March 2018, Vol. 245, No. 3

Features

ISN Shares Insights on Contractor Management

Contractor and supplier information management company ISN released its inaugural Contractor Management Survey, which found, not surprisingly, that improving safety performance of both employees and contractors is the top priority for 2018. Among the 161 companies responding to the survey, 56% were from the energy and utilities sectors. P&GJ asked the following questions of ISN:

P&GJ: With safety being at the forefront for the majority of organizations, what are some of the things they can do to ensure they are hiring contractors with the same vision.

ISN: Establish a clear communication strategy that outlines what needs to be communicated to contractors, how to accomplish it and how to proceed to the next step of engaging contractors on a personal level.

Measure performance by capturing and regularly analyzing both lagging and leading indicators of contractor performance. Communicate scorecards and gaps regularly to ensure alignment of vision.

Establish an approved contractor list. Stay ahead of the curve by maintaining a proactive and structured process for finding, pre-qualifying, onboarding and consistently monitoring contractor relationships. A fundamental element in this life cycle is the approved contractor list.

Establish consequences and remove redundant or consistently non-compliant service providers from your approved vendor list. Establish long-term, win-win relationships with contractors and subcontractors who are aligned with your vision.

P&GJ: What are some things companies can do or look at to help them in choosing reputable contractors?

ISN: Companies who hire contractors or subcontractors need to establish a documented contractor management plan. Of oil and gas companies surveyed by ISN earlier this year, 93% who identified their companies as having a more mature contractor management process, have a documented strategic plan in place to meet their goals, compared to 63% for those organizations that self-identified as having a less mature process.

Documented contractor management plans should minimally address:

1. Acceptable contractor performance targets and expectations (both lagging and leading indicators of safety, quality and regulatory compliance measures)

2. How to communicate the expectations with contractors in a consistent and traceable manner

3. The maintenance and utilization of an approved contractor list and a data-driven contractor evaluation and selection process

Purpose-built technology platforms like ISNetworld set the standard in the pipeline industry for identifying and efficiently managing the performance and regulatory compliance of not only contractor and subcontractor companies, but the individual-level qualifications for their employees working on pipelines, especially those working on pipelines regulated by the Department of Transportation.

P&GJ: How are companies, contractors and subcontractors replacing an aging workforce?

ISN: In our research, organizations, including those classified as leading, are challenged with the shortage of a skilled and competent workforce. Replacing the aging workforce requires both short-term and long-term strategies.

In the short-term, companies are focused on retaining experienced workers where they can versus fluctuating staffing levels with the price of oil or immediate demand for work. Many companies are levering retired workers in part-time or consultative arrangements to retain industry expertise and competency.

Long-term workforce strategies may include a close coordination with trade schools, developing apprenticeship programs and using tools such as social media to assist with recruitment and retention.

P&GJ: What are some other key issues for the oil and gas sector when it comes to outsourcing work?

ISN: The most frequent challenges organizations face when using contractors are a) contractors having recordable incidents and not following safety rules and b) finding qualified contractors.

The inability to effectively ensure the competency and regulatory compliance of second and third-tier subcontractors hired by general contractors is a top risk identified by oil and gas companies. Inadequate process safety management and the prevalence of temporary (short-service) workforce are other top risks cited by companies in the oil and gas industry. P&GJ