Contractor Safety Management – How Do You Know Your Contractors Are Working Safely?

The increasing trend toward outsourcing services has in turn considerably amplified the need for effective management systems for contractor oversight. This is where a contractor safety management system can help guide you through the complexities of contractor engagement, ensuring the safety of the contractor and your own business interests.

Several key factors contribute to the historically poor performance in the management of contractor environmental, health, and safety (EHS) issues. A comprehensive analysis reveals the following key areas of concern:

• Lack of understanding of EHS legal obligations pertaining to contractors.
• Insufficient consideration of contractor EHS management systems and performance in awarding contracts.
• Insufficient pre-planning of contractor works, specifically in relation to determining hazards and site-specific risks.
• Limited supervision and inadequate monitoring of contractor activities with respect to EHS aspects.
• Responsibilities of the various parties not clearly assigned or comprehended in relation to EHS aspects.
• Lack of necessary technical skills or knowledge for the specific project/related field.
• Ineffective communication with clients or other stakeholders.

But how extensive does the system need to be? This will depend on your company’s risk profile and the risk profile of the contractor. If you are contracting out routine work such as office cleaning, a simple document check may suffice, although, if your cleaners must abseil down the outside of the building, a more robust system will be required. You will want to ask the contractor:

• Do they have the expertise to conduct the specialized work using appropriate equipment?
• Do contractor personnel have the skills needed to be working at heights?
• Does the contractor have adequate insurance in case of any mishap?

As the company hiring the contractor, you will have to ensure that: 

• Your own building has appropriate anchor points for the contractor to use.
• Is there a plan to ensure the safety of passers-by?
• What happens when something goes wrong? Who's responsibility is it?

A contractor safety management system should be tailored to suit both the specific types of contractors engaged and the resources available within your company. This customized approach ensures efficiency and effectiveness in managing contractor safety. Remember that contractors are typically engaged for their specialized expertise and capabilities that may not exist in-house.

In California, case law recognizes that a hirer of an independent contractor delegates all responsibility for ensuring that the safety of contractor workers rests with the contactor and not the hirer. This principle was established as the ‘Privette doctrine’ which shields the hirer of an independent contractor from liability for the injury or death of a contractor’s personnel. However, there are exceptions to this established precedent i.e., when the company does not disclose latent or concealed hazardous conditions, provides unsafe equipment, or the company controls the work and affirmatively contributes to the injury. Understanding these exceptions and managing contractor relationships accordingly is an important aspect of contractor safety management.

An example of where contractor safety management had gone wrong was found in the 2010 accidental oil spill which occurred in the Gulf of Mexico and is referred to as the Deepwater Horizon accident. While there were a number of mistakes and oversights attributed to the disaster resulting in the largest accidental oil spill in United States (U.S.) history, one of the key mistakes was flaws in British Petroleum’s (BP) management and design, as well as poor communication between BP and its contractors, inadequate training, lack of experience of personnel, and poor maintenance of equipment.

What is the value of monitoring your contractors? 

The monitoring phase is to ensure contractors EHS procedures are “living and breathing” while they are conducting work. What does this mean? The primary objective of this monitoring process is to ensure contractors are conducting work safely by implementing the processes they have described in their EHS systems and processes.

It is important that a systematic approach is adopted when monitoring contractors. Requirements of the contractor and employer should be clearly identified in the contract documentation. Appropriate records of activities related to monitoring and supervision of contractor operations clearly demonstrate the employer’s commitment to meeting its EHS regulatory obligations.

To demonstrate due diligence, contractor safety management systems typically come in four stages:

• Contract Specification – outlining the business safety expectations to the potential contractor including adherence to EHS regulations; project initiation process and incident reporting requirements throughout the project duration.
• Contractor Pre-qualification – request information about the competency of the contractor, public liability and workers insurance, skills and training programs completed, recent EHS incidents, and other safety management systems relevant to the proposed project.
• Project Initiation – once the preferred contractor is selected by your business and prior to allowing the project to begin, ensure all contract terms and requirements are in place, contractors and subcontractors understand the business safety rules, and lines of communication and responsibility are established.
• Contractor Monitoring and Verification – During the project, monitor and verify the work being performed. Ensure workplace inspections and observations are conducted regularly. Document any non-conformance issues and take action to remedy them. Also, it’s important to verify that the contractor is executing the work as specified.

Why Audit your Contractors? 

Conducting an audit of your contractors provides both legal and policy implementation assurance that the employer is managing the contractor relationship appropriately. Contractor audits provide many assurance benefits including:

• EHS compliance assessment - Audits help ensure that all contractors are adhering to contractual requirements and ensure alignment with regulatory standards and industry best practices.
• Reduction in operational risk - Audits help identify potential legal and financial risks.
• Continual process improvement - Audits help identify redundancies and inefficiencies in contract management, which can streamline processes for improved operational effectiveness.
• Continual quality improvement - Audits help ensure that future contract workers are of higher quality, have the right skills and ability to deliver the project safely, and are most relevant to the organization's needs.
• Building a partnership - Audits help ensure that the company’s trust in the performance of the contractor is validated.
• Mitigate external risks - Audits can help the employer identify and mitigate external risks introduced by third-party suppliers and stakeholders.

How do you Keep the Audit Program ‘Fresh’? 

It is essential for the company and its auditors, whether internal or external, to create an audit program. This program should include a detailed timeline, outline the necessary information, and describe strategies to collect valid and reliable data. It should also ensure data security, confidentiality, and impartiality, and identify the key personnel and stakeholders involved.

As outlined above, the key is to build an appropriate contractor relationship to ensure that projects are performed safely within the boundaries of employer and contractor responsibilities. To maintain the freshness of your audit program, the following principles may be followed:

• Modify the audit scope and objectives during each audit cycle.
• Select different information and data required during each audit period and focus on deferring contractor safety management system components.
• Select different locations or projects for each contractor to gauge the contractor’s safety management system implementation consistency.
• Involve different personnel from various levels of the contractor’s business at each round of audits.
• Vary the audit sampling methodology including the statistics to be gathered.
• Utilize different technological tools for data collection and analysis in each audit cycle.

Evaluating contractor safety management programs should occur regularly and frequently. At a minimum, these assessments should be conducted annually or biannually. Additionally, every two to three years a more focused and thorough evaluation should be carried out of the contractors’ EHS system. This thorough review ensures that contractors are meeting compliance and adhering to best practices in their EHS activities.

Do you have questions? Our Contractor Safety Management experts are here to help!