www.virtualriskmanager.net chain of responsibility: risk management of contractors, sub-contractors,...

www.virtualriskmanager.net

Chain of responsibility: Risk management of contractors,

sub-contractors, and spot hire transport in the supply chain

Dr Will Murray

Interactive Driving Systems


Debate

Transport (sub-)contractors are a road fatality waiting to

happen?


Aims & Background


Aims

• Background• Why is (sub-)contracting important?• Poor practice in managing (sub-) contracting• Good practice research• Shell India case• Sample tools:

– (Sub-)contractor audit– SHEM committee Terms of Reference


Background

• Contracting, sub-contracting and use of de-, un- or poorly-regulated ‘flexible labour’ common in transport sector around globe– includes (Sub-)contractors, owner drivers, spot-hire & agency

• Has many business benefits:– off balance sheet, custom & practice, flexible & low cost

• But can also bring ‘safety issues’• Presentation based on:

– University of Huddersfield research

– On-going business to business projects

– NIOSH ‘White Paper’ research


Why important?


Why important?

Transport contractor’s yardClient head office


Why (sub-)contracting important?

Work-Related Fatalities

20022003200420052006

Employees 1 0 2 2 1

Contractors 15 12 15 4 11 Total 16 12 17 6 12

Global FMCG company Global oil company


Why important?

Full time employee

57%

Agency36%

Not stated5%

Contract0%

Managerial / Director

1%

Other 1%

Agency (Contract) = 10% of shifts


Why important?

% of drivers v % of incidents

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

% of drivers

% o

f acc

iden

ts

% of drivers

% of incidents

10% 25%

20% 39%

50% 64%

90% 93%

100% 100%


Why: Contract versus employed driversHours driven per incident

0

1000

2000

3000

4000

5000

6000

1 2 3 4

Region

Ho

urs

dri

ven

per

inci

den

t

employed

agency


Why: Sub-contractor example

• Oil company appoints transport contractor and manages really tightly through strict contractor management procedures:– Rejects 3 other contractors partly on grounds of poor safety

record– Main contractor later sub-contracts majority of work to 2 of

the rejected contractors who have many near misses in dust on dirt roads – trying to meet tough schedules – before major rollover costs oil company $9.3 million

– Oil company had NO policies in place to manage sub-contractor safety performance

• Could this be one of your sub-contractors?


Poor practice

By users and suppliers


Poor practice - ‘users’• Not developing/applying any contractor management policy

• Focus on cost

• Poor communication - senior and local managers

• Limited management systems in place - open to ‘gifts’

• No advanced planning of contractor needs - ‘last minuteism’

• Playing off contractors against each other to cut costs

• Not properly assessing vehicles, drivers & journeys

• Giving minimal work instructions or debrief to temporary drivers


Poor practice - ‘suppliers’

• Taking work on at very low rates• Little focus on customer service• ‘Small print’ terms and conditions and ‘get out’ clauses• Poor safety, fuel use and vehicle care• No clear written policies• Very limited risk assessment• Supplying unsuitable, inexperienced drivers• Keeping no records or performance data• Evidence of using inducements and gifts


Research on good practice

Including Shell India case


Summary of good practiceUsers and suppliers work closely to: 1. Plan ahead

2. Understand each other’s requirements and give

regular feedback on fulfilment3. Ensure all (sub-) contracted operations are

appropriately risk assessed, implemented, managed, audited and reviewed


Good practice operations• Build safety into contract tender process• Buy on quality and value – rather than lowest price• Treat contract drivers equally• Provide contractors with clear requirements for safety

management• Assign realistic workloads• Ensure systematic recruitment/training procedures• Keep and use detailed operational statistics• Undertake regular audits and reviews


Shell India case• Shell India, GRSP & local agencies implemented contractor

initiative in 2006 to raise the safety standards of truck operations including:– Business case – Pilot phase to develop contractor systems audit and process– Stakeholder workshop involving Shell, GRSP, police, doctors,

administrators, trainers, traffic engineers, highway experts, politicians, licensing authorities, regulators & enforcement agencies, government officers, politicians, AIMTC & 6 contractors running approximately 1,500 trucks

– Voluntary, but auditable, 20-element Code of Conduct signed for safe fleet management to be piloted in Bangalore and Chennai

– Code covered organisational, driver, vehicle & journey management


Shell India case• Other outcomes included:

– Production, delivery and evaluation of training for owners, managers, drivers & helpers

– Engagement with stakeholders & authorities to influence:• road design, planning and construction• licensing system to prevent unlicenced driving• wage rates & working conditions• drug and alcohol abuse • Overloading

– Ongoing performance monitoring of outcomes KPIs including fuel use, maintenance costs, downtime and safety


Shell India case

• Phase 2 began in late 2006, managed by consortium including Shell, GRSP & AIMTC– aimed to expand program to 100 transporters in southern India – 5 training modules had been developed

• No more recent evaluation data available• Shows:

– Benefits of partnership approach– Focus on better management of informal transport contracting

sector

• Worthy of further development and evaluation• Methodology has potential as good practice model


Good practice tools

Self audit for users & suppliers *

Shem committee *


Contractor Management Audit Source: www.fleetsafetybenchmarking.net


Contractor and Sub-contractor SHEM Committee Terms of Reference

1. Promote safe & environmentally acceptable practices & procedures

2. Review (sub-)contracting safety & environmental statistics & incidents

3. Develop and implement recommendations to improve (sub-) contractor safety and environmental performance

4. Provide a forum for learning and sharing of safety and environmental information, initiatives, problems and issues

5. Represent all stakeholders, including union and front line worker representatives in developing policies, processes and procedures

6. Meet quarterly, with formal action minutes & follow-up items allocated

7. Committee will include senior representatives from company, contractors and sub-contractors


Conclusion• Transportation (Sub-) contracting has many benefits & risks

• Improvements in standards required from users and suppliers

– Proactive, committed MANAGEMENT is most important issue

– Partnerships and ‘managing process’

– Auditing and data analysis

– Code of practice

– Regular formal and informal dialogue between users and suppliers

• In UK agency sector collision rate decreased from 4X to 1.5X employed

drivers when such good practice applied

• Contact for guidance documents and assistance:

– [email protected]

www.virtualriskmanager.net chain of responsibility: risk management of contractors, sub-contractors,...

Documents

background slide

suppliers slide

shifts slide

subcontracting important

rejected contractors

risk management of contractors

poor practice users

poor practice suppliers