internal vs. external eh&s: considerations for using partners to drive greater value
TRANSCRIPT
Internal vs. External EH&S
Considerations for Using Partnersto Drive Greater Value
Meet Your Moderator
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James Ciccone
During This Webinar
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All lines will be muted.
Communicate via the questions tab in your
webinar panel.
Unanswered questions will be responded to
after the webinar.
Webinar recording and slides will be emailed
to you tomorrow.
Meet Your Presenter
Jim Holland
Managing Director of Professional Services Triumvirate Environmental
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Agenda
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Challenges with Delivering EH&S Operational Excellence
The Use EH&S Partners: How Does It Work?
The Pro’s & Con’s of External Partnerships
Case Study & Final Thoughts
Q&A
Challenges with Delivering EH&S Excellence
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• Regulatory climate is growing in complexity
• Skill sets and resources are more difficult to find and retain
• Capabilities are not aligned with core operations
• EH&S issues are often addressed reactively versus proactively
• Lack of cost certainty and/or transparency
Long-Term Consequences
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• Repeated incidences causing operational failures and shut downs
• Failed inspections and fines
• Uneven performance across operations
• Compliance projects behind schedule
• Employee concerns and fears
Poll Question
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What aspect of your EH&S program do you struggle with the most?
Agenda
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Challenges with Delivering EH&S Operational Excellence
The Use EH&S Partners: How Does It Work?
The Pro’s & Con’s of External Partnerships
Case Study & Final Thoughts
Q&A
Partnering with EH&S Expertise
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0
• Works through the simple idea of specialization, and the segmentation and focus on tasks within a specific field or skill set.
• This comparative advantage leads to enhancements and delivery efficiencies that can become a virtuous cycle; specialization leads to learning that can improve the delivery, costs and quality of tasks.
• However, as most of us have experienced in the global customer support (e.g. call centers) realm, those benefits plateau quickly.
What do Good Partnerships Look Like?
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• Expertise and experience
• Strong process and metrics
• Flexible and innovative solutions
• Client engagement and knowledge via a consistent delivery team
Compliant operations
Agenda
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Challenges with Delivering EH&S Operational Excellence
The Use EH&S Partners: How Does It Work?
The Pro’s & Con’s of External Partnerships
Case Study & Final Thoughts
Q&A
What Do Good Partnerships Deliver?
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Delivery Components
ValueProposition
Delivery Components
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• Policy and procedure development
• Permitting, Registration, & Licensing
• Equipment testing and maintenance
• Safety protocols
• Raw material inventory audits
• Hazard material management and data inventory
• Training – general and specific, regulatory and operational
• Management oversight and reporting – internal and compliance
• Emergency Response – spills and odors
• Hazard waste oversight
Demonstrating Value
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• Deliver a safe working environment - reduce risk and liability through
subject matter expertise and best practices
• Proactive response to regulatory changes
• Communications and visibility both internally and externally
• Reduce non-core or non-strategic management responsibilities
• Consistency across multiple sites / divisions / operating groups
• Tailored or a la carte solutions that are flexible
Poll Question
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Which outcome is most important to you?
Common Concerns
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1. Consultants are expensive
There are hidden costs to full-time employees not normally considered:
• 30% direct overhead to cover payroll costs of health care, employer insurance, short and long
term disability and life insurance, 401k matching contribution, and incentive bonuses
• 15% for vacations, sick days, and training
• 5-10% for direct management oversight
• 20% for indirect overhead of HR, Accounting, and Corporate
• Additional costs, which will vary depending on the compliance level of the firm, representing
monies spent on outside project consultants and potential fines that may occur
Common Concerns
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2. We use consultants for project work only
EH&S expertise will produce higher quality operational outcomes by:
• Adherence to and execution of a rigorous compliance calendar
• Strong process and ownership
• Higher level of EH&S knowledge resident or ingrained in the workforce
• Complete, accurate, and robust documentation and timely regulatory submissions
• A drive toward reductions in incident frequency and magnitude
Common Concerns
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Results matter over process:
• Partner resources are professional, highly trained, committed and enthusiastic
• A delivery model of having the same operational resources on site regularly address the
need of having direct control and visibility
• Deep expertise support available to the client, on an as needed basis without having a full-
time cost
• Personnel represent a stable workforce that are the enabler of the EH&S level sought as
opposed to a barrier
3. Use of a third party sends the wrong message
Common Concerns
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There are hidden costs to full time employees not normally considered• 30% direct overhead to cover payroll costs of health care, employer
insurance, short and long term disability and life insurance, 401k matching contribution, and incentive bonuses.
• 15% for vacations, sick days, and training.• 5 to 10% for direct management oversight.• 20% for indirect overhead of HR, Accounting, and Corporate.• Additional costs, which will vary depending on the compliance level
of the firm, representing monies spent on outside project consultants and potential fines that may occur.
4. Control is lost
EH&S is usually not a core capability of most firms; giving the responsibility
to a set of experts will result in better outcomes:
The partner firm is accountable to client management in a formal and structured process
The third party partner has the objectivity, independence, perspective and clarity or singular vision
to intervene and make corrections in influencing outcomes
Internal resources will ultimately become complacent in their role by the larger group, be
assimilated, and find themselves going with momentum
Having an EH&S partner provides an external, objective audit while establishing a deep
productive relationship
Common Concerns
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5. We are forced into a singular, one size fits all program
An effective EH&S program delivery will by definition be tailored and modified
to:
• Align with both the current and future state of client operations
• Provide a flexible response to the workload through the fiscal cycle
• Deliver different skill sets when needed
Common Concerns
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This is the way we have always done it
6. Inertia
Agenda
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Challenges with Delivering EH&S Operational Excellence
The Use EH&S Partners: How Does It Work?
The Pro’s & Con’s of External Partnerships
Case Study & Final Thoughts
Q&A
Case Study
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TEI produces higher quality outcomes with
fewer personnel due to:
• Delivery of expertise and skill sets,
unbundled from specific individuals
• Use as needed
Assumes 20 to 30% of client’s EH&S director
and / or executive leadership to manage the
team
Holidays, vacation, training & sick days are
not typically included in direct overhead
Reduces redundant, duplicative, & low value
efforts
Fines and administration base amounts are
industry norms:
http://cfpub.epa.gov/enforcement/cases/
Cost Comparison of Direct Hire vs. TEI Supported EH&S Services (3 days) for X Chem Year 1
Labor Number Base Salary Total Number Base Salary Total Delta
Environmental Manager 1 $100,000 $100,000 0.2 $400,000 $80,000 $200
0.6 $190,000 $114,000 $95
Total Direct Labor (Days) 5 $100,000 4 $194,000 ($94,000)
Overhead
Executive oversight $20,000 $4,000 $16,000
Direct 30% $30,000 $0 $30,000
Indirect 20% $20,000 $0 $20,000
Efficiency Gain 15% $15,000 $0 $15,000
Total Indirect Labor $85,000 $4,000
Total Labor $185,000 $198,000 ($13,000)
Outside Consulting $20,000 $6,000 $14,000
OSHA Fines & Admin. $10,000 20% $2,000 $2,000 $666.67 $1,333
EPA Fines & Admin. $500,000 10% $50,000 $50,000 $20,000 $30,000
Total $257,000 $224,667 $32,333
12.6%
In House Team Triumvirate
Annual
Savings
Client Inputs
Case Study
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Skill Sets & Expertise: Calcified & Narrow Evergreen, Greater Breadth & Depth thru CoE’s
Risk: Surprise Events Long Range Visibility
Costs: Hidden & Increasing Transparent, Stable & Predictable
Energy: Reluctant & Unapproachable Professional & Enthusiastic
Activity: Start/stop, reactive work Proactive, process driven work
Engagement: High churn, barrier to goals Stable workforce, enabler to goals
In House Team Triumvirate
Conclusions & Final Thoughts
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The challenges of delivering world class EH&S results continue to increase
A strong EH&S partner can be a terrific solution to ensure real time compliance,
cost certainty, and flexibility
Traditional concerns are mitigated
The Triumvirate Difference
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• Lead expertise in all industries, and regulatory agencies (federal
and local)
• World-class employee training and qualifications
• Delivers staff augmentation, projects, and rapid response
• Broad experience levels
• Vertically integrated
• Client base that exceeds 1,000
