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Best-in-Class Contractor Management

Safety Executives of New York

69th Annual Professional Development Conference

April 8, 2014

© 2014 ISN Software Corporation Dallas Calgary Sydney London Los Angeles New York 1-800-976-1303

• Web-based Contractor/Supplier Information Management

• Collect & review HSE, Quality, Procurement, Compliance and Training

data

• Industries Served:

– Oil & Gas

– Chemical

– Mining

– Manufacturing

– Utilities

– Healthcare &

Pharmaceuticals

Introduction: What is ISNetworld?

Source: International Association of Oil and Gas Producers. "Safety Performance Indicators – 2012 Data". Report No. 2012s, June 2012.

http://www.ogp.org.uk/pubs/2012s.pdf

Increasing Contractor Hours, Higher Incidents

Contractorization – Opportunity and Challenge

• Increasing contractorization not necessarily a negative trend for safety

– Bring specialization, skill and equipment

– Enables safe and sustainable operations

• Prime duty for safe operations and environmental

stewardship lies with the owner organization

– Robust strategy needed

– Better risk mitigation

10 Strategic Elements

1. Establish a clear

communication strategy

2. Are designed to measure

performance

3. Incorporate a risk-ranking

process

4. Follow a three-step due-

diligence process

5. Maintain a qualified

contractor list

6. Establish consequences

7. Address subcontractor

management

8. Follow standardized and

transparent guidelines

9. Integrate with internal

business processes

10. Leverage technology

1. Establish a Clear Communication Strategy

What

How

Engagement

• A well thought out plan for both internal and external communication

– 99%: U.S. enterprises in the Construction Industry with fewer than 100 employees. US Census

• Zero incidents goals

• Golden rules

• Scorecard status

• Performance and audit gaps

• Timely and consistent

• Traceable and auditable

• Mailings/emails

• Contractor handbooks

• Electronic platforms

• One-on-one meetings

• Workshops / Councils

• Community meetings

Engagement

2. Designed to Measure Performance

• If it matters, measure it

• Use both leading and lagging metrics

Leading

• Employee turnover rate

• 3rd Party certifications achieved

• Completed vs. expected trainings

• Completed vs. scheduled inspections

• New/enhanced safety controls implemented

• Observations/investigation results

• Risk assessments and job hazard analyses

• Employee perception surveys

Lagging

• Injury frequency and severity

• Near misses (frequency, trend)

• Fatality or other accidents

• Lost workday rate

• Chemical releases

• OSHA citations (number and type)

• Workers' Comp claims and trends

• Experience Mod Rate (and changes)

Common Evaluation Components

Percentage of Clients per Evaluated Component in a Centralized Evaluation*

Management

System

Questionnaire

OSHA

Recordable

Statistics

Workers’

Comp.

Experience

Rating

Desktop Audit

of Safety

Programs

Verification of

Insurance

100% 100% 92% 97% 63%

*Based on 232 Owner/Operators and 564 grading configurations

2. Designed to Measure Performance (cont’d)

Case Study: Chevron Gulf of Mexico

Grade Components

A-B No Restrictions

C Mitigation plan and pre-job meeting required

D Mitigation plan, pre-job meeting required; management

approval in writing; trained HES person on site during work

F Not allowed to be used; VP approval required

Case Study: Chevron Gulf of Mexico

Contractor Incident Rates by Year

Data Based on an Average of 12 Million Work Hours per Year

• 92% decrease in contractor TRIR* over 10 years

• Optimized contractor base by 42%

• 90% of spend is with A & B contractors

*Based on 200,000 hours

3. Incorporate a Risk-Ranking Process

• Contractors come in various sizes, capabilities, risk profiles

• Classify risks according to pre-set criteria and matrix

– Potential adverse consequences

– Frequency, duration and / or scope of work

– High, Medium, Low

• Re-evaluate / adjust contractor risk periodically

3. Incorporate a Risk-Ranking Process (cont’d)

4. Utilize a Three-Step Due-Diligence Process

5. Maintain a Qualified Contractor List

• “Quick, we need them now!”

• Proactive, structured process for finding, qualifying,

onboarding, and monitoring contractors

• Builds stronger and lasting partnerships with contractors

• Enhances procurement integrity

6. Establish Consequences

• Establish, communicate and enforce consequences for

non-compliance

• Develop contracts and agreements carefully

• Eliminate time/effort required to manage challenging

performers

• Provides a base of fewer, safer service providers

7. Address Subcontractor Management

• Have you ever seen service providers with logos you don’t

recognize on your jobsite?

• Subcontractors typically have a higher likelihood of incidents

• Best practice subcontractor approaches:

1. Ensure they are qualified/monitored to same

level of standards as general contractor or,

2. General contractor required to demonstrate

the same level of rigor for qualifying subs

8. Follow Standardized and Transparent Guidelines

• Consistency and transparency is a common

challenge

• Utilize a single, well organized database

• Improves procurement transparency

• Minimize duplication and inefficiencies

8. Follow Standardized and Transparent Guidelines

• Challenges with Dispersed Operations (Kinder Morgan)

Source: http://www.kindermorgan.com/asset_map/

9. Integrated with Internal Business Processes

• Contractor management as an integral part of the complete

business processes

• Goal is to drive end-to-end risk management

• Examples of Key Performance Indicator (KPI) integration:

– Purchase orders issued only to

qualified contractors

– Site entry ID badges tied to contractor

approval status

Case Study: Apache Helipass

• Designed to check all required information prior to an

employee/contractor heading offshore for Apache

• Checks core training and drug & alcohol information

0

• Without technology/automation, contractor management

can become laborious, inefficient and disorganized

• Use of Internet and specialized management tools

– Collect and share information in a secure and

efficient environment

– Reduce duplication and administrative cost

• 59% of best-in-class organizations

use technology to enhance

HSE performance(2)

(2) http://www.aberdeen.com/Aberdeen-Library/6991/RA-envinronment-health-safety.aspx

10. Leverage Technology

Dashboard: Centralized Contractor Information

CASE STUDIES

6.3

3.9

2.39

5.8

3.6

2.06

5.7

3.5

2.01

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

BLS State and Local Government* BLS Private Industry* Actively Managed Contractors**

No

nfa

tal

TR

IR (

Rate

of

Incid

en

t p

er

100 E

mp

loyees)

Nonfatal TRIR (Total Recordable Incident Rate)Public Sector vs. Private Industry vs. Actively Managed Contractors

Public vs. Private vs. Actively Managed Contractors

2008 2009 20102008 2009 2010 2008 2009 2010

*2008 BLS Nonfatal TRIR, http://www.bls.gov/iif/oshwc/osh/os/ostb2071.pdf

*2009 BLS Nonfatal TRIR, http://www.bls.gov/iif/oshwc/osh/os/ostb2435.pdf

*2010 BLS Nonfatal TRIR, http://www.bls.gov/iif/oshwc/osh/os/ostb2813.pdf

** ISNetworld.com

38%

41%

What Gets Measured, Gets Done

2.54

2.25

1.84

1.191.11

0.91 0.91

0.89

0.87

0.85

0.70

0.75

0.80

0.85

0.90

0.95

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

<2 Yrs 2 to 4 Yrs 4 to 6 Yrs 6 to 8 Yrs ≥8 Yrs

Exp

erie

nce

Mo

dific

atio

n R

ate

(EM

R)In

jury

Ra

te p

er

10

0 E

mp

loye

es (

TR

IR)

Number of Years Participating in a Best in Class Contractor Management System

ISN US Contractor’s TRIR and EMR vs. Years Subscribed24,515 US Contractor’s Data Through March 2013 (99th Percentile Data Used)

2012 TRIR

Current Year EMR

White Paper on Best-in-Class Contractor Management

Request Whitepaper at : http://www.isnetworld.com/contractorManagement

In Summary

• What gets measured gets done

(3) http://www.ilo.org/global/meetings-and-events/events/world-congress-on-safety-and-health-at-work/lang--en/index.htm

“Occupational safety and health is first of all a matter

of human rights and respect for human dignity.” Juan Somavia

(3)

Contact Information

Richard Cerenzio, Director

rcerenzio@isn.com

214.866.4723

Laura Tabor, Sr. Group Supervisor – NYC Office

ltabor@isn.com

646.722.4370

Brad McAnally, Sr. Account Supervisor

bmcanally@isn.com

214.866.4733

www.isnetworld.com

© 2014 ISNetworld

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