Keeping people safe and well is a top priority for industry as a collective.
The reality is that contractors account for most fatalities in the petroleum and petrochemical industries. Despite this fact, there are still significant challenges for operators and contractors alike when it comes to safety on complex sites, and most of the challenges come as a byproduct of the relationship.
Upstream and downstream companies broadly fall into two groups: owners/operators, managing daily operations, and contractors/vendors that provide specialized services and support for operations, construction, maintenance and more. They rely on one another, yet the inherent hierarchy introduces several pressures: operators exert financial control, contractors face financial dependency, risk allocation and compliance burdens are often uneven, and operators hold technical authority. The way operational risk and safety are managed and controlled on site is influenced by each of the pressures because of the knock-on effects. While there is no simple fix, it’s worth it to understand the organizational factors behind these challenges in order to explore alternatives.
The thing about a relationship is that there are two points of view, but the contractor management story has often been told using rigid, top-down terms through the perspective of the operator. The contractor is typically viewed as the company that is "just paid to provide a service." Even the term ‘contractor management’ alludes to the notion that operators leverage financial control, risk mitigation and technical authority as a means of governing how contractors work. While there is some practicality, the reality is that overburdening regulation has innate limitations and implications. Limitations like dampened innovation and inhibited decision making for operational risk and efficiency are examples of restrictions on learning and flexibility. The practical question is: "How do we create a bridge that balances financial, operational and legal risks for both operators and contractors while fostering better learning from contract partners?"
While there are some recognized legal and contractual constraints, there are a few strategies that can add efficiency to tackling contractor performance opportunities collectively through collaboration:
Prioritize relationships
Building trust, communication and shared understanding takes time. Longer-term contracting fosters collective improvement and innovation by allowing relationships to develop and harness ideas through mutual learning. Proactive contracting can also support this by adopting value-based procurement, aligning metrics to enhance communication and promoting shared accountability for learning and improvement. Operational risk and safety are more than having paperwork in order and compliance checks; it’s a function of collaboration.
Proactively engage
The contractor engagement cycle begins with planning and ends with off boarding. Dynamic and adaptive engagement integrates agile management, digital tools, feedback loops, Kaizen improvement — or change for the better — and inclusive pre-start up round-tables to transform contractor management into a more collaborative, responsive and continuous improvement-driven process.
Intentionally align
Achieving contractor alignment involves ensuring that contractors operate in harmony with the operator’s goals, values and processes. Through early contractor intervention in the scope of work, work planning and design, cultural alignment sessions, joint safety plans, HSE resource sharing and collaboration, contractor engagement can be bolstered through the life cycle of the contract.
There’s no silver bullet for contractor performance. Contractor performance is such a challenge because of the complex array of trade-offs and balancing of competing risks between different groups. However, reliance on one another means more authentic, adaptable strategies are needed to reposition the relationship away from top-down, one-way expectations and toward aligned, engaged, relatable collaboration. This isn’t about giving up control; it’s about redefining how control is exercised — through embracing trade-offs, alignment and engagement as opposed to rigid oversight.
For more information, justin@novapathrisk.com
