By Jerome E. Spear, CSP, CIH
Contractors are hired for their technical competency and skill to complete a project that has been conceptualized by the project owner and designed by the owner’s architect(s) and engineer(s). However, since the project occurs on the owner’s site, the owner is potentially exposed to additional liability (i.e., OSHA fines and tort liability) that must be considered. In general, a “hands-off” approach or a “hands-on” approach is used to address such potential liabilities.
Liability is a complex issue. Some case law gives an incentive to owners to keep contractors “at arm’s length,” while other case law appears to require owner involvement that gives rise to additional liability (Yohay & Sapper, 1998). However, preventing an injury is ultimately the best way to prevent a lawsuit. Contractor SH&E performance can be improved by integrating SH&E activities into the contracting process, which includes the following:
- Prequalification and contractor selection;
- Designing and planning for safety;
- Work-in-progress assessment and verification;
- Post-work performance evaluation.
Prequalification & Contractor Safety
A formal prequalification process is an important initial step in establishing an effective contractor SH&E program. Although SH&E personnel are not typically in control of the contractor prequalification or selection process, opportunities exist to provide input on the SH&E performance of prospective contractors during the prequalification process.
The prequalification process typically involves the prospective contractor providing the owner with a completed prequalification questionnaire (PQQ) and supporting documents and programs. The PQQ’s purpose is to identify those contracting organizations with effective safety management systems with proactive cultures. The completed PQQ should be evaluated by a review panel comprising a variety of experts from various departments within the company. Areas of expertise represented on the review panel should include the following (Farrow, 1999):
- SH&E issues: look at culture, safety management systems, regulatory compliance and safety performance.
- Technical issues: review organizational structure, discipline/trade skills, ability and experience in similar projects.
- Quality issues: evaluate the contracting organization’s ability to ensure the integrity and quality of the service.
- Financial issues: ensure that resources are available to meet the demands, performance standards and costs.
Prequalification Criteria
The effectiveness of the contractor’s risk reduction practices should be the basis for contractor safety prequalification criteria. Commonly used contractor SH&E performance criteria include the following:
- Experience modification rate (EMR): It is common practice for owners who have a formal contractor SH&E program to require contractors to have an EMR of 1 or less.
- Injury frequency and severity rates: Specific target injury rates are typically company-specific and are often revised (i.e., lowered) periodically by the owner based on the owner’s contractor safety goals.
- SH&E program evaluations: SH&E program evaluations are time-consuming and more subjective than reviewing injury statistics, but the evaluator should base his/her judgment on the presence or absence of specific management system elements.
- Integration of SH&E on current projects: The most effective means of evaluating a contractor’s SH&E capabilities is to visit a jobsite to evaluate their performance (Hislop, 1999). Interview the prospective contractor to assess their corporate safety culture, SH&E knowledge, management skills and philosophy.
- OSHA and EPA citation history: A contractor that is subject to regular scrutiny by OSHA should be avoided since the presence of that contractor would increase the likelihood of OSHA inspections performed at the owner’s site. OSHA inspection records are public records and may be obtained by conducting a company search of the OSHA inspection database.
- References from previous customers: The owner should talk with previous customers and should determine whether or not previous customers were satisfied with the contractor’s SH&E performance.
SH&E Contract Requirements
Prudent contractors usually include the cost of supplying safety equipment and employee training in their bids (Nwaelele, 1996). Consequently, their bids may be higher, causing owners to look elsewhere. In other words, some effective SH&E programs go unrewarded. Owners can change this by making SH&E considerations an integral part of project management. Many owners have well-written contractor SH&E programs and incorporating their standards as specific contract requirements should be considered. The more specifically the SH&E requirements are stated in the contract, the greater the owner’s ability to ensure that the work is conducted in a safe manner (Hislop, 1999). SH&E requirements should also be objectively stated to avoid ambiguity and interpretation issues. The project team should work with legal and contract specialists to formulate project safety specifications. Although SH&E contract specifications vary from company to company and often from project to project, the following should be considered when developing SH&E project requirements (MacCollum, 1995):
- Name the person who will be responsible for overseeing contractors’ performance and ensuring that the work is performed in a safe manner;
- Require all contractors to prepare and submit an acceptable SH&E plan that defines supervisory and employee safety training prior to the start of their particular work;
- List specific published SH&E standards and hazard prevention requirements;
- List special SH&E requirements to be followed for unique hazards not adequately defined in provisions contained in published SH&E standards;
- List qualifying requirements for eligible contractors to ensure that bidders are restricted to those contractors whose past SH&E performance indicates that they are competent and safe contractors and include an assessment of the contractor’s current SH&E capabilities.
Designing & Planning for Safety
Considering SH&E issues while designing the project and during preplanning of the project could have a dramatic impact in reducing injuries that may occur during the project’s work phase. SH&E considerations not addressed during the initial design phase often costs significantly more to retrofit or otherwise correct after the project is completed or even during the project’s work phase.
The owner’s project team should include a safety engineer who analyzes conceptual project designs and predicts hazards that may evolve (Nwaelele, 1996). Performing formal SH&E assessments and reviews during the designing and planning phases can identify and assess hazards early on so that the project team can eliminate them or provide engineering solutions to efficiently control hazards during the work phase. Some specific examples of how SH&E issues may be addressed during the design and planning phase include specifying temporary decking to be installed as soon as possible to prevent injury from falling, designing permanent stairways and walkways to be constructed first so that the use of temporary scaffolding is minimized and removing or relocating utilities.
Work-In-Progress Assessment & Verification
A monitoring program typically includes SH&E performance reporting, inspections (by owners and contractors) and incident reporting. Owners often require periodic (i.e., at least monthly) reports to be submitted to the owner to track the contractor’s SH&E performance. Consideration should be given to measure and track both results-based metrics (such as injuries and incidents) and activity-based metrics (e.g., inspections, audits, job safety analyses completed, toolbox safety meetings, number of corrective actions implemented, behavior observations and feedback, etc.).
Once the contractor is on site, the owner should periodically monitor the contractor’s work practices. If improper SH&E practices are observed, the owner needs to take action to ensure that the responsible contractor(s) correct the situation. The frequency of monitoring should depend on the level of risk associated with the work the contractor is performing. The contractor should conduct internal SH&E inspections according to their procedures. The contractor’s self-inspection reports may be submitted to the owner or be available to review upon request. A formal system should be established to review the audit findings with the contractor(s) that reflect corrective actions needed, person(s) responsible for implementing the corrective action and due dates to ensure that deficiencies are corrected in a timely manner.
Post-Work Performance Evaluation
After completion of the project, a post-work evaluation of the contractor’s performance should be conducted. The SH&E portion of this evaluation should incorporate data from the contractor’s monthly reports, audit findings and observations. This comprehensive report can be used to build a database of contractors for future projects (Nwaelele, 1996). Furthermore, both company and contractor management teams should complete contract closeout reports that detail the positive and negative aspects of the contract and the recommendations for similar contracts in the future. If the contractor does not meet the owner’s expectations and requirements, a meeting may provide the contractor an opportunity to discuss the issues and to develop a corrective action plan. In some cases (consistent with contracting provisions), the owner may determine that the contractor should be removed from the approved contractor list.
In summary, successful contracting management requires the involvement of various owner and contractor representatives. The key to improving SH&E performance is through the integration of SH&E into the contracting process, which includes establishing formal prequalification and contractor selection criteria and incorporating SH&E requirements into the contract. Since designing and planning with contractor safety in mind provides the greatest opportunity to minimize incidents in the field, formal SH&E reviews should be performed during the designing and planning phases of the project. Finally, the contractor’s performance should be evaluated both during and upon completion of the project to not only provide feedback to the contractor so they can work to improve their performance, but also to determine if the contractor should be considered for future projects.
References
Farrow, D. (1999, Jan.). Contracting out: Assuring health and safety. Safety & Health Practitioner, 17(1), 32-35.
Hislop, R. (1999). Construction site safety: A guide for managing contractors. Florida: Lewis Publishers.
MacCollum, D. (1995). Construction safety planning. New Jersey: John Wiley & Sons, Inc.
Nwaelele, C. (1996, Apr.). Prudent owners take proactive approach. Professional Safety, 41(4), 27-29.
Yohay, S. & Sapper, A. (1998). Liability on multiemployer worksites. Occupational Hazards, 60(10), 28-36.
Jerome E. Spear, CSP, CIH, is president of J.E. Spear Consulting, LP and has more than 21 years’ experience helping organizations prevent injuries and illnesses, control losses and achieve regulatory compliance. He held the positions of technical services manager with XL Specialty Risk Consulting (a division of XL Specialty Insurance Co.) and corporate industrial hygiene manager for Chicago Bridge and Iron Co. Spear is also an adjunct instructor for Texas A&M University’s School of Rural Public Health.
