Usage of Contractors in the Liquefied Petroleum Gas Industry

This article covers summary about Contract Management in LPG industry. Contractors are used extensively in the oil and gas industry for all kinds of work and at every stage of the operation. This extends to, and includes, exploration, construction, production and decommissioning, as well as the less technical services such as cleaning, catering and waste removal. They can also be used for emergency response.

Scale of contractor use

Contractors tend to be used for specialist work, or work that is specific to a time when there is a raised workload such as maintenance during shutdown, inspection or testing.

For example, when an installation has to be shut down within a tight schedule, the number of extra staff required on site at any particular time may increase to as many as 200. Consequently, the exposure to hazards will increase due to the higher number of personnel on the installation.

Depending upon the requirements for contractors, they can vary from one-man operators to multi-national companies employing large numbers of staff. Some of the contractors may be ex-employees who are employed on a contractual basis during shutdowns – they have the advantage of having experience and knowledge of the installation and its operating procedures (e.g. mechanical technicians).

Contractor management, ownership and site supervision/ representation

It is essential that the client (employing company) and the contractor both have a clear understanding of their roles and responsibilities in order for a project to be carried out safely and successfully. These are outlined below.

Client (employing company)

The client is responsible for the workplace the contractor is working in. Clients are those organizations who select and engage contractors to undertake specific work for them. They are obliged to protect their own employees, as well as the employees of the contractors they are engaging, from risks to health and wellbeing. This will probably be underpinned by local legislation.

The client also has a responsibility towards the contractor and the contractor’s own staff for hazards that may occur as a result of the client’s own activities. An example might be where a refining company loads its vehicles in separate bays and has a need to have those bays checked to see if their electrics are safe and up to standard. It decides to engage a specialist electrical company to test the equipment.

A safe method of working is then agreed between the client and the contractor which allows the contractor to work in one loading bay at a time. This then allows the other bays to remain operational whilst the checks are carried out in one bay.

The movement of vehicles within the general area of the loading bays will pose the biggest hazard to the contractor. The client will need to carry out an induction with the staff of the electrical company who will be working in the bays. This would cover the movement of vehicles, places that the contractor should and should not have access to, etc.

Contractors

The contractor is responsible for the safe method of working. Contractors are those people or organizations who have been selected and engaged to undertake work for the client.

The contractor will not be as familiar with the workplace and its hazards as regular workers. Consequently, adequate control measures should be implemented in order to counteract this increased risk. Examples might be:

• Limiting access the contractor has to specific areas Giving all of the contractor’s staff a detailed induction course on specific hazards likely to be encountered.

Procedures for selecting suitable contractors

Clients need to ensure that any contractor they engage is competent. That is to say, they have sufficient skills and knowledge to undertake and complete the work safely, efficiently and to the quality level required. The degree of competency required will inevitably depend on the work to be done.

The client should ensure contractors are fully aware of what is expected of them. Health and safety arrangements should be explained to them. Contractors should also be instructed on standard procedures, any permit-to-work systems, and the current health and safety policy statement.

Determining a contractor’s competence should be the first step in choosing a suitable contractor. The kinds of issues which should be considered include the following:

• Is the contractor adequately insured?;
• Has, or will, the contractor undertake a risk assessment of the proposed contracted work? Are the health and safety policies and practices of the contractor adequate?;
• Is the contractor’s recent health and safety performance reasonable (number of accidents, etc.)?;
• Is the contractor’s health and safety training and supervision adequate?;
• Does the contractor have arrangements in place for consulting with their workforce?;
• Does the contractor or their individual employees hold a “passport” or other type of certification in health and safety training?;
• What, if any, enforcement notices have been served on the contractor?;
• Can the contractor offer any independent assessment of their competence?;
• What references from previous employing companies can the contractor show?;
• What relevant qualifications and skills does the contractor have?;
• What is the level of competency of the staff doing the job?;
• Is there appropriate certification for any equipment that the contractor might intend to use?;
• What selection procedure does the contractor have for sub-contractors they might engage with?;
• Is the contractor a member of a relevant trade or professional body?;
• What is the contractor’s financial viability?;
• Does the contractor’s safety method statement meet expectations?.

Managing/supervising contractors

Those who are responsible for managing contractors must ensure their relationship with contractors is handled appropriately. As we have just discussed, rigorous checks must be made to ensure the contractor is suitable for the work being undertaken. Once a contractor is selected and engaged, the client should provide an appropriate level of supervision of the work being undertaken by the contractor.

The level of supervision will depend on the size and/ or complexity of contracted work. For example, maintenance work may require constant supervision to ensure the agreed safe working procedures are being adhered to.

Larger contracts, on the other hand, may need a more structured means of management control. This might involve the contractor relaying daily reports on all aspects of the operation.

Read also: Basic Info about Liquefied Petroleum Gas Transportation on the LPG tankers

It is for the clients to decide what controls they need to implement in order to effectively manage and supervise the work of the contractor. The more impact the contractor’s work potentially could have on the health and safety of anyone likely to be affected, the greater the management and supervisory responsibilities of the client.

Clients also carry a greater responsibility when their knowledge about the health and safety implications of the contracted work is more extensive than that of the contractor.

It is essential that the nature and extent of the controls exercised by the client in managing the contracted work is agreed by both parties before work starts. Clients may need to agree with the contractor on how the work will be done and the precautions that will be taken. This might include the following:

• What equipment should or should not be worked on/ used;
• Personal protective equipment to be used and who will provide it;
• Working procedures, including any permit-to-work systems;
• Training and induction in such systems;
• The number of people needed to do the job;
• The reporting of accidents and safe keeping of records and plans.

Clients, contractors and sub-contractors should monitor their health and safety performance. This will include ensuring risk assessments are current, and that control measures are being applied and are effective. The degree of risk involved with the contracted work will govern the level of monitoring required.

Let’s take a look at a couple of case studies that relate to contract management.

Case Study 5.1

A client engaged a contractor to do some maintenance work on an electrical substation. However, the client failed to check the competency of the contractor to undertake the work. This was compounded when the client failed to supervise the work adequately and to control access to the substation.

Within the substation, open fuse-boards were inadequately shrouded. The result was that one of the contractor’s employees was severely injured when he came into contact with a live piece of equipment.

When the enforcing authorities prosecuted the client and the contractor, the client was found guilty of not applying due diligence in selecting or supervising the contractor and was fined £50,000 plus costs.

The contractor was found guilty of failing to adequately control the installation of two ceiling fans in the substations and was fined £30,000 plus costs.

The experienced electrician employed by the contractor and who was supervising the activities of the electrician who was injured was found guilty of failing to take simple steps to prevent contact with live equipment and was fined £1,000 plus costs.

Case Study 5.2

An onshore facility needed to replace some bolts on a pipe flange which had rusted quite badly. The pipework involved was used to convey high temperature chemicals and, as the pipe could not easily be shut down, it was agreed that the safe working procedure should be to remove one bolt at a time and to replace each bolt before removing and replacing the next bolt.

The company contracted an ex-employee to supervise the work and he went with the fitter to the site and they had a toolbox talk covering the safe working procedure previously agreed. The contractor then left the fitter to get on with the job.

Once the fitter started the work it soon became clear the bolts would not undo using a spanner as they were too rusty. He decided he needed to use a hacksaw. He also decided to remove all of the old bolts before replacing them.

When the last bolt was removed, the flange fell off and the fitter was sprayed with hot chemical liquid, causing severe burns.

The contractor had been employed purely to supervise this work but by only giving a toolbox talk prior to the work being started, the level of supervision was far from adequate.

Contractor responsibilities

As we mentioned in the previous section, it is the contractor who is responsible for the safe method of working he/she and his/her staff employ.

This is because, in many cases, they are being engaged because of their specialist knowledge and expertise, whereas the company contracting out the work does not have that expertise.

For example, maintenance work needed on an offshore installation’s subsea structure would need specialist divers to undertake the work. This would be beyond the experience of the normal workforce on the installation. Contractors also need to give an assurance that the work they carry out will not impact on the safety of operations (e.g. will not shut down emergency systems such as alarms, emergency shutdown systems, etc.).

Other responsibilities of the contractor

The contractor also has other responsibilities, particularly where a contractor employs sub-contractors. In this case, both the contractor and sub-contractor will have some health and safety responsibilities. The extent of the responsibilities of each party will depend upon the circumstances.

Although the selection and employment of subcontractors is ideally the role of the contractor, it is ultimately the responsibility of the client to ensure that the contractor is qualified and has an effective procedure in place with which he/she can assess the competence of a sub-contractor. The contractor may use similar criteria to select a sub-contractor to that used by the client when selecting a main contractor. The work to be done by the sub-contractor will determine the level of competence required.

Other responsibilities of the contractor: risk assessment

There is a requirement for a risk assessment to be conducted concerning the work which is to be undertaken by the contractor. There also needs to be agreement about the measures that will be applied to control those risks identified in the risk assessment. These need to be agreed between the client and the contractor as well as any sub-contractors. Consideration should also be given to any risks which could arise from each other’s work that could impact on the health and safety of employees or any other persons affected by that work.

Other responsibilities of the contractor: instruction and training

There is a requirement for contractors and sub¬contractors (as well as the client) to:

• Consider what information should be passed between them and agree appropriate ways to ensure this is done.

Exchange clear information about any risks arising from their work, including relevant safety rules and procedures. These may include permit-to work systems and arrangements for dealing with emergencies.

Provide any information, instruction and training to their employees on anything which may impact on their health and safety. This may include induction or training on permit-to-work systems.

Consult their employees (and safety representatives if applicable) on health and safety matters.

Contractors and sub-contractors should monitor their health and safety performance. This allows them to check if their risk assessments are up to date and whether existing control measures are working or if further control measures need to be implemented. The level of monitoring needed is relative to the level of risk, i.e. the higher the risk, the greater the level of monitoring that will be required.

Safe handover: understanding the hazards

Safe handover procedure

Whenever a site, or part of a site, piece of machinery or plant, is to be handed over to a contractor for them to undertake their work, a comprehensive system of safety checks should be implemented. This may include:

• Electrical isolations with lock offs as appropriate Mechanical isolations with lock offs as appropriate Physical barriers to restrict access by non-authorized personnel;
• Pre-cleaning of the area;
• Pre-cleaning of the equipment.

Whatever system is implemented, it needs to be agreed between both the client and the contractor. It must also take into account the arrangements and procedures of both parties. However, as the work is likely to be undertaken on the client’s premises or installation, this may mean that the client’s arrangements and procedures are used as a basis for the agreed procedure, with the contractor’s specific requirements superimposed on those procedures.

There should be a record kept of what was included in the handover. Particularly important are any isolations and barriers which may be involved.

Also to be recorded is the acceptance by the contractor of responsibility to maintain the integrity of the area during the period of the contract. This should be part of the handover process. There is a need, however, for both parties to carry out periodic checks during that period to make sure that any safety measures which have been put in place are complied with.

Once the contract is completed, there should be a procedure for handing the site, or part of a site, piece of machinery or plant, back to the client. This handback should follow an agreed procedure to ensure that all matters have been dealt with safely and securely. This will include confirming that all parts of the installation which have been temporarily the responsibility of the contractor are in full working order and also that any isolations and barriers have been removed. Any pipework which has been worked on must be pressure tested to confirm its integrity (usually by using either water or an Crew Evaluation Test online for seamans about Flex Inert Gas Generator Systeminert gas).

Once all of the criteria for the handover process have been completed and the client is satisfied that everything is in working order, then the contract will be signed off and the plant re-commissioned. It is essential for both parties that the handback process is conducted thoroughly and meticulously.

Revision questions for element 2