. Inclusion of project-specific E&S requirements. To require “ At all times, the E&S
contractors to implement E&S commitments specified in project-
Plans to be developed
specific ESIAs and E&S management plans, clients should include
and directly reference these requirements (as annexes or appendixes), by the contractor shall
regardless of contract type. be proportionate to the
E&S risks involved in the
47. Identification of E&S plans to be developed by contractor. Clients
should list in the E&S conditions of the contract all E&S management execution of the work.”
plans and associated documentation that must be prepared or refined
and implemented by the contractor, and require that these documents be
submitted for client review and approval within an agreed timeline relative
to the project schedule, contractor mobilization, and commencement of
work. The level of required documentation and E&S plans may depend
on the scope of work of the activities and services being provided. At
all times, the E&S Plans to be developed by the contractor shall be
proportionate to the E&S risks involved in the execution of the work.
If it is an EPC or O&M contract, then certainly the contractor will
have to develop a number of E&S “implementation” plans detailing
the controls that will be applied to ensure compliance with E&S
requirements. In the case of small contractors or tasks and services
that do not pose significant E&S risks, a general E&S plan describing
controls and monitoring mechanisms, or the adherence to a pertinent
client’s procedures, may be sufficient.

48. Provision of E&S personnel and resources allocated to the contract

or service. Clients should include the requirement that appropriate
resources and key E&S personnel be appointed as part of the contract,
throughout project implementation, or during the period in which
their services are needed to manage and implement E&S requirements.
It is recommended that conditions for replacement of key personnel
should be acceptable to the client’s E&S representatives.

49. Selection and alteration of E&S contract requirements. Specific

provisions should be included in the contract only after they are
deemed to be acceptable by the evaluation panel, including the E&S
representative(s), and approved by client management. If certain conditions
are to be agreed on later, the contract should include requirements to
reach such an agreement.

16 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

50. General or specific requirements. Clients should ensure their contracts include general and/or project-specific
requirements for the following:

i. Development and adoption of an E&S management program or system or commitment to adhere to, adopt,
and implement the client’s ESMS framework, as necessary for the contractor involvement in the project. (See
Footnote 6.)

ii. Number and qualifications of E&S personnel required to be on staff and on-site—including those responsible
for HR; worker health and safety; worker grievances; environmental management; community health; safety
and security; worker accommodation; site security; and emergency response.

iii. The nature, risks, and complexity of the project; the scope of work of the service being contracted; the development
and implementation of specific client-approved E&S management plans; and associated documentation as
required by the ESIA/Environmental and Social Management Plan, will include, at a minimum, implementation
plans for occupational health and safety, emergency response, hazardous materials management, and site
restoration, among others. The contract should list the plans the contractor is to develop for client approval
and the plans that may have been prepared by the client for contractor implementation.

iv. Explicit commitment to compliance with the project commitments as captured in the commitment register;
conditions of approval; environmental design criteria; management plans; ESAP and national law; and acquisition
of all required permits, licenses, consents, and approvals prior to undertaking the activities being permitted
or otherwise approved.

v. Specific reference to IFC PSs, EHS Guidelines (general and relevant sector specific), and other guidance as
appropriate (for example, IFC and European Bank for Reconstruction and Development (EBRD) Guidance
on Worker Accommodation).

vi. Adherence to the project code of conduct.

vii. Adherence to the project security forces management plan, if applicable.

viii. Induction and training programs for E&S and other personnel, including training on applicable HR policy
provisions, grievance mechanisms, health and safety, code of conduct including training on the provisions
intended to combat GBV and SEA, materials management, and environmental protection.

ix. Monitoring of E&S performance by contractor workers and subcontractors and client’s role in this.

x. Any monitoring of environmental parameters (such as noise, air emissions and air quality, water flows and
14
quality, waste generation and management) that contractors may be required to carry out.

Monitoring of environmental media often remains the responsibility of the client or owner’s team to ensure consistency of methodology and analyses, for comparison
14 

with baselines and predictions. However, in some cases the contractors are required to monitor their own performance. Some specialist monitoring may be more
appropriately carried out by the contractor, such as blast vibration monitoring or monitoring required only during the construction phase and related to particular
activities. Client monitoring is preferred, and strict controls on sampling methods and equipment, labs, lab methods used, quality assurance/quality control, and
chain of custody procedures should be in place.

Contractor Selection | 17
 xi. Implementation of a grievance mechanism for workers (including subcontract workers) either through a grievance
mechanism implemented and managed by the contractors or through extending the grievance mechanism of
the client to the workforce of the contractor. In both cases, clear reporting on grievances and how they are
addressed between contractor and client is required. The grievance mechanism should ensure proper handling
of GBV-related grievances, including but not limited to sexual harassment.

15
xii. Assurance that the client’s grievance mechanism for external stakeholders is either adopted by all contractors
or there is clear communication to stakeholders on how to address grievances related to the activities of the
contractors, including both works on the project site(s) and in any ancillary facilities and infrastructure. The
community-level grievance mechanism should ensure proper handling of grievances arising from GBV or SEA.

xiii. Other requirements of the client’s stakeholder engagement program that are to be supported by the contractor.
This should be integrated with the client stakeholder engagement program to ensure consistency.

xiv. Creation and maintenance of records on E&S performance.

xv. The environmental conditions under which the contractor will be allowed to demobilize and leave the site,
including conditions of site restoration and requirements for handling personnel retrenchment, particularly
those involving local workers.

xvi. Penalties and/or incentives for E&S performance of contractors and subcontractors.

xvii. Reporting requirements, including reporting on E&S performance.

xviii. Clear contract statement that the contractor is responsible for the E&S performance of subcontractors and
suppliers.

xix. Contract statement that on the contractor’s failure to meet the E&S requirements in such a way as to prevent
significant impacts to workers, local communities and/or individuals, and/or environmental resources, and
on the contractor’s failure to correct such deficiencies upon receiving proper notice, the client has the right to
appoint and pay another party to repair damages or otherwise remedy the impacts and reduce payment to the
contractor in the amount paid to the third party.

xx. As noted previously, mitigation measures to control E&S impacts during construction work to be considered
as part of the works themselves, not measures that are needed in addition to the main works. The bill of
quantities shall include adequate costs and timelines for expenditure to effectively implement the commitments
related to E&S performance. The bill of quantities should define milestone and final payments for completion
or partial completion of work, to include satisfactory performance of related E&S requirements. If a contract
includes incentives for timely completion of work, it should also include corresponding penalties for failure
to implement required mitigation measures.

51. Implementing GIIP. Because the full spectrum of E&S requirements may not be known at the time of the
contract, IFC recommends that clients include general requirements in all contracts that GIIP must implement to
mitigate E&S impacts.

15  Stakeholder may need to be defined for the project as part of the discussions with the contractor(s).

18 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

52. Review of bill of quantities. The bill of quantities for payments should be reviewed and accepted by the client’s
contract administrator who has to ensure that the technical and overall quality of the service and work being
conducted by the contractors follows the agreed terms and conditions. Depending on the sensitivity and complexity
of the E&S matters of the contract, the client’s contractor administrator may require that one or more senior client
E&S professionals is involved in the review of invoices and bill of quantities since they will need to ascertain the
implementation of E&S control and mitigation measures included in the contractor’s work when requests for
payment are received at milestones. If necessary, they may require the bill of quantities to be more explicit on specific
mitigations that are required for specific works, or otherwise advise the contractor of such mitigations.

53. Reviewing requirements. IFC and/or its financial intermediaries or another party to which it delegates authority
(for example, a technical advisor or independent engineer) may, at their discretion, review contracts to verify the
inclusion of appropriate project-specific E&S requirements and E&S-related costs.

54. Incentivizing good E&S performance. Clients are encouraged to include incentive mechanisms in the bill of
quantities for satisfactory E&S performance and control of potential impacts as part of their completion of major
works. Such mechanisms may include: a better score in the contractors’ overall qualification and clients’ contractor
performance database (which is helpful for any future bidding process or service); expedited processing of invoices
or bill payments; recognition of good E&S practices; and an additional bonus for completion of the work package
with overall good E&S performance.

Contractor Selection | 19
 4.5 SUBCONTRACTING AND PROCUREMENT

55. It is the client’s responsibility to comply with IFC PSs, ESHS Guidelines, loan agreement commitments, ESIA,
local laws and regulations, and permits and standards, ensuring that any contractor providing services of any kind to
the client duly follows these requirements throughout the duration of the contract, including any activity or services
performed by subcontractors or third parties undertaking a contract from the contractor.

56. Clients generally do not have direct control over subcontractor performance, although they may have some
influence over selection and may (indirectly) supervise their E&S performance. Therefore, clients must use their direct
control over their contractors to ensure that E&S requirements are being met by subcontractors. To achieve the
commitment of paragraph 50 (xviii), clients should require contractors to include in subcontracts the requirement
to comply with IFC PSs and all E&S requirements that are appropriate for the works being subcontracted and
consistent with the client’s and the contractor’s E&S management programs. In general, clients should require that
contractors apply the guidance described in sections 4.1 through 4.4 in prequalifying, soliciting, selecting, and
16
entering into subcontracts.

4.6 EXISTING CLIENT-MANAGED CONTRACTS

57. Amending existing contracts. For large development projects, there

may be existing, smaller contracts managed by the client (for example
for track maintenance and drill pad construction) that will continue
into the construction phase alongside major contracts. For consistency,
these contracts and the performance requirements associated with them
should be reviewed and, if necessary, brought in line with the other
contracts to properly incorporate all applicable E&S requirements.
This is particularly the case where the ESIA process had not been
completed when the contract was awarded. This might mean developing
a contract amendment to ensure all the necessary E&S provisions are
included and ensuring that contractor staff undergo the same training
as other contractors new to the site.

“ Clients generally do not have direct control over

subcontractor performance, although they may have
some influence over selection and may (indirectly)
supervise their E&S performance. Therefore, clients
must use their direct control over their contractors
to ensure that E&S requirements are being met
by subcontractors.”

An early “skill versus needs” assessment should be conducted when needed to identify challenges and opportunities to increase the local content in subcontractor
16 

hires and add needed measures (for example, capacity building and other training) to make sure local workers abide by project E&S standards.

20 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

5. Project Performance

58. Understanding implementation responsibilities. The roles of clients and contractors in meeting E&S requirements
are usually intertwined and must be worked out at the project level. Some actions described below as being the
responsibility of the client or the contractor may be reversed or shared on some projects. In some cases, such as
stakeholder engagement, both clients and contractors will have certain obligations and limits and will need to
coordinate their efforts. In others, such as monitoring, each party will monitor E&S performance, but at different
frequencies and levels of detail. In all cases, the client remains ultimately responsible to lenders for ensuring E&S
requirements are met, with the responsibilities of the contractor defined in the contract. For design-build (or design-
build-operate) contractors, the design standards and requirements (and operation standards) will also be set out
in the terms of reference to the contract. For public-private partnership (PPP) projects the administration may also
have roles and responsibilities (to the Bank) which may be additional to their usual regulatory functions.

59. Contractor oversight. The client will monitor contractor and subcontractor E&S performance and ensure the
contractor monitors its own and all subcontractors’ E&S performance throughout construction, including mobilization,
the main construction phase, and demobilization. Clear responsibilities and reporting lines are essential to avoid
duplication of effort or, conversely, gaps in monitoring. If operations are carried out under contract, or some work
is performed by contractors, the client and contractor will monitor E&S performance during operations as well.

60. Clients should require contractors to report on an agreed frequency their E&S performance and metrics (which
shall include relevant information and data from subcontractors, as applicable). Timely reporting of E&S performance
and results enables the client to identify opportunities for improvement, prevent poor performance issues, and assist
contractors if remedial action is to be taken.

61. E&S performance meetings. Regular meetings are essential to ensure

contractor performance is satisfactory and that project specifications
Box 2. Driving Performance are being met. (For an added benefit of meetings, see Box 2.) The
through Competition authority of monitoring staff who control contractor performance
also needs to be clarified and understood by contractors (for example,
Experience has shown that some clients who gives instructions to stop work or proceed but with modifying
share performance-monitoring results at the approach, scope, equipment, and so forth).
weekly meetings with all contractors to
62. Clients should ensure that contractors employ qualified E&S
effectively drive improved performance
personnel to oversee E&S performance, and that contractor staffing and
by introducing a competitive element, resources are commensurate with the magnitude and timing of work
sometimes with small incentives. and potential E&S risks. Clients should also approve documentation,
including for training programs, to ensure all staff are aware of E&S
commitments and their part in meeting them.

Project Performance | 21
 5.1 CONSTRUCTION Box 3.  Mobilization
5.1.1 Mobilization
The initial phase of construction
63. Review and approval of contractor E&S plans. As IFC clients usually begins with a mobilization or
are responsible for their contractors meeting all of the project’s E&S
preconstruction phase during which
requirements, it is essential for them to review and approve project E&S
the site is prepared for construction. This
management plans and procedures at this stage. These might include
such plans as working within boundaries (footprint management), phase can include major works such as land

protection of biodiversity, land clearing and erosion control, traffic clearing and excavation, building and office
management, labor sources and methods of recruitment of workers, construction, access road construction or
worker accommodation, noise and dust control, and possibly others
improvement, construction of worker
(See Box 3).
accommodations (and use of temporary

64. Kickoff meeting. Prior to early work activities, the client should accommodations), arranging for adequate
hold a kickoff meeting with each of the contractors prior to arriving security systems and technical measures
at the site. Timing of mobilization based on logistical issues, resources,
at the accommodation and construction
customs delays, and so forth should be considered in the planning.
sites, and other activities. Collectively these
Client and contractor project managers and major subcontractors should
participate in these meetings. The purpose is to review planned activities are usually known as “early works.”

and schedules, review E&S requirements (among others), review the

roles of the various parties in implementing and monitoring mitigation This is often the period of the greatest

measures, and agree on project-specific induction and training content. E&S impact. It is critical that the correct
These meetings should include a discussion about control of access to documents, training, procedures, and
the site, use of security forces if applicable, and how to best coordinate
systems are in place to ensure the impacts
the client’s security management system and E&S activities at both the
are managed properly.
base camp (accommodation site) and any remote construction sites.
Both client and contractor E&S representatives should be present to
Clients are cautioned against authorizing
reiterate all E&S commitments and establish initial compliance points
and coordination requirements during site establishment. contractors to begin work in advance of an

effective ESMS, approved E&S management

65. E&S induction and training. A general E&S site induction should
plans, and associated documentation being
be mandatory for all workers, with specialized technical E&S training
in place.
delivered to staff. The degree of training should be based on the project’s
E&S risks, on the tasks that will be performed, the code of conduct,
including stakeholder engagement rules, and security management, and
on the general E&S provisions that are applicable for all personnel,
including contractors and subcontractors. All workers should be made
aware of the worker and public grievance mechanisms and how to
access them. In particular, security contractors should be given detailed
training on community engagement and the grievance mechanism,
as complaints may be brought to their attention in the first instance,
and as contractors are not often included in employee training. In
projects at high risk of SEA or GBV, contractors should develop and
implement SEA and GBV awareness training for staff at all levels,

22 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

from contract management to day laborers. Additional training may be needed for staff that will be responsible for
implementing, monitoring, and reporting E&S performance. Once the general E&S induction is defined, a series of
specific trainings may be required in order to ensure that the requirements, controls, and mitigation measures are
well communicated and understood.

66. Client site visits and oversight. At project sites where there could be significant and/or permanent impacts
due to preconstruction activities, including sites where there is a substantial amount of land clearing, the client,
representative engineer, or E&S lead should visit daily during the first weeks to help guide the contractor’s E&S
managers and staff in overseeing activities and ensuring that there are common expectations on E&S performance.
This might continue for the duration of the activity with a periodicity properly assessed to ensure adequate supervision,
proactive monitoring, and sound E&S performance.

67. Clients should monitor contractor E&S performance during this phase, as described in section 5.1.4. Clients
should require contractors to monitor their own and their subcontractors’ E&S performance and report to the
client no less than weekly as described in section 5.1.5. In the case of certain environmental and safety incidents,
the client should be informed immediately; these instances should be agreed and understood by all parties. Clients
should consider E&S performance in the payment of invoices, as described in section 5.1.6.

5.1.2 Main Construction

68. Client E&S capacity. Clients and/or their representatives (for example, owner’s engineers) must assign E&S
personnel with appropriate qualifications and seniority to oversee and supervise the E&S performance of contractors,
including their subcontractors. The number of personnel and their disciplines should be commensurate with the size
of the project and the potential E&S risk.

69. Prior to construction activities that could cause E&S impacts, the client should hold a kickoff meeting with the
contractors. Client and contractor project managers and E&S personnel should participate, as should E&S supervisors
and personnel of major subcontractors. The purpose is to review planned activities and schedules, review E&S
requirements and expectations, review the roles of the various parties in implementing and monitoring mitigation
measures and E&S management plans, and agree on an induction and training program on project-specific E&S
aspects, including site security arrangements. A general site induction to E&S, including OHS and code of conduct
training, should be mandatory for all workers, with specialized training for key staff responsible for implementing,
monitoring, and reporting E&S performance.

70. Clients will monitor contractor E&S performance during this phase as described in section 5.1.4. Clients will
require contractors to monitor their own and their subcontractors’ E&S performance and report to the client in a
timely manner, as described in section 5.1.5. In the case of environmental, safety, or social incidents, the client should
be informed immediately. The applicable instances should be agreed to and understood by all parties. Clients will
consider E&S performance in the payment of invoices, as described in section 5.1.6.

Project Performance | 23
 5.1.3 Demobilization and Site Handover

71. Upon meeting the conditions established in the contract (see paragraphs 49 and 50) determining that construction
is complete, the contractor can demobilize equipment and personnel and turn over the site or, if more than one, all
work sites to the client. To ensure that all the necessary E&S provisions have been duly met and that the appropriate
controls and requirements were implemented, the client could typically develop a checklist or punch list including all
relevant E&S aspects that need to be verified upon completion of work. If there are pending topics or requirements,
these shall be communicated to the contractor, who should address them on an agreed schedule.

72. Client E&S personnel should inspect all work sites and other areas affected by the contractor, when notified
that construction is complete, to determine if the requirements established in the contract have been met. Clients will
allow contractors to demobilize equipment and E&S personnel only after client E&S personnel determine that E&S
requirements have been fully met. Handovers may be phased on complex sites and when work is completed early.
Issues that have arisen during the contract should be reviewed carefully during the handover review and acceptance
by the client, including the possibility of the issues arising in the future.

24 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

5.1.4 Client Monitoring of Activities “ At any stage of
73. Client monitoring of contractor E&S performance must continue construction or other
throughout construction, from mobilization through demobilization. work, if the contractor
This should involve both visits to work locations and reviews of records has not taken
kept by the contractor and of reports submitted by the contractor. The
appropriate action to
frequency of site visits should be commensurate with the magnitude
of the E&S risks of the activities being carried out and permanence of achieve compliance
potential impacts that could result from ongoing activities. For highly with E&S requirements
17
sensitive projects (Category A ), consideration should be given to after repeated notices of
having the client or engineer’s representative on-site on a permanent
violation and warnings
basis. Monitoring may be conducted by client E&S personnel and/or
E&S personnel of an owner’s team. of noncompliance,
and significant E&S
74. Client E&S personnel should review one or more recent inspection
impacts are occurring
reports and the contractor’s previous month’s E&S progress report
prior to visiting the site to monitor the contactor’s E&S performance. or imminent, the
They should do the same before participating in meetings where the client should order the
contractor’s E&S performance is to be discussed.
contractor to stop work
75. Client E&S personnel will review contractor reports and follow until E&S performance
up as needed to ensure timely resolution of issues of noncompliance is brought under control
with E&S requirements. This may include additional visits to the
and up to acceptable
contractor’s site or offices, further communications with contractor
E&S personnel, issuance of notices of deficiency or warnings to the
standards.”
contractor, and other actions as needed, including those in paragraphs
76 and 80.

76. At any stage of construction or other work, if the contractor has not
taken appropriate action to achieve compliance with E&S requirements
after repeated notices of violation and warnings of noncompliance,
and significant E&S impacts are occurring or imminent, the client
should order the contractor to stop work until E&S performance is
brought under control and up to acceptable standards. See also Box
4 and paragraph 81.

A Category A project is likely to have significant adverse environmental impacts that are sensitive, diverse, or unprecedented. A Category B project has potential
17 

adverse environmental impacts on human populations or environmentally important areas—including wetlands, forests, grasslands, and other natural habitats—which
are less adverse than those of Category A projects. A Category C project is likely to have minimal or no adverse environmental impacts.

Project Performance | 25
 5.1.5 Contractor Monitoring and Reporting
“ Clients should require
contractors to report 77. Clients should require contractors to monitor and keep records on
E&S performance in accordance with the ESMS and E&S management
on E&S performance
plans. This may include monitoring of E&S matters, scheduled and
on at least a monthly unscheduled inspections to work locations, observations made during
basis throughout the routine activities, desk reviews, drills, and any other monitoring protocols
implemented by the contractor to ensure E&S compliance. The client
construction phase,
E&S personnel must be familiar with the contractor’s monitoring and
including mobilization, record keeping system so this aspect of the contractor’s performance
construction, and can itself be monitored.
demobilization.”
78. Responsibilities for monitoring need to be clear between the
client and contractor, and results (if client and contractor are both
collecting data) must be comparable, for example, collected using
the same methodologies, analyzed at the same labs, and using similar
18
equipment, and so forth.

79. Clients should require contractors to report on E&S performance

on at least a monthly basis throughout the construction phase, including
mobilization, construction, and demobilization. This could be more
frequent for more sensitive E&S projects. It can be part of the overall
engineering progress report or a stand-alone E&S report. Reported
E&S information should include the following:

i. Safety: hours worked, recordable incidents and corresponding Root

Cause Analysis (lost time incidents, medical treatment cases), first
aid cases, high potential near misses, and remedial and preventive
activities required (for example, revised job safety analysis, new
or different equipment, skills training, and so forth).

ii. Environmental incidents and near misses: environmental incidents

and high potential near misses and how they have been addressed,
what is outstanding, and lessons learned.

iii. Major works: those undertaken and completed, progress against

project schedule, and key work fronts (work areas).

iv. E&S staffing: new hires and departures, and listing of current
staff and titles.

To improve efficiency, responsibilities should be defined early regarding who collects what data. In relation to the data collected by the contractor, the owner should
18 

be comfortable with what is being collected and how it is being collected, analyzed, reported, and so forth. This is usually done through the sign-off by the owner
on the proposed monitoring plan of the contractor.

26 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

v. E&S requirements: noncompliance incidents with permits and national law (legal noncompliance), project
commitments, or other E&S requirements.

vi. E&S inspections and audits: by contractor, engineer, or others, including authorities—to include date, inspector
or auditor name, sites visited and records reviewed, major findings, and actions taken.

vii. Workers: number of workers, indication of origin (expatriate, local, nonlocal nationals), gender, and skill level
(unskilled, skilled, supervisory, professional, management).

viii. Training on E&S issues: including dates, number of trainees, and topics.

ix. Footprint management: details of any work outside boundaries or major off-site impacts caused by ongoing
construction—to include date, location, impacts, and actions taken.

x. External stakeholder engagement: highlights, including formal and informal meetings, and information disclosure
and dissemination—to include a breakdown of women and men consulted and themes coming from various
stakeholder groups, including vulnerable groups (e.g., disabled, elderly, children, etc.).

xi. Details of any security risks: details of risks the contractor may be exposed to while performing its work—the
threats may come from third parties external to the project or from inappropriate conduct from security forces
employed either by the client or public security forces.

xii. Worker grievances: details including occurrence date, grievance, and date submitted; actions taken and dates;
resolution (if any) and date; and follow-up yet to be taken—grievances listed should include those received
since the preceding report and those that were unresolved at the time of that report.

xiii. External stakeholder grievances: grievance and date submitted, action(s) taken and date(s), resolution (if any)
and date, and follow-up yet to be taken—grievances listed should include those received since the preceding
report and those that were unresolved at the time of that report. Grievance data should be gender-disaggregated.
Particular sensitivity may be needed around SEA or GBV issues raised.

19
xiv. Major E&S changes: to ESMS, E&S management, or E&S practices.

xv. Deficiency and performance management: actions taken in response to previous notices of deficiency or observations
regarding E&S performance and/or plans for actions to be taken—these should continue to be reported until
20
the client determines the issue is resolved satisfactorily.

This is more often a requirement for the client. Of course, contractors should also report on changes, but they are usually limited in their ability to make significant
19 

E&S changes.
As this could represent a significant undertaking for large projects, contractors usually will need a permanent staff member—usually a good clerk or junior or
20 

trainee engineer—who collects and helps organize the information.

Project Performance | 27
 5.1.6 Approving Invoices for Payment

80. E&S review of contractor invoices: The client’s E&S manager or representative should be part of the process
for signing off on all payments to contractors, even if the payment is not for work that is explicitly related to E&S
mitigation and performance. E&S staff shall work closely with the project manager (client or engineer’s project
manager, depending on who employs the E&S personnel) to determine if there are any outstanding E&S items and
whether including that full or partial payment under specific line items of the bill of quantities should be withheld,
either temporarily or permanently, or that there should be some combination of temporary and permanent withholding
(Box 4).

81. If the contractor does not take timely action to reach compliance with E&S requirements, client E&S personnel
and the project manager should continue to take appropriate action to encourage compliance, which could include
orders to stop work, withholding of further payments, and/or escalation of the issue to higher management. If
significant impacts are occurring or imminent, the client may notify the contractor that another party will be brought
in to deal with the issue and the payment to the contractor will be reduced by the amount paid to the other party,
as would be specified in the contract. See paragraph 53.

Box 4. E&S Review of Contractor Invoices

• Temporary withholdings should be recommended in case of repeated minor violations of E&S requirements that are not leading

to significant impacts on workers, external parties, or environmental resources; minor violations that are not corrected after

repeated warnings; or first-time major violations that can be corrected easily and that have not led to permanent E&S impacts.

The withheld amounts should be paid upon contractor correction of the deficiency to the client’s satisfaction.

• Permanent withholdings should be recommended for minor violations that are not corrected after repeated warnings and

that could result in significant impacts; or for any violations that have resulted in significant impacts, including permanent

impacts. Some portion of such withholdings may be released upon satisfactory resolution of the issue, but some significant

portion must be permanently withheld as a penalty to discourage repeated incidents.

• As noted in paragraphs 32 and 50 (xx), payments that are withheld either temporarily or permanently will be all or part of the

payment specified for a line item in the bill of quantities, which in turn will be the payment due for a discrete portion of the

total works. Client E&S personnel should work with the project manager and others as needed to arrive at the amount to be

withheld. This amount should not be based directly on the cost of compliance but rather should be somewhat higher than

this amount, and based on a specific percentage of the line item in question.

• The contractor should be notified of the specific actions that must be taken in order to receive further payments for the works

in question, or to receive payment that has been temporarily withheld.

28 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

5.2 OPERATIONS AND MAINTENANCE

82. Clients who hire contractors to operate projects, or to undertake activities under contract during the operations
period, should use the guidance in sections 4 and 5 to solicit, select, and supervise contractors, as is appropriate for
this phase and the contractors’ activities. Required policies, procedures, and guidelines for operations should include
lessons learned from construction and any planning conditions, as well as ESIA commitments.

83. Prior to defining the full E&S requirements and approving the contractor’s ESMS for the operations phase,
the client should review the section of the ESIA relating to operations and its associated commitments, including
mitigations and management plans and any conditions imposed by regulatory authorities. The client should make
such modifications as are appropriately needed given changes to or knowledge of the site and its environment,
including potentially affected people due to construction activities and the project itself.

Project Performance | 29
Annex A. Sample Questionnaire to Include in Requests
for Expression of Interest or Prescreening
of Contractors
Note that any questionnaire should be tailored to the sector and risk level of the project.

Relevant Issue Requested information

PS
PS1 Assessment and management of environmental and social risks and impacts

Please provide a copy of the company’s environmental, social, and

health and safety policies.

Please provide information on both:

1. The company’s corporate ESMS
2. The project ESMS that the company would typically implement at
the site

Please provide details of any accreditations such as ISO 14001/OSHAS

18001, held by the company, and/or alignment with ISO 26000, GRI,
United Nations Global Compact, World Business Council for Sustainable
Development, and/or other social responsibility standards/guidelines/
formal initiatives.

Please provide a typical organization chart that shows how safety and
health, environmental, social (including stakeholder engagement and
grievances), and labor issues are managed at the site level, including
management and monitoring of subcontractors and their performance.

Please provide appropriate E&S metrics for the past three calendar
years, including spills, releases to the environment, number of
environmental fines or regulatory administrative processes, number
of registered stakeholder grievances (disaggregated by gender), and
number of registered labor grievances (disaggregated by gender).

Please provide detailed information on how the company selects and

manages its subcontractors (local or other), particularly in determining
Subcontractors whether they have systems in place to follow the necessary
environmental, social, and health and safety requirements of the
project.

Please provide information on how the company monitors

Subcontractors subcontractors’ environmental, social, and health and safety
compliance and performance.

Please confirm that the company has read and understood the ESIA,
with particular attention to the commitments register and the ESHS
management plans for the project.

Annex A. Sample Questionnaire to Include in Requests for Expression of Interest or Prescreening of Contractors | 31
 The client requires that goods and services are procured locally, as
far as possible, when available at equivalent quality and price. Please
Supply chain
demonstrate how the company might achieve this, illustrating with
examples from other projects if appropriate.

PS2 Labor and working conditions

Please provide a copy of the company’s safety policy.

Please provide a representative copy of a Health and Safety Site

Management Plan.

Please provide appropriate health and safety metrics for the past three
calendar years, including (i) worked hours for the period, (ii) total
recordable fatalities, (iii) total recordable injury frequency rate, and (iv)
total recordable disease frequency rate (based, for example, on ICMM
definitions).

Please describe in detail how the company trains for and implements
safe working practices among its workforce.

Please describe how the company plans to safeguard the health and
safety of its workers while on site. What are the anticipated OHS risks
and how will they be addressed?

Please provide a copy of the company’s HR policies and grievance

mechanism, and describe how these will be communicated to all
workers on-site.

Please provide details on how the company will comply with national
labor and employment law.

Please provide details how the company will manage equal

opportunities and nondiscrimination, sexual harassment issues,
migrant labor, and retrenchment among its workforce.

Please describe how the above issues will be managed by the company
at the subcontractor level, including monitoring and reporting systems.

The client requires that as much local labor as possible be used during
the construction phase. Please describe how the company would
approach this to avoid importing third country nationals or expatriate
labor, as far as possible, and to leave a useful legacy of skills in the area.
(It is acknowledged that a proportion of skilled labor will have to be
brought in to fulfill project needs.)

The client requires that contractors have cognizance of the minimum

standards for worker facilities at the site, including sanitation, access
to drinking water, and accommodation set out in the IFC and EBRD
Guidance Note, Workers Accommodation, Processes and Standards,
and International Labour Organization requirements. Please describe
how the company will incorporate these requirements into the project.

32 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

PS3 Resource efficiency and pollution prevention

Please describe how the company typically manages solid waste,

both hazardous and nonhazardous, generated by its activities at a
construction site, including reduce, reuse, and recycle initiatives.

Please describe how the company typically manages wastewater (for

example, in camps, process) generated by its activities at a construction
site, including reduce, reuse, and recycle initiatives.

Please describe how the company typically manages storm water flow
generated by its activities at a construction site.

Please describe how the company typically manages the transportation

and storage of hazardous substances and materials at the company’s
sites.

Please describe how the company typically manages soil removal and
storage (for later reuse).

Please describe how the company typically manages the control of

erosion and sedimentation at the company’s sites.

Please describe how the company typically manages air quality at its
sites.

Please describe how the company typically manages nuisance noise at

its sites.

Please provide examples of environmental monitoring programs that

the company has carried out on other jobs.

Please describe how the company typically manages and uses fresh
water at the company’s sites.

Please describe how energy efficiency is typically built into the

company’s activities.

Please describe how greenhouse gas emissions will be accounted for

and reported.

Please describe other resource efficiency practices at the company’s

sites.

PS4 Community health, safety, and security

Please describe how the company prepares for emergencies at its

sites, including those that may affect nearby communities, such as an
explosion or accident or a spill or release into a local water course.

Please describe how the company trains for and implements good
driving practices among its workforce to avoid or minimize impacts to
the communities.

Annex A. Sample Questionnaire to Include in Requests for Expression of Interest or Prescreening of Contractors | 33
 Please provide a code of conduct describing expectations for the
behaviour of direct and subcontract employees when outside the work
site and in the host community. The code of conduct should include
specific provisions to prevent SEA and GBV.

Please provide details of how the company typically manages

community engagement and community relations to respect the
client’s existing relationship with communities and contributes to this.

Please provide details of the company’s physical and personnel security

measures and how security is typically implemented at its sites.

Please provide details of the company’s policy for the adequate

management of security measures and protection of human rights of
local communities.

PS6 Biodiversity conservation and sustainable management of living natural resources

The client has several requirements relating to the conservation of

biological diversity (biodiversity) including terrestrial and aquatic
ecosystems. Please describe any previous projects that the company
has undertaken where this was also a significant issue and how the
company contributed to this effort.

If the company has not been involved in projects where biodiversity

has been a significant issue, please describe how the company would
plan to address and support the client regarding the conservation of
biodiversity for this project.

PS8 Cultural heritage

Please describe how the company typically addresses the finding of

archaeological or cultural heritage items during execution of its work.

NA Corporate social responsibility

The client has requirements relating to social responsibility for this

project. Please provide examples of social responsibility initiatives that
the company has contributed to at other sites or projects, and suggest
ways that the company might contribute to this project, in discussion
and coordination with the client.

34 | Good Practice Note: Managing Contractors’ Environmental and Social Performance

Annex B. Further Resources

Below is a sampling of resources to help address risks mentioned throughout this document. For more good
practice publications, visit http://ifc.org/sustainabilitypublications. Sign up for our mailing list at www.ifc.org/
sustainabilitylist.

SECURITY FORCES

International Finance Corporation (IFC). February 2017. Good Practice Handbook: Use of Security Forces:
Assessing and Managing Risks and Impacts.
www.ifc.org/securityforces.

INFLUX, IN-MIGRATION, INCLUDING GENDER AND RISK OF GENDER-BASED VIOLENCE

World Bank. December 2016. Managing the Risks of Adverse Impacts on Communities from Temporary Project
Induced Labor Influx. http://pubdocs.worldbank.org/en/497851495202591233/Managing-Risk-of-Adverse-
impact-from-project-labor-influx.pdf.

IFC. September 2009. Good Practice Handbook Projects and People: A Handbook for Addressing Project-
Induced In-Migration. http://www.ifc.org/HB-Inmigration.

STAKEHOLDER ENGAGEMENT

IFC. May 2007. Stakeholder Engagement: A Good Practice Handbook for Companies Doing Business in
Emerging Market. http://www.ifc.org/HB-StakeholderEngagement.

GRIEVANCE MECHANISMS

IFC. September 2009. Addressing Grievances from Project-Affected Communities.

http://www.ifc.org/GPN-Grievance.

Compliance Advisor Ombudsman. Grievance Mechanism Toolkit.

https://www.cao-grm.org/.

WORKER ACCOMMODATION

IFC and EBRD. September 2009. Workers’ Accommodation: Processes and Standards.
http://www.ifc.org/GPN-WorkersAccommodation.

ENVIRONMENTAL AND SOCIAL MANAGEMENT SYSTEMS

IFC. October 2015. Environmental and Social Management System (ESMS) Implementation Handbook—
GENERAL. http://www.ifc.org/esms.

Annex B. Further Resources | 35

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38 | Good Practice Note: Managing Contractors’ Environmental and Social Performance