Embracing accountability: How to minimise contractor risks

by FM Media
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PHIL WADICK from Work Safety and Training, and MISCHELLE TICKNER from SAFcomm talk to Facility Management about minimising the risks associated with contractors through careful selection, monitoring and records management.

The risk of managing contractors has increased due to the greater use of contractors, coupled with the fact that accountability has increased. “In the past contractors have operated somewhat autonomously from the principal, but those days are changing and business are being held more accountable for any person representing them. Management systems need to reflect these changes,” says Mischelle Tickner, sales and marketing director at SAFcomm.
Tickner adds that due to the competiveness of today’s business market and the demand for skilled labour, there is a greater use of contractors in many organisations, which translates to a greater risk if the process is not managed successfully. She notes that risk exposure can occur through quality of work, standard of service delivery, safety and financial control, which ultimately impact financial well-being and reputation.
“However, this can be easily managed through a systematic approach, giving you visibility and a better understanding of your contractor’s business practices, and by ensuring you select contractors that work in line with your business values and objectives,” adds Tickner. “The systems you put in place don’t need to be technologically advanced to be effective, they just need to be structured and followed.”

1. SELECTING THE RIGHT CONTRACTOR
According to Tickner, the first step is selecting a contractor that suits the requirements and meets the necessary qualifications for the tasks to be completed. She notes that a detailed appraisal should be carried out prior to awarding the contract or commencing work.
“This appraisal should include a simple checklist that gives you a full overview of the compliance of the contractor against legislation and identified risks for the tasks. The basic items on this checklist should include business and safety questions. If you identify any gaps in the requirements, don’t exclude the contractor outright. Communicate with them and give them the opportunity to improve their compliance. Some smaller operators will appreciate the understanding and it will further develop an open business relationship,” she states.

Registered companies versus sole traders
Some organisations have set guidelines about selecting registered companies versus sole traders, but if a choice can be made, it is important to weigh up the difference using an organisation versus using a sole trader may make.
Phil Wadick, principal of Work Safety and Training, notes that as sole traders are small businesses they can respond quickly to market demands and are price competitive due to smaller overheads, but he adds that although they comprise skilled workers, they often have a limited range of speciality skills compared with larger organisations.
Wadick notes that sole traders have a flat management structure, offering immense flexibility and making it easy to speak to the person who makes the decisions, unlike large organisations where the decision-makers are insulated from the client through organisational layers.
The quality of work by licensed and appropriately trained tradespeople in small enterprises is usually good and comparable to what can be expected in larger organisations, believes Wadick. However, he warns that new businesses can start up and close down quickly in the sole trader arena, so warranty work may sometimes be an issue. Tickner adds that as most sole traders do not enjoy perpetual succession, business continuity may also be affected. “However, if the business has been around for a reasonable timeframe, and you have been referred to them by word of mouth, they usually will provide excellent aftersales service,” Wadick says.
Concerning health and safety, he notes that sole traders rarely have sophisticated, systematic and/or documented health and safety management systems in place. “If they do have these, they may be generic and written for them by a third party. Paperwork can be seen as necessary to secure certain types of work, but not necessarily a reflection of how they do the work,” he states.
“Sole traders may not understand what regulatory controls are mandatory and may even be more likely to ignore them if known – they trust their own common sense and trade skills to keep themselves safe and can view regulatory controls as costs, burdens and designed to slow down their work.” Wadick states that these sorts of issues need to be clarified at the outset and defined in the scope of works that accompanies the tender documents.
While larger organisations will often have well-presented and thorough documented safety systems in place, according to Wadick, these can be a bit like smoke and mirrors, as they are designed and written by office-based employees and not the workers themselves.
“Whether you engage sole traders or larger organisations, there is no escaping the responsibility of providing them with an induction during which the hazards and risks of the work in which they are about to engage are discussed and a plan formulated. And, it is worthwhile to have an on-site supervisor to keep an eye on their work and help them to work safely where you can.
“At a minimum, all workers are required to possess the WorkCover accredited general construction induction card. If the job is high risk, they will need to develop and present a safe work method statement. The facilities manager or owner will by default be the principal contractor and will need to ensure that they comply with their own safe work method statement,” he concludes.

Using local contractors
Engaging local contractors is a requirement for some companies. Wadick believes that this is not a bad thing as they are quick to respond, readily available and generally do a good job, as their reputation is at stake on every job.
Tickner agrees, noting that many overlook the benefits of local contractors. “Many have a solid understanding of the local infrastructure and have developed good working relationships in the area. Through working with these businesses you may find the added advantage of improved community relations and business reputation,” she states.

Pros and cons of prequalifying
According to Wadick, the advantages of prequalifying are:

  • It provides some kind of evidence of fulfilment of duty of care and due diligence (albeit limited).
  • It helps establish a framework that describes the expectations placed on the contractor, and their performance can be measured against these expectations. Poor performance against these criteria will exclude them from future work, which provides a very strong economic motivator for compliance. Ensure working safely is rewarded, while mainly punishing working unsafely.
  • It helps establish the mentality required in contractors that workplace health and safety (WHS) is valued by the facility (customer).
  • It helps the contractor to mentally engage with the hazards and risks of the types of jobs they may do, so as to plan to work safely. Prequalifying should indicate the types of work required and have the contractor demonstrate how they will undertake such work safely.

He notes that there are disadvantages:

  • Contractors can have third parties write up the required documentation for prequalification without much mental engagement with the hazards and risks. In such cases, the contractor may feel no affiliation with the documented systems and treat them with disdain – they may be perceived as one more hoop that needs to be jumped over to obtain the work, rather than as a map to help them work safely.
  • Even in large organisations, the workers who turn up to do the job may not have been inducted into the requirements of the job and may be kept at a distance from the paperwork that has been used to describe how the company will perform the work safely.
  • Prequalification schemes tend to require fairly generic statements about how the company will manage WHS arrangements, and may not address the site hazards and risks on any given day for any given job.
  • It may be hard for local sole traders to fulfil the requirements of prequalification, but they still may offer a reliable and safe service.

“Whether you choose prequalification or not, there is no substitute for regular on-site discussions with the workers performing the work to decide, in consultation with them, on the best ways to perform the work safely,” Wadick concludes.

Making a final decision
According to Tickner, the final questions that need to be asked once a shortlist of contractors is ready for final review include:

  • Has the contractor got the human resources and management structure to work to your company standards?
  • Do they have adequate insurance for the work being carried out?
  • Can they demonstrate that their employees have the skills to carry out the contracted work in a safe manner as evidenced by safety performance statistics and other documented evidence?
  • Do they have systems in place to comply with relevant legislation?

“If you answer ‘yes’ to all of these questions and have a solid understanding of their practices through your evaluation process, you have established a systematic approach to contractor management. The remaining steps are about ensuring the scope of work is completed on time, on budget and to the quality you would expect from your own workforce,” says Tickner.
Wadick adds that it is extremely important that price alone is not the only guide for awarding work, noting that to create a level playing field, the capacity to perform work safely and legally must be one indicator to awarding a contract. “Only contract people who can demonstrate their capacity and willingness to comply with mandatory controls. Any WHS documents produced by the contractors must reflect how they will implement such controls,” he concludes.

2. MONITORING AND RECORDING
Continuous monitoring is critical to the success of any work performed, whether it’s by an employee or a contractor. Wadick advises that it must be ensured that mandatory controls are adhered to by some kind of direct supervision and/or spot-check auditing.
“Conducting regular inspections of contractors’ work, reviewing these against the scope of work and schedule, and evaluating the outcome in consultation with the contractor will ensure any deficiencies are identified and addressed quickly,” Tickner adds.
She notes that contractors should be treated like employees; they should be included in all relevant meetings and given an avenue to provide feedback – as this will nurture a better working relationship.

What if a contractor does not have sophisticated safety management systems?
Wadick shares some advice on what to do to protect your own and a contractor’s health and safety, and to help create evidence that you have used due diligence in the exercise of your duty of care in case a contractor does not have sophisticated safety management systems:

  1. Provide a site induction, completing, at a minimum, the following:
  • Discuss the job, its hazards and its risks with them.
  • Check they have the appropriate licence for the job and a WorkCover card.
  • Ask them how they intend to do the job safely. If they do not have a relevant safe work method statement, access a template and help them fill it out before they commence work. Fill it out for them if they struggle with the writing part of it, but do it in consultation with them, using their own words.
  • Try to be helpful. Ask them if there is anything you can do to help make the job safer for them and for your own staff, who may share the area with the workers. Do they need an area cleared of people or materials? Do they need access to certain areas? Do they need the electricity turned off to certain areas? Do they understand your isolation (lockout/tagout) procedures?
  • Ensure their electrical equipment is tested and tagged and within date.
  • If they are using other types of plant and equipment, view the maintenance records or similar.
  • Have them sign off on this induction.
  1. Consider providing an on-site supervisor if they are performing risky work, or at least ensure there is a site contact person with whom they can communicate easily.

3. MAINTAINING RECORDS
The final stage of contractor management (other than the completion of a contract) is the obligation to maintain records of all works, Tickner explains. She notes that the contractor’s information should be included in all existing systems, such as the safety management or procurement system, and all the documentation collected should be stored and maintained.

Phil Wadick is the principal of Work Safety and Training, and Mischelle Tickner is SAFcomm’s sales and marketing director.

This article was originally published in Facility Management Feb-Mar 13.

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