Managing risk- key issues for manufacturers - challenges of supply chain in the energy sector

Terry Woolmer - Head of Health and Safety Policy

•CEEMET (Council of European employers of the metal, engineering and technology-based industries)

•EEF – the manufacturers’ organisation

Occupational Safety & Health Conference Fort Worth - 18/09/2015

EEF & CEEMET Member Companies

Energy Sector• Oil and Gas - Subsea & surface systems (services, well heads,

flow control, pipelines, maintenance, extraction and downstream processing.

• Wind - New Build, Upgrades, O&M (Operations and Maintenance)

• Hydro – Installation and upgrade of power plants

• Solar - steam turbines and the entire range of auxiliary and ancillary system components.

• Biomass - Steam turbines

• Distributed and Hybrid Energy – energy storage solutions

• Provision and maintenance of power systems - engines, generator sets and custom engineered power solutions

• Shale gas, coal-bed methane and tar sands

Scope

• Operator/Customer/Client/Contractor interfaces

• Sharing workplaces – management and control Co-operation Co-ordination Communication

• Skills/Competence

• Skills Gap

• Leadership

• Regulatory frameworks

• Way forward

Context - challenges facing Energy Sector

• New technologies – new hazards / new risks / new skill requirements/ skill shortages/ rapid growth and rapid technological change:

• Old technologies – old hazards / new risks / new skill requirements/skill shortages /ageing infrastructure:

• New entrants and players to the energy sector, e.g. investment companies

• Low probability/high consequence events e.g. major hazards.

• Higher probability/lower consequence events

• Occupational health not just safety

• Industry fragmentation

• Government energy policies

• Market volatility in energy prices, e.g. oil and gas

• Companies working across regulatory and international jurisdictions

• Do existing regulatory models fit?

What do EEF & CEEMET members have in

common?

•Client/Customer/Operator•Principal Contractor (Tier 1)•Sub- Contractor (Tier 2/3)•Manage supply chain (many tiers)•Operate across many regulatory boundaries and international jurisdictions

Issues faced by EEF/CEEMET members

• Client/Customer/Operator• Contractor selection• Language difficulties• Risk assessments and Method Statements• Skills Gap in supply chain • Mutual recognition - competency/EHS training• EH&S culture• Processes, e.g. SSOW, PTW• Co-ordination,Co-operation & Communication

Issues faced by EEF/CEEMET members

• Client/Customer/OperatorLevel1/2/3 …………………..and 4/5?

• Level of engagement by client with contractor at design stage – major hazards risk control

• Client specifying sub-contactors/suppliers• ‘Intelligent customer’ capability • Old Boys network – power and influence• Costs/Revenue - Margins

Issues faced by EEF/CEEMET members

Contractor selection

•Competence of contractors (e.g. respective roles of the client and the contractor’s management);

•Pre-qualification process

•Do clients have adequate arrangements to identify, establish and maintain the core competencies needed to manage safety and to retain ‘control’ of services contracted out.

•Selection (resources, equipment, knowledge and experience);

Issues faced by EEF/CEEMET members

Language difficultiesInductionInstructionDocumentationUse of interpretersUse of multi-lingual H&S signage/pictogramsNormative behaviours Country/Industry H&S cultures

Issues faced by EEF/CEEMET members

• Skills gap – emerging energy sectorSkills shortagesCompetency shortages

• Ageing Workforce• Consequences

Issues faced by EEF/CEEMET members

• Mutual recognition• EHS training, e.g. safety critical roles• competency

Issues faced by EEF/CEEMET members

• Risk assessments and methods of work

Language difficultiesInterpretation issues, e.g. hazard & riskPaper exerciseConcentrate on effectiveness of controls

Issues faced by EEF/CEEMET members

• EH&S culture• Is there one? Level 1 customer

Fully committed company leadership?

Issues faced by EEF/CEEMET members

• Processesproliferation of different working procedures and interfaces between duty holders

Permits to Work

Issues faced by EEF/CEEMET members

• Co-ordination & Co-operation • Coordination between clients, contractors and sub-contractors (i.e. who does what, when and how)

Induction to site rules, procedures, hazards and emergency arrangements;

Supervision (by whom - including on-the-job and checks of completed work);

Contractor Communication

One company said:

•“We expected them to come in and finish the job yesterday but they didn’t turn up. We didn’t even know they were on site this morning.”

•The contractor said:

•“Our men couldn’t finish the job yesterday, as the weather was too bad.”

•The company said:

•“We didn’t know they were working from a ladder - we would have expected them to put up some scaffolding or use a mobile elevating work platform. It was difficult to get to the pipe.”

•The contractor said:

•“The company didn’t include this section of pipework in their original request - it was an add-on when they realised the problem was more widespread.”

•What went wrong?

•Communication with the contractors was poor. They were left to get on with it and the company didn’t even know when they were on site. The job changed and no-one considered the risks. The contractors’ method of working was unsafe.

Contractor Communication - Outcome

• During the middle of the morning one of the contractors fell from the ladder.

• He landed on some nearby plant and suffered serious internal injuries, but eventually recovered.

• Greater reliance on multiple contractors and multiple contractor interfaces, due to the increased complexity of the energy landscape, is likely to increase the potential for accidents to occur as a result of poor communication.

•Need clarity about who does what, when and how

Leadership in Energy Sector

• Commitment is the key. Not what you say, but what you do.

• Do companies promote workforce engagement?

• Do senior industry leaders demonstrate leadership and take responsibility for the delivery of exemplary standards of health and safety?

• Do workers and managers know and understand what they need to do?

• Are managers responsible for decisions on plant design/modification, maintenance aware of the implications of what they do?

• Do industry leaders declare their support for key performance indicators and report their company performance against these measures publicly.

Do we need Regulatory Change?

Do current policy, legislation and industry practices effectively address the hazards and risks associated with both ‘existing’ and emerging’ energy industries?

•Permissioning regime, e.g. licensing, safety cases, etc

•Prescriptive regulations

•Goal-setting regulatory regime

•Frameworks of named duty holders with specific responsibilities

•International Standards

•Industry Agreements/standards

•Tier 1 Contractor led standards

•Let the market decide

Way forward – Energy sector

• Equal Emphasis on:

those responsible for the installation or running of a plant or facility, and

those who can influence conditions to which workers are exposed (the contractor supply chain)

Rationale : Contractors account for large proportions of the workforce, e.g. 85% of the work force of the Offshore UK Oil and Gas Sector?

• Tier 1 contractor relationship with Client ‘critical’ – direction must be aligned

• Contractor involvement in eliminating or minimising risk through design – engage the supply chain.

• Effective arrangements for identifying, sharing and learning lessons for controlling significant risks by each energy sub-sector

• Common contractor pre-qualification system – perhaps led by regulators

• More global Initiatives (DROPs - dropped object prevention) – 200+ companies

• Allow contractors to build products for a ‘global’ market.