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Contractor Safety

SPHERA SOLUTIONS: CONTRACTOR SAFETY

Companies large and Every industry is affected by the safety practices of its
contractors, but the ones that typically face the most
small rely on contractors scrutiny are in the Oil & Gas, refining, petrochemicals,
mining, transportation, warehousing, waste management
and suppliers to execute and construction fields. Oil & Gas and construction are
particularly noteworthy in this regard. These companies
numerous business functions. employ the most contractors. The construction sector is
also significant because almost every business, barring a
Choosing the right contractor few service organizations, deals with construction activity

and ensuring adherence related to building, converting, extending or demolishing


workplace areas of their business.
to the proper protocols is Contractors often have different cultures, perspectives,
critical to ensuring safety in approaches, maturities and attitudes toward safety, but
companies cannot allow contractors’ differing safety
the workplace, both on the opinions and protocols from compromising the business
initiatives of the organization using the contractor. Not
company’s premises and doing so could lead to costly, unplanned shutdowns;
spills; undesired expenses; injuries; loss of productivity
beyond them. Regulatory and income; and a slew of other unwelcome possibilities.
To protect the business, companies must initiate a
bodies such as the U.S. rigorous Contractor Safety program that includes
prequalification, pre-job assessment, monitoring, post-
Occupational Safety and job evaluation, effective policy, procedures and training
Health Administration (OSHA) to minimize losses and incidents.

and the U.S Mine Safety Contractor activities and the full contractor life cycle
management workflow must be integrated seamlessly
and Health Administration with a company’s overall Environmental Health &
Safety processes. Job safety analysis (JSA), hazard
(MSHA) hold the proponent and operability (HAZOP) studies, environmental
considerations and incident reporting are just a few
employer responsible for of the elements that contractors should be trained to
handle to help prevent injuries and even casualties.
violations or safety incidents There have been numerous instances where contracted
work has resulted in injuries because of lack of:
by its contractors and
1. Safety precautions
subcontractors. Transferring 2. Supervisory measures
health and safety risk to 3. Permits

contractors for high-risk 4. Planning


5. Approvals
activities and expecting 6. Training
regulators to focus on them Short-term measures, cutting corners and executing
and not hold your company the minimum to get through pre-contractor qualification
steps quickly will undoubtedly lead to problems big and
accountable is unrealistic. small that will affect the full supply chain.

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OPERATIONAL RISK | ENVIRONMENTAL PERFORMANCE | PRODUCT STEWARDSHIP

Risk Management Dilemma Why Is Contractor Safety Important?


Historically, most high-risk activities were offloaded onto At the risk of sounding repetitive, the following list summarizes and
contractors with the assumption that all violations would be the educates both the proponent organization and contractors on the
contractors’ responsibility. Given that this line of thinking is no importance of Contractor Safety initiatives:
longer valid, how can proponent employers jointly manage safety
risks with the “right” contractors? Ideally, they should look at 1. OSHA, MSHA and other local regulations worldwide hold
doing business together as a true partnership. proponent employers responsible for contractor and
subcontractor violations.
2. Safe, reliable and socially responsible contractors are good
for business.
Who Should Read This E-book? 3. Companies dependent on contractors want to mitigate the
risk of catastrophic incidents especially those that could
In today’s tight labor market, companies are becoming more
lead to injuries or loss of life.
and more dependent on contractors. If your business has
experienced a significant increase in the number of contractors 4. Contractors’ attention to safety is considered a proxy for the
you use, and if your current processes, systems and resources contractors’ reliability in executing requested tasks.
are unable to cope with the challenges, this e-book will offer a
5. Companies want to avoid the media attention from incidents
broad spectrum of relevant considerations, best practices and
involving contractors. (For example, the Deepwater Horizon
tools that are available in the market today to help you run an
incident resulted in fines to both the proponent and contractor
efficient EHS organization.
organizations, and received a lot of undesired media coverage
On the other hand, if you are a contractor who has recently lost at the time.)
a business opportunity because of a failed prequalification or 6. Contractors present a source of excessive risk and liability
post-job assessment, this e-book will provide an insider’s guide to proponent organizations.
to what employers look for when evaluating contractors. Any
7. Injuries to personnel, damage to property, disruption of
contractor that is struggling to meet employers’ prequalification
department operations, negative effects on motivation, and
and assessment criteria will also find this e-book helpful to build
litigation can cripple all parties.
a continuously updated and centralized library of frequently
requested metrics. 8. Contracted personnel are more likely to demonstrate unsafe
behavior than on-site staff.

The Benefits of a Contractor Safety Program


Based on our consultations with EHS practitioners involved in Contractor Safety initiatives, the following compelling value
propositions stood out to justify investment in Contractor Safety programs, including:

• Improved understanding of contractor risks.

• Improved incident reporting across the supply chain.

• Improved relationships with the remaining contractors.

• Improved coaching of poor performers on how to meet expectations and improve efficiencies.

• Improved sharing of best practices and lessons learned from incidents.

• Improved market intelligence.

• Reduced EHS and logistical risks by avoiding worst-in-class contractors.

• Reduced number of contractors.

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SPHERA SOLUTIONS: CONTRACTOR SAFETY

Contractor Safety Model


and Implementation
This section outlines the Contractor Safety management
components, frameworks, activities and assessment
metrics popular among Contractor Safety designates in EHS
departments.

Contractor Safety Program Components

Our research found the following common themes across all


leading Contractor Safety programs:

Written Specific Safety Standards Requiring


Programs 1 6 Contractor Safety Compliance

High-level Contractor
Safety Policies 2 7 Contractor Training
Compliance

Contractor
Prequalification
Policies 3 Contractor Safety
Programs
8 Contractor Medical
Treatment Provisions

Motivational Incentive for


4 9
Routine Contractor
Compliance Inspections Contractor Safety Competition
Programs

Contractor
Safety Meetings 5 10 Contractor Safety
Questionnaires

Campbell Institute Contractor Life Cycle Program


1
2
Prequalification
Any Contractor Safety e-book would be incomplete without
recognizing the stellar work performed by the Campbell Institute Pre-job Task and Risk Assessment

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in aggregating the best practices of world-class organizations in
EHS around the management of contractor and supplier safety. Contractor Training and Orientation
In September 2014, 15 EHS professionals representing the

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Campbell Institute member organizations discussed the major
Monitoring of Job
steps of the contractor life cycle and agreed that the following
processes formed the core of a sound Contractor Safety
Post-job Evaluation
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program:

Source: Campbell Institute

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OPERATIONAL RISK | ENVIRONMENTAL PERFORMANCE | PRODUCT STEWARDSHIP

Within the Campbell model, there are noteworthy variations in company processes tied to the nature of the company businesses.
One large trading and logistics company that Sphera works with puts contractors through a rigorous vetting process as they progress
through the contractor life cycle. This company clearly outlines its EHS expectations to contractors from the get-go with published
Contractor Screening Terms, Contractor Management Processes, Contractor Codes of Conduct and Contractor Health, Safety,
Environmental and Community (HSEC) Incident Reporting and Investigation Guidelines. The company uses third parties or its own
employees to execute one or more of the qualifying processes.

Phase 1 – Prequalification

The company uses a prequalification questionnaire to drive self-assessments at participating contractors.


The list of items reviewed in this phase are examined in the Contractor Metrics and Assessment Categories
chapter of this e-book. They use a “pass/fail” grading scale.

The company tries to “coach” contractors when its minimum standards are not met at this stage, and provides
temporary approval.

The trading company allows contractor operations before an on-site assessment is scheduled. Whereas,
another company, a refinery, that Sphera is engaged with, requires onsite assessments in Phase 1, before any
work is started with a contractor.

Phase 2 – Pre-job Task and Risk Assessment

This activity takes the shape of an on-site audit or assessment to confirm the inputs provided during Phase
1. Contractor operation plans (equipment moving, loading/unloading procedures), competency and functional
testing, crew certificates and third-party equipment are analyzed in this phase.

Phase 3 – Contractor Training and Orientation

In this phase, the primary focus is on what the contractors should work on and how. The discussion with
contractors starts with the contractor’s safety oversight procedure. Contractors walk the systematic process
that they are supposed to maintain and comply with during the task execution process. Companies maintain
and share specific risk registers as well as job safety analysis documentation for each contractor job. All
subcontractors identified by the contractor go through the company’s approval process.

Phase 4 – Monitoring the Job

Project-specific key performance indicators are used to support the monitoring phase. Contractors are required
to report these metrics periodically. Inspections are scheduled to ensure that the reported KPIs match actual
events. Contractor-related metrics are included in the overall EHS metrics included in senior management
reports. Company employees are tagged to contractors and held accountable for contractor performance.

Phase 5 – Post-Job Evaluation

Final compliance reports, closed-out EHS inspections, decommissioning reports, site restoration, waste
management, demobilization schedules and utility reports are just a few of the many reports gathered during
this phase.

The key initiative needed during this phase is ensuring that each area being evaluated is meeting the
established safety protocols. In this phase, the contractor should be forthcoming in complying with company
requests to maintain a good relationship and improve the prospect of getting future projects.

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SPHERA SOLUTIONS: CONTRACTOR SAFETY

Contractor Metrics and Assessment Categories

We have compiled below all safety metrics, assessment categories and evaluations requested by companies from their contractors
across the five phases outlined earlier:

Total Recordable Injury Reputation


Rate (TRIR) (i.e., word of mouth)

Provision of Mobile Experience


Days Away/Restricted or OSHA Logs
Apps to Report Unsafe Modification Rate
Transfer Rate (DART)
Conditions (EMR)

Risk Assessment
Ratings (in terms of
Lost Workday severity, frequency and
Rate (LWR) probability) Against Risk
Mitigation Measures

Safety Training Continuous Incident and Quality Assurance


Programs Improvement Plans Near-miss Logs Plans

Periodic Reports Adequate Insurance Pre-job Hazard Analysis


on Dollar Losses Coverage and Safety Plans

Quota-based Safety Written Safety Policies Periodic On-site


Observations and Procedures Corrective Actions Audits/Assessments
Per Month

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OPERATIONAL RISK | ENVIRONMENTAL PERFORMANCE | PRODUCT STEWARDSHIP

Representative Industry Practices


While approaches above, from the two companies, were outlined in the context of the Campbell model framework, there are other
notable practices worth mentioning, including:

• Companies should be leery of unaudited contractor-provided


metrics and instead require employees or third-party agencies
to gather and/or ascertain Contractor Safety initiatives and
metrics.

• Contractors should be reassessed regularly.

• Consequences should be communicated clearly and


categorized by the number of infractions with terminations
after a certain number of incidents.

• Post-work evaluations should be considered when bidding for


new projects.

• Periodic contractor performance reviews should be completed.

• Safety and operating inspections should be addressed for


every process change.

Other Best Practices

As you can see, finding the best contractors to work with can be challenging, but there are tools you can use to help you along the way,
such as these additional tips from the Campbell Institute:

• Choose contractors that can prove they have a history of


meeting government regulations and follow corporate policies.
These types of firms will more likely be able to mitigate risks
and prevent any problems.

• Assign a risk rating for the work being performed.

• Verify contractor certifications and permits.

• Schedule assessments during the duration of the contract.

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SPHERA SOLUTIONS: CONTRACTOR SAFETY

Technology

Using a platform that allows the proponent organization to manage the data and workflows associated with contractor vetting makes
it possible to not only select the right contractor but also allows the proponent organization to communicate their standards, making
the relationship stronger and more productive.

Sphera recommends the deployment of holistic EHS platforms that provide Contractor Safety modules as integrated components of
the EHS platform. This recommendation applies to both the proponent and contractor organizations.

The Contractor Safety module on the Sphera platform allows companies to:

Perform Online Tag Incidents and Maintain a Dossier of Manage Keep a Database of
Self-assessments ! Near-misses Contractor Performance Workflow Reporting Approved Contractors

From the contractors’ point of view, while a few third-party qualifying services provide low-cost solutions to help them get through the
pre-qualification stage, it remains a stopgap measure. A robust solution on the other hand helps build maturity of risk and compliance
processes, and lays a strong foundation for collaboration with multiple buyers of contractor services. Contractors are best served
with a platform that can help them execute tasks: productively (efficiently and profitably), safely, with a high degree of quality,
sustainably and satisfactorily for their customers’ wants/needs.

For contractors, Sphera recommends that they manage their Risk Assessments
operational risk management program holistically using a
three-pronged approach as detailed below: (What will stop company from executing tasks?)

• Identify risks (i.e. problems), causes, consequences,


safeguards

• Examples – HAZOP, LOPA, FMEA, FTA

Controls

• MOC (management of change)

• Incident recording

• Root cause analysis (reoccurring incidents is not an option)

• Remediation – action plans, accountability, workflow

Lessons Learned Database

• Transfer company knowledge from retiring to next


generation employees

• Share incident root causes across plants / geographies

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OPERATIONAL RISK | ENVIRONMENTAL PERFORMANCE | PRODUCT STEWARDSHIP

Reporting Views

Analytics and reporting capabilities are essential in any EHS platform. EHS executives need rolled up KPIs of contractor performance
vis-à-vis from their own employees and perhaps benchmarked against industry metrics. Contractor metrics and assessment
categories outlined in the previous section form the basis of these reporting views.

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Total Recordable Injury Rate

0
Year 1 Year 2 Year 3 Year 4 Year 5

Total Recordable Injury Rate by Company & Contractor | Company Contractor Overall

0.3

0.2
Loss Time Injury Frequency

0.4

0.2

0.0
Year 1 Year 2 Year 3 Year 4 Year 5

Lost Time Injury Frequency by Company & Contractor | Company Contractor Overall

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SPHERA SOLUTIONS: CONTRACTOR SAFETY

Business line 1

Business line 2

Business line 3

Business line 4

Business line 5

Business line 6

New Pending Pending Rejected Phase 1 Phase 2


contractor Assessment Approved Assessments
response completed

Collected Metrics

• New contractors to send questionnaire • Contractors rejected as do not meet our expectations

• Responses from contractors allowed • Contractors approved for use based upon Phase 1
submissions
• Contractors we need to review their completed
questionnaires • Phase 2 site visit inspections completed

Contractor Safety Checklist

While researching this e-book, we came across an excellent Contractor Safety guide for employers. The link to this guide is included
in the Reference section. The guide outlines a series of checklists that proponent organizations can use to self-assess their own
contractor management programs. A few noteworthy coverage areas include:

• Planning (outsourcing activity) • Regulatory pressures

• Risk assessment • Contractor communication

• Contractor selection • Measuring contractor performance

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OPERATIONAL RISK | ENVIRONMENTAL PERFORMANCE | PRODUCT STEWARDSHIP

External – Regulators and


Compliance Frameworks
OSHA and MSHA

Keep in mind that workers have the right to be safe at work.


For instance, OSHA details many “worker rights” and “employer
musts” for U.S. companies, including a worker’s right to request
an inspection if that person feels there are unsafe working
conditions and companies’ responsibility to report all fatalities
within eight hours of the incident. (See Figure 1.)

It is the responsibility of companies to ensure the safety of all


workers including people working for contractors.

When an employer arranges to have contractors perform work


that involves activities that could put personnel at risk, the host
employer must inform the contractor that the workplace contains
specific hazards and that the work is permitted only if all workers
have the proper training, equipment and work conditions to
accomplish the task(s) in a safe manner.
Figure 1

Construction Industry Regulation and Its Impact on Other Industries

The construction industry has traditionally had more than its fair share of serious accidents. In 2016 alone, most recent year for which
data is available, OSHA reported that 991 of the 4,693 private industry deaths (21 percent) occurred in the construction industry.
While human error cannot be discounted, many construction accidents can be attributed to poor management, improper training and
sometimes inadequate planning from the building designers to take into account Health & Safety risks.

While OSHA regulations cover the construction sector in the U.S., the Construction Design and Management (CDM) Regulations 2015
published in the U.K. are important to understand for any U.S.-based company with global operations. CDM regulations outline key
principles in designing and managing construction work that contractors carry out.

CDM is about identifying hazards via a formal risk assessment process, defining roles and responsibilities for streamlined
communication between all parties involved, and a defined Health & Safety plan so that hazards can be managed and controlled
during the construction phase. CDM affects everyone involved in the building and construction phases including demolition, extension
and maintenance of structures.

Conclusion
Keeping workers and workplaces safe is every company’s responsibility. What sometimes gets lost in translation, if you will, is that
people working for contractors and subcontractors should have and deserve the same rights to a safe working environment. The
strategies outlined in this e-book will help companies not only manage that process but also help ensure a better working relationship
for all parties involved.

References
Construction (Design and Management) Regulations 2015 - http://www.hse.gov.uk/pubns/priced/l153.pdf
Managing Contractors - A Guide for Employers http://www.qub.ac.uk/safety-reps/sr_webpages/safety_downloads/managing_contractors.pdf
Best Practices in Contractor Management - http://www.nsc.org/CambpellInstituteandAwardDocuments/WP-BestPractices-ContractorMgmt.pdf
Multi-Employer Citation Policy - https://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=DIRECTIVES&p_id=2024

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About Sphera
For more than 30 years, Sphera has been
committed to creating a safer, more sustainable
and productive world by advancing operational
excellence. Sphera is the largest global provider of
Operational Excellence software and information
services with a focus on Environmental Health
& Safety (EH&S), Operational Risk and Product
Stewardship. The Chicago-based company serves
more than 2,500 customers and over 1 million
individual users across 70 countries. Sphera is a
portfolio company of Genstar Capital, a leading
middle-market private equity firm focused on the
software, industrial technology, financial services
and healthcare industries.

www.sphera.com

For more information contact us at:


sphera.com/contact-us/

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