Mitigate Hidden Business Risk: Improving Safety by Pre-screening and Qualifying Contractors


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When considering the biggest drivers of organizational safety and compliance, it’s not often that contractors enter the discussion. As a result, organizations may be overlooking an area of significant risk and opportunity.

Pat Cunningham, Director of Safety & Auditing Services at BROWZ, addresses the following questions:

-Why are businesses relying on contractors more than ever before?
-What does OSHA expect when it comes to contractors?
-What types of data should you be collecting about your contractors?
-What are elements of a good screening program?
-Who else from your organization needs to be involved?
-What are the different ways you can approach prequalification?

Watch a video recording of the webinar here:

Published in: Business, Health & Medicine
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Mitigate Hidden Business Risk: Improving Safety by Pre-screening and Qualifying Contractors

  2. 2. The Safety Guy ‖ Who is Pat Cunningham?  Masters, Occupational Health & Safety Management  Delegate to National Safety Council  Career safety professional  Not “the sales guy”  Loves sharing best practices  Wants to give you useful information that benefits your business and improves workplace safety for everyone. WATCH FOR THESE - Signals a “Gold Nugget” of particularly useful information. Pat Cunningham, MS Director, Safety & Auditing Services
  3. 3. What we will cover ‖ Let’s answer these questions:  Why are businesses relying on contractors more than ever before?  What does OSHA expect when it comes to contractors?  What types of data should you be collecting about your contractors?  What are elements of a good screening program?  Who else from your organization needs to be involved?  What are the different ways you can approach prequalification?
  4. 4. Why so many contractors? ‖ Key drivers that increase usage of contractors… IF YOUR BUSINESS USES CONTRACTORS… You should be considering them in all your risk management programs and processes.  Lean-hiring practices  Reduced benefits cost  Possible tax incentives  Access to expertise that’s not available in-house  Flexible employment & staffing models
  5. 5. Mitigate hidden business risk  Prevent fatalities, reduce the number of injuries & other unwanted outcomes  Measure all contractors against company-defined “acceptable risk” standards  Avoid time lost due to incident investigation  Avoid cost overrides  Decrease the amount of possible citations, violations, and penalties  Decrease legal exposure Why prequalify?
  6. 6. Improve safety and quality efforts  Fewer people going home injured  Influx of qualified workers  Improve project execution and operations  Support quality management and Continuous Process Improvement (CPI)  Maximize production time  Demonstrate corporate social responsibility  Protect corporate brand Why prequalify?
  7. 7. ‖ Contractors that are prequalified consistently outperform their peers on key safety performance indicators. Better Safety Outcomes!
  8. 8. What does OSHA expect? Date: 7/9/13 From: Pat Cunningham., Director of Safety & Auditing Services, BROWZ, LLC To: Dorothy Dougherty, Directorate of Standards & Guidance US Department of Labor – OSHA Greetings, I am looking for a ‘guideline’ document from OSHA which outlines its pre-qualification expectations/desires of business owners when hiring contractors. I did a search of the OSHA web site, and cannot find a single source document that provides business owners recommendations, or criteria for screening contractors. There is related verbiage regarding owner/contractor pre-qualification embedded in the following General Industry Standards: 119, .120, .146, .252, .272 & .1200 There may be other standard references I have missed, but I believe this illustrates how embedded the content is for anyone who desires guidance from OSHA on this topic.
  9. 9. ‖ OSHA Standards 1. Process Safety 2. Hazardous communications 3. Permit-required Confined Spaces 4. Control of Hazardous Energy, LOTO 5. Welding, Cutting, Brazing (fire prevention) 6. Special Industries – Grain handling 7. Hazard communication OSHA Standards & Implications
  10. 10. OSHA Standard #1 ‖ Process Safety, 1910.119(h):  “When selecting a contractor, shall obtain and evaluate information regarding the contact employer’s safety performance and programs.”  Periodic evaluation of contractor performance  Inform contractor: fire, explosion, toxic release potentials, EAP  Maintain contract employee injury/illness log  Contractors assure that each employee is trained to perform their work safely
  11. 11. OSHA Standard #2 ‖ Hazardous Materials, 1910.120 (b)(1)(iv):  Contractors and sub-contractors: retained for work in hazardous waste operations, shall inform them of potential fire, explosion, H&S and emergency response. The written program shall be made available to contractors and subs.
  12. 12. OSHA Standard #3 ‖ Permit-Required Confined Spaces, 1910.146 (c)(8): • When a “Host employer” arranges to have employees of another employer “contractor” perform CSE work: - Inform the contractor that the workplace contains permit-required spaces - Apprise the contractor of the elements of the hazards and the experience within the space - Ensure necessary precautions - Coordinate entry operations when both are in space - At the conclusion of entry work – contractor debriefing (hazards confronted or created)
  13. 13. OSHA Standard #4 ‖ Control of Hazardous Energy, LOTO, 1910.147 (f) (2) (i): • Outside personnel (contractors): • Whenever outside service personnel are to be engaged in activities covered by the standard, the on-site employer and outside employer shall inform each other of their respective LOTO procedures • The on-site employer shall ensure that his/her employees understand and comply with the restrictions and prohibitions of the outside employer’s LOTO program
  14. 14. OSHA Standard #5 ‖ Welding, Cutting, Brazing [fire prevention & protection], 1910.252 (a) (2) (xiii) (D): • Advise all contractors about flammable materials or hazardous conditions of which they may not be aware
  15. 15. OSHA Standard #6 ‖ Special Industries - Grain Handling, 1910.272 (i): • The employer shall inform contractors performing work at the grain handling facility of known fire and explosion hazards related to the contractor’s work and work area. The employer shall also inform contractors of the applicable safety rules of the facility • The employer shall explain the applicable provisions of the emergency action plan to contractors
  16. 16. OSHA Standard #7 ‖ Hazard Communication, 1910.1200 (e) (2): • Multi-employer workplaces: Employers who produce, use or store hazardous chemicals at a workplace in such a way that the employees of other employers may be exposed (contractors) shall ensure that the hazard communication program includes: - Method used to provide the other employers on-site access to Safety Data Sheets - Precautionary measures needed to protect workers during normal conditions and emergencies - Labeling system used in the workplace
  17. 17. Business Implication #1 ‖ Multi-Employer Citation Policy, CPL 2-0.124: • On multi-employer worksites (all industry sectors), more than one employer may be citable for a hazardous condition that violates an OSHA standard (types of employers): - Creating – created the unsafe condition - Exposing – their employee’s were exposed - Correcting – responsible for installation/maintenance - Controlling – worksite supervisory authority
  18. 18. Business Implication #2 ‖ Voluntary Protection Program, CSP 03-01-003  H&S pre-qualification screening  Provided “equally effective protection” and abide by rules of host  Orientation, EAP, and knowledge of VPP site  Hazard ID and correction  Provision for removing contractor or its employees for violating work rules  Contractor participation and worker interviews conducted by OSHA  Annual site review  Combined workforce injury/Illness rates VPP, a great benchmark
  19. 19. What are the elements of a good screening program? Protocols & Metrics Gather VerifyAssess Track/Share
  20. 20. What types of data should you collect? ‖ What’s Important?  Benchmark with industry peers and others  Conduct an internal assessment to determine what’s needed:  Existing company policies and procedures for contractor pre-qualification  Organization’s willingness for change  Metrics/KPI’s  Organization Objectives  Company/community image  Current risk exposure/liabilities  Annual assessment & report Metrics
  21. 21.  Injury/illness logs (annual updates)  Experience Modification Rate  OSHA Establishment search  Policies/procedures – related to site work  NAICS/BLS industry comparisons  Employee training programs and records  Observation program  Labor/management safety committee (employee involvement)  Supervisor training  Sub-contractor pre-qualification HS&E Data Collection
  22. 22.  Professional memberships – Safety Council, VPPPA, etc.  Spill control/counter measure plans, equipment and training  Human performance tools: self checking, stop work authority, co-worker coaching, verbal communication and shift turn-over  Injury/incident and near-miss reporting  Hazard awareness/injury prevention tools: JSA, Tailgate, etc.  Dedicated site safety professional and/or competent person with duties for site inspections  Requirement for crew safety meetings and safety stand-downs (if necessary) HS&E Data Collection
  23. 23.  Endorsements  Coverage limits  Workers Compensation  Bankruptcy  Liens  Judgments  Ongoing monitoring of policy changes and expiration dates Insurance & Risk
  24. 24.  Corporate citizenship  Special licenses or certification requirements  Security and clearances  Drug and alcohol screening  Weapons ban  Sexual harassment  Equal Opportunity Employment  Proprietary non-disclosure policies Organizational Specific Data
  25. 25. Who needs to be involved? Stakeholder: Area of concern / involvement: Supply Chain / Procurement Will you be circumventing my current processes? Project Manager Can I hire contractors I want? Is this going to slow things down? Safety Department What if contractors aren’t safe? How will I know when they are on-site? Legal What if processes are not documented correctly? Are we increasing our liability exposure? Current Contractors What are the expectations? Are there equal safety expectations for similar contractors? Why do I have to submit so much information? Government / OSHA Was the event preventable? Were contractors involved? Were the contractors pre-screened? Consider perspectives of other stakeholders
  26. 26. Prequalification Option #1 Bad idea
  27. 27. Prequalification Option #2 ‖ Perform the function in-house (prerequisites):  Established policy, procedure, tools & training  Sufficient number of staff, agreement on departmental duties - responsibilities & authority  Robust repository for storing & updating documentation  Agreed upon protocols & metrics  Ability to apply special provisions  Auditing function (internal & contractors)
  28. 28. Prequalification #3 ‖ Partner with a prequalification service provider (prerequisites):  Established policy, procedure, tools & training  Do your homework – know what you want to accomplish: - Relief of administrative burden - Repository - information verification & updating - Configurable system to meet your protocols - Customer support – single point of contact for clients & contractors - Straight forward pricing - Ability to benchmark ‘best practices’ & desire for continuous process improvement
  29. 29. Ready to get started? ‖ Where is your organization today?  Contractor Safety Risk Assessment - Prequalification Program Elements - Score indicator (gap analysis) - Will be emailed to you Take risk assessment
  30. 30. Closing “Nuggets” ‖ Summary:  Contractor companies are utilized by most companies, the added risk exposure should be assessed and there are benefits to managing the risk  While there is no single source document from OSHA regarding their expectations for contractor pre-qualification, there are requirements embedded into various standards  There is a wealth of information that can be collected from contractors – client specific  Many stakeholders – whose perspectives all need to be incorporated into the decision making process  Two options for managing contractor pre-qualification: in-house, or use of a service provider
  31. 31. Closing comments  Become to others, “The ____ Guy or Gal“  Respect for all workers & create win-win situations  Leave a positive legacy
  32. 32. Contact Info ‖ Pat Cunningham, MS Director, Safety & Auditing Services