Contractor  Management    

A  Risk  Based  Approach  

Presented  by  Katrina  Macgregor  

Objec<ves  

This  session  will  address  how  an  organisa/on  can  proac/vely  demonstrate  due  diligence  through  the  procurement  and  contractor  management  process  to  ensure  that  they:  

–  Clearly  understand  the  risks  associated  with  the  goods  and  services  they  are  wan/ng  to  outsource;  

–  Establish  a  procurement  strategy  that  ensures  that  the  right  checks  and  balances  are  completed  to  verify  the  organisa/on  objec/vely  assesses  and  selects  the  right  contractor  to  do  the  work;  

–  Proac/vely  monitor  the  contractor  to  ensure  all  key  risks    and  obliga/ons  are  being  appropriately  managed.  

Pi>alls  in  Contractor  Management    •  The  scope  of  works  for  the  services/goods  to  be  

outsourced/procured  are  not  clearly  defined.    

•  Key  risks  (including  controls)  associated  with  the  services/goods  to  be  outsourced/procured  are  not  defined.  

•  OHS  accountabili/es/responsibili/es  and  performance  standards    are  not  clearly  defined  and  documented;  

•  The  assessment  of  a  contractor’s  OHS  performance  during  the  procurement  process  not  involving  an  OHS  expert.  

Pi>alls  in  Contractor  Management    •  There  is  no  valida/on  of  a  contractor’s  responses  to  OHS  

requirements  in  a  tender  document.      

•  Safety  documenta/on  is  not  contextualised  for  the  actual  work  to  be  completed  (i.e.  only  prepared  for  tendering  and  selec/on  purposes).      

•  There  is  no  ongoing  valida/on  of  how  the  contractor  has  implemented  the  required  OHS  requirements  for  the  contract.    

Due  Diligence  in  Contractor  Management    

“Taking  every  precau/on  that  is  reasonable  in  the  circumstances  to  protect  health,  safety  and  welfare  of  all  workers  and  others  who  could  be  put  at  risk  from  work  carried  out  as  part  of  the  business  or  undertaking.”    

Safe  Work  Australia,  2011  

Due  Diligence  in  Contractor  Management    

• What  are  the  services/goods  being  outsourced?  

• What  are  the  key  legisla/ve  requirements?  • What  are  the  key  risks  associated  with  the  goods/services  being  outsourced?  

Specify  

•  Verifica/on  the  contractor’s  compliance  to  the  scope  of  works?  

•  Verifica/on  of  capabili/es,  competencies,  insurances,  registra/ons  and  systems  of  work.    

Assess  

•  Inspec/ons,  audits,  mee/ngs.    •  Performance  repor/ng.  • Management  of  non-­‐compliances.  

Monitor    

Risk-­‐based  Contractor  Management  •  A  key  element  to  demonstra/ng  due  diligence  in  the  

selec/on,  engagement  and  management  of  contractors  is  Risk  Management.  

•  A  risk  based  focus  to  contractor  management  suggests  that:  

–  Risks  are  first  iden/fied  and  assessed;    –  The  amount  of  effort,  planning  and  supervision  to  

manage  the  contractors  reflects  the  risk  of  the  task/contract  (not  just  the  contract  size  and  monetary  value).  

Risk-­‐based  Contractor  Management  •  Factors  that  influence  the  risks  associated  with  contractor  

management  include:  

–  Size  and  cost  of  the  project;  –  The  type  of  work  (i.e.  high  risk  work);  –  The  size  and  capability  of  the  contractors  including  the  

maturity  of  their  OHS  Management  System;  

–  Degree  of  choice  in  contractors  available  to  deliver  the  product/services;  

–  Your  organisa/on’s  ability  and  capability  to  manage  the  contractor.    

Risk-­‐based  Contractor  Management  

Low  Risk  Contract   High  Risk  Contract  

Procurement  Controls    

•  Request  for  quota/on  .  •  5%  of  overall  evalua/on  

allocated  to  OHS  capability.  •  Contractor  ‘s  OHS  

Capability  assessed  by  the  Contract  Manager.  

•  General  Terms  and  Condi/ons  to  be  issued  which  include  project  specific  OHS  requirements.    

•  Tender.  •  15%  of  overall  evalua/on  

allocated  to  OHS  capability.  •  OHS  ques/onnaire  to  be  

completed  by  contractors.    •  Contractor’s  OHS  capability  

is  independently  assessed  by  an  OHS  professional.  

•   Full  contract  to  be  provided  with  detailed  OHS  requirements  outlined.    

Risk-­‐based  Contractor  Management  

Low  Risk  Contract   High  Risk  Contract  

Contract  Management  Controls    

•  Restricted  access  to  the  work  area.  

•  Induc/on  to  the  work  area  and  emergency  procedures.  

•  Arrival  and  departure  monitored.  

•  JSAs,  insurances,  licences  and  registra/ons  vefed.  

•  Project  Risk  Register  an  Mi/ga/on  Plan.  

•  Full  OHS  induc/on  completed.  

•  Safety  Management  Plan  with  JSAs,  WMS  etc.  provided.  

•  Pre-­‐work  assessment  completed.  

•  OHS  Adviser  appointed  to  oversee  OHS  aspects  of  the  contract.    

•  Monthly  inspec/ons.  •  Monthly  mee/ngs.  

Risk-­‐based  Contractor  Management  

Low  Risk  Contract   High  Risk  Contract  

Contract  Management  Controls    

•  Monthly  performance  reports.  

•  Insurances,  licences  and  registra/ons  vefed.  

•  Handover  plan.  

Conclusion  

•  Knowing  what  goods/services  you  are  about  to  outsource/procure  by:  –  Iden/fying  all  foreseeable  risks  and  establishing  appropriate  

controls;  and    

–  Understanding  the  legal  implica/ons  associated  with  outsourcing/procuring    goods/services.  

•  Preparing,  planning  and  adop/ng  a  cradle  to  grave  approach  to  contractor  management.  

•  Applica/on  of  the  ‘SAM’  principle  will  ensure  that  the  common  pihalls  will  be  sa/sfactorily  addressed.    

Conclusion  

•  Establishing  a  tender  process  that  looks  at  OHS  Management  before  examining  cost/price.  

•  Adopt  a  partnership  approach  with  contractors.  –  Formalise  regular  communica/on  and  review  processes.  

–  Provide  support  and  guidance.