Business

Z's new Contractor Management System

20/10/2015

Z's new Contractor Management System

Here at Z, we want to have a robust and dynamic Contractor Management System (CMS) that influences our business partners and their workers to achieve world class HSSE outcomes. 

With the changing HSSE landscape, Z identified a need to undertake a step change in contractor management to achieve the ‘next level’ of HSSE outcomes above the industry standard.  In the New Zealand landscape this is not easily achieved.  The NZ construction industry has the second highest number of fatalities (2006-2012) in the world, and the country’s wider culture is one that supports and encourages risk taking behaviour, i.e. we’re recognised as an adventure sports destination.

We identified now as the right time to undertake a different approach for a number of reasons, including: 

  • The business model for managing our Assets maintenance and capital works programme has grown in scale, increasing the length and breadth of our contractor supply chain, 
  • We had moved from ‘renting out’ our major construction project delivery to an in-house project management office (PMO), with direct responsibility for the management of capital projects, and 
  • Our contractor engagement survey told us our contractors are ready for this step change.   

These changes in a Z context meant the CMS needed to be redesigned and extended to a more comprehensive framework – one that enables us to successfully execute the adopted business model and to be able to undertake assurance activities to ensure our HSSE obligations and goals are being met. To help us realise these goals, we partnered with ISNetworld. 

Our intent throughout the CMS implementation was to keep ownership of the contractor outcomes with those in direct control of the work, and for Z to undertake assurance activities for our HSSE obligations.  

We set ourselves a number of outcomes, including: 

Outcome 1 - A best practice, robust and dynamic CMS that focused on the elimination, or minimisation, of risks associated with contractor activities conducted across Z’s workplace. 

Outcome 2  - A robust level of supervision, reporting and assurance activities that confirm the CMS requirements and safe work practices relevant to the risks.

Outcome 3 - A reduction of risk significant OHS incidents (and their severity) occurring in Z’s contractor management supply chain following effective CMS implementation.

The non-financial business benefits that we targeted included:

  • Assurance that Z’s CMS is best practice; focused on risk reduction and safe work practices.
  • A reduction of risk for Z, relevant to the engagement of contractors undertaking work on Z sites.
  • A reduction in contractor incidents and their severity.
  • A reduction in hours involved in incident investigation.
  • An increase in performance reporting and assurance activities across our Assets contractor supply chain.
  • Increased engagement/satisfaction from our Asset Team contractor supply chain with Z as a principal.

We wouldn’t achieve this simply by implementing changes and, as a result, we’re committed to using the CMS project delivery process to extend our influence with our business partners and their workers with an approach focussed on engagement. Rather than telling our key contractors what our new contractor management processes were, we worked alongside our contractors to develop the processes, and will continue to do so in monitoring, reviewing and implementing as part of the continuous improvement cycle. 

We’re already noticing improved performance as a result of the changes we’ve made. Early on we established a minimum threshold where we only engage with A and B grade contractors to undertake work directly with Z. ISN benchmarking showed us that A and B contractors out-performed lower graded contractors in terms recordable incident data. 

This is consistent with the results we are now seeing from our contractors.

Table 1.

Here at Z, we want to have a robust and dynamic CMS that influences our business partners and their workers to achieve world class HSSE outcomes. 
With the changing HSSE landscape, Z identified a need to undertake a step change in contractor management to achieve the ‘next level’ of HSSE outcomes above the industry standard.  In the New Zealand landscape this is not easily achieved.  The NZ construction industry has the second highest number of fatalities (2006-2012) in the world, and the country’s wider culture is one that supports and encourages risk taking behaviour, i.e. we’re recognised as an adventure sports destination.
We identified now as the right time to undertake a different approach for a number of reasons, including: 
The business model for managing our Assets maintenance and capital works programme has grown in scale, increasing the length and breadth of our contractor supply chain, 
We had moved from ‘renting out’ our major construction project delivery to an in-house project management office (PMO), with direct responsibility for the management of capital projects, and 
Our contractor engagement survey told us our contractors are ready for this step change.   
These changes in a Z context meant the CMS needed to be redesigned and extended to a more comprehensive framework – one that enables us to successfully execute the adopted business model and to be able to undertake assurance activities to ensure our HSSE obligations and goals are being met. To help us realise these goals, we partnered with ISNetworld. 
Our intent throughout the CMS implementation was to keep ownership of the contractor outcomes with those in direct control of the work, and for Z to undertake assurance activities for our HSSE obligations.  
We set ourselves a number of outcomes, including: 
Outcome 1 - A best practice, robust and dynamic CMS that focused on the elimination, or minimisation, of risks associated with contractor activities conducted across Z’s workplace. 
Outcome 2  - A robust level of supervision, reporting and assurance activities that confirm the CMS requirements and safe work practices relevant to the risks.
Outcome 3 - A reduction of risk significant OHS incidents (and their severity) occurring in Z’s contractor management supply chain following effective CMS implementation.
The non-financial business benefits that we targeted included:
Assurance that Z’s CMS is best practice; focused on risk reduction and safe work practices.
A reduction of risk for Z, relevant to the engagement of contractors undertaking work on Z sites.
A reduction in contractor incidents and their severity.
A reduction in hours involved in incident investigation.
An increase in performance reporting and assurance activities across our Assets contractor supply chain.
Increased engagement/satisfaction from our Asset Team contractor supply chain with Z as a principal.
We wouldn’t achieve this simply by implementing changes and, as a result, we’re committed to using the CMS project delivery process to extend our influence with our business partners and their workers with an approach focussed on engagement. Rather than telling our key contractors what our new contractor management processes were, we worked alongside our contractors to develop the processes, and will continue to do so in monitoring, reviewing and implementing as part of the continuous improvement cycle.  
We’re already noticing improved performance as a result of the changes we’ve made. Early on we established a minimum threshold where we only engage with A and B grade contractors to undertake work directly with Z. ISN benchmarking showed us that A and B contractors out-performed lower graded contractors in terms recordable incident data. 
This is consistent with the results we are now seeing from our contractors.
Table 1.

We’ve still got some way to go, and there are a number of additional value add options that we’re still planning to tap into through the use of ISNetworld as we continue to develop and work with our business partners to achieve world class HSSE outcomes. 

Nathan James, HSSE Business Partner