Four Steps to Establishing Effective Contractor Partnerships

Step 1: Scope Definition

Before selecting a contractor, it is important to consider several factors:

• The design of the work to be outsourced.
• The risks involved with the outsourced work.
• Skills of the people needed to perform the job safely.
• The ideal profile of the contractor.
• The reasons for outsourcing the work.

Let’s look at two typical reasons for outsourcing – cost optimization and non-core operations – and examine what the impact of that reason is, as well as what considerations are important.

If reducing costs is the reason for outsourcing to a contractor, the decision makers should be aware that lower wages may mean less qualified personnel, and potentially vendors with lower standards. Mitigation measures may be necessary to balance this additional risk. These measures could include additional training, orientations that highlight the hiring company’s safety approach, increased supervision, and stronger leadership accountability.

In the case of non-core operations, special attention should be paid to ownership of the work and how it interfaces with the core work processes. We recommend that leaders take responsibility for safety across all jobs being performed in their area, whether by their own employees or by contractors. This requires involving those leaders in the design process.

More broadly, it is critical to consider culture, not just process, when integrating contractors into a project. Contractors are often treated as second-class employees despite officially being called “partner companies.” It is the role of leaders to ensure contractor employees are valued and treated equally.

Step 2: Contractor Selection

In the tendering process, the technical and commercial selection criteria usually include capability, experience, efficiency, and cost. Safety is not always part of the criteria – although it’s being considered more frequently – and if it is, it’s often a reference to lagging indicators or compliance with the hiring company’s safety requirements.

There are three key considerations in contractor selection:

1. What data or information do you look at when evaluating the safety performance of the contractor?
2. How do you integrate safety in the selection criteria?
3. Who is part of the contractor selection team?

1. Data or information to evaluate safety performance

Measuring safety based on lagging indicators is not an effective way to evaluate safety performance. Better insights can be achieved by asking vendors to qualify how they manage safety. In addition, interviews with employees and leaders of shortlisted candidates will provide a more accurate understanding of how safety is embedded in the culture of the contractor.

2. Integration of safety in the selection criteria

Safety performance is often used as a threshold, which means that minimum criteria need to be met to be eligible for the work. However, once you are eligible, your safety performance is not considered anymore and the selection is based purely on price. This greatly pushes potential contractors to reduce or minimize their safety efforts in establishing their fee to ensure they get the contract. Once it’s awarded, this typically results in endless discussions between the contractor and the client on what is needed, or at what (additional) cost, which reduces the level of trust and collaboration that are essential to keep (contractor) employees safe.

A better way to handle this is to include safety elements in the final selection criteria so that safety, together with other criteria such as capability, experience, and finance are considered.

3. Contractor selection team

Another important consideration is the composition of the contractor selection team. In the typical process, the end user will describe the work and expected outcomes of the work, then hand it over to procurement who handles the whole selection process. Once the contract is signed and awarded, the work gets handed over again to the end user. A better way is to include key stakeholders throughout the whole process. For high-risk jobs, senior safety leaders should have a strong decision-making role in addition to operations or project leaders.

In the long run, developing strategic partnerships enables organizations to develop safe, trustworthy working relationships.

Learn more about building stronger owner-contractor relationships in Part 3 of this series:“Involving and Engaging Contractors in SIF Prevention: Partnering with Contractors for People-Centered SIF Prevention .”

Step 3: Contract Design and Onboarding

When it comes to safety, contracts usually require compliance with procedures, rules, and safety systems of the hiring organization. Some agreements also penalize or incentivize safety performance, but we find that this often leads to tick-the-box behavior and underreporting.

When going through the contract design and onboarding phase, the following principles are key:

1. Align on accountability, not just compliance
2. SIF Precursors must be jointly identified, not imposed
3. Leadership involvement is not optional
4. Culture is shaped during onboarding

1. Align on accountability, not just compliance

If a contract only focuses on rules and procedures, safety responsibility shifts to the contractor only. Client employees and managers will more likely abdicate any responsibility or accountability towards the safety of contractor employees, apart from providing negative consequences when rules or procedures are not followed. Effective onboarding makes it explicit who owns risk decisions and how both client and contractor will collaborate. Clarity on these elements is critical, especially when work conditions change.

2. SIF Precursors must be jointly identified, not imposed

The work that contractor employees do is different from the work of client employees. Contractors have particular knowledge about the work they need to do, but the client has experience with the specific work environment in which the contractor will work. Collaboration between client and contractor is required to identify SIF Precursor at this intersection: where are controls fragile, where is pressure the highest, and how do assumptions differ?

If this does not happen during onboarding, it will surface later – during execution – when options are fewer and consequences greater.

A SIF precursor is a high-risk situation* in which safety controls are compromised, missing, or ineffective.

*A high-risk task is sufficient to create a high-risk situation.
Amplifiers simply increase the likelihood of an incident or the severity when it happens.

3. Leadership involvement is not optional

Client and contractor leaders cannot delegate onboarding to procurement or the HSE department. Visible leadership involvement sets expectations on how work will be executed, what cultural attributes are fundamental, which leadership behaviors need to be demonstrated at both sides, and how safety decisions will be made across boundaries.

4. Culture is shaped during onboarding

How contractors are treated during contract negotiations and onboarding – as partners or liabilities – establishes behavioral norms that persist throughout the execution of the contract and influences how easily critical safety information will flow between client and contractor.

Step 4: Execution of the Work

As stated above, a contractor safety management system is only as good as its implementation. Procedures, training, and permit to work systems are essential, but they do not guarantee safe outcomes. More than through those systems, safety is defined by how leaders show up in practice, how roles and decision rights are understood in practice, and how risk is really managed under the daily operational pressures. With multiple companies collaborating in the same space, even small gaps in leadership alignment and role clarity can rapidly amplify SIF Risk.

There are a number of elements to consider in the execution phase:

1. Training creates awareness only
2. PTW effectiveness depends on time and attention, not on forms
3. Role clarity must be operational, not theoretical
4. Safety performance reflects how decisions are made under pressure
5. Managing change is a critical moment of execution

1. Training creates awareness only

Training and e-learning are essential starting points. Contractor employees learn how important the elements of the training are through the focus that client supervisors and managers apply, and the quality and consistency of the feedback and support they receive while performing work.

2. PTW effectiveness depends on time and attention, not on forms

Contractors often express frustration with long PTW processing times and mismatches between the instructions and real site conditions. This not only generates deviations, but adds pressure to get the work done in fewer hours than foreseen. It is critical that client supervisors have sufficient time to review the work on site together with the contractor to review how the work will actually get done.

3. Role clarity must be operational, not theoretical

Execution breaks down when assumptions about roles and responsibilities remain hidden. RACI charts are an effective way to clarify those, but only if they are used to facilitate a conversation to surface unclarities, disagreements, and resolve overlaps. A RACI chart should not be a document that is only used after the fact to define legal consequences.

4. Safety performance reflects how decisions are made under pressure

The true test of a contractor safety management system is how decisions are made when schedules slip, conditions change, and production pressures increase. Safety in those moments depends on the extent that employees from both client and contractor feel they have the authority – AND feel supported – to raise concerns and stop the work when controls are compromised or conditions change.

5. Managing change is a critical moment of execution

During periods of change, SIF exposure often increases. Minor changes can typically be addressed by the execution elements covered above. However, when changes are more substantial, a formal Management of Change (MOC) process is required. Indeed, in these cases some elements of the contract may need to be rewritten, or an addendum may be required. This often means that several of the principles of section 3 – contract design and onboarding – also need to be revisited. SIF Exposures may change, new people with different skills, expertise, and expectations may come on board. An effective Contractor Safety Management system anticipates the occurrence of change and provides clear guidance on how this is managed, rather than relying on ad hoc decisions and improvisation under pressure.

Contractor Safety Management System Overview

Projects that are the safest and most successful look beyond rules, compliance, and reporting—they use Contractor Safety Management Systems to incorporate safety into all stages of project planning, design, and implementation.

Learn more about building effective contractor relationships in these additional articles or contact us for a consultation.

• Defining the Challenge of Engaging Contractors in SIF Prevention (Part 1)
• Partnering with Contractors for People-Centered SIF Prevention (Part 3)
• Working with Contractors for Sustainable SIF Prevention (Part 4)