Risk management in the supply chain

Our supply chain includes thousands of suppliers and contractors with whom we cooperate on a daily basis. As a general contractor, we are responsible for the actions undertaken by the suppliers and contractors, supplied materials and provided working conditions. The main non-financial risks in the supply chain concern:

• occupational health and safety,
• conditions of employment,
• environmental protection.

Every new contractor undergoes a preliminary assessment based on a questionnaire. The questionnaire consists of a supplier’s declaration on compliance with applicable regulations within the scope of labour law, environmental protection, etc. All significant suppliers and subcontractors (100%) are subject to preliminary assessment (qualification). In the case of ending cooperation with a given supplier, the final assessment is conducted, including such issues as quality, timeliness, actual technical capacity, OHS, environmental aspects and issues related to human rights, including employees’ rights. The assessment is conducted by contract managers, who must indicate any irregularities or events that may constitute a threat, actions inconsistent with the principles applicable to sub-suppliers in the Budimex Group. Results of questionnaires and final assessments are gathered in the Central Database. Internal auditors have access to these data and use them to assess sub-suppliers. Auditors have also access to suppliers’ bids, based on which the contract has been signed. When analysing the offer, contract history and the final assessment’s result, they may compare the elements to which the given supplier undertook at the offer level with an actual process and effect of cooperation. Regardless of the assessment, after the end of a given contract, we send a Satisfaction Survey to the investor. Next, we analyse the assessment’s results and conclusions during annual management reviews.

Based on the preliminary qualification and final assessments, we group the subcontractors as follows:

• recommended (top ratings),
• qualified (positive ratings, but slightly lower than in the case of recommended suppliers),
• rejected (low ratings, but qualification is conditional, i.e. cooperation can be started if e.g. business partner introduces corrective actions),
• disqualified (cooperation with a given partner is impossible, e.g. due to its financial situation or previous gross breach of rules on cooperation, e.g. in the area of ethics or environmental protection, i.e. bribery attempt or causing significant environmental damage).

We strive to supplement significant agreements with key contractors, even those having greater bargaining power, with an ethics-related appendix.

Results of preliminary (questionnaires) and final assessments at sub-suppliers in 2019 and the status as of 31 December 2019 for all Contractors are as follows:

Scope of verification