Driving Zero Harm with Efficiency Improvements in Contractor Management

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1 Driving Zero Harm with Efficiency Improvements in Contractor Management By Debra Evans Partner, Senior Consultant Kepner-Tregoe, Inc. Leo Jolly Senior Consultant Kepner-Tregoe, Inc.

The Federal Mine Safety and Health Act of 1977 defines a contractor as any person, partnership, corporation, subsidiary of a corporation, firm, association or other organization that contracts to

2 The Federal Mine Safety and Health Act of 1977 defines a contractor as any person, partnership, corporation, subsidiary of a corporation, firm, association or other organization that contracts to perform services or construction at a mine. Contractors are men and women who contribute significantly to the daily outputs the products and services required by successful mining organizations. Contractor personnel are more vulnerable to hazards than full-time mine employees. A recently published article by New South Wales (NSW) Industry and Investment magazine, offered riveting data provided by the NSW Work Cover and Coal Services Pty Ltd. They show that contractors accounted for half of all fatalities in the NSW mining industry between 2001/02 and 2006/07. In coal mines, four out of five fatalities (in this same period) were contractors. Almost a third of all serious bodily injuries have been sustained by contractors. (State of New South Wales through Industry & Investment NSW September 2009) Employees new to the mining site are less familiar with work procedures, work environment, and habits of the existing workforce. Contractors engaged in high risk areas should be considered vulnerable and must be protected with the same vigor as their full-time counterparts. With this in mind, Kennecott Utah Copper (KUC) one of the largest copper mines in the world took action to improve contractor management, and by implication safety in At the time this program began, contractor injury rates were higher than full time employees. As safety performance is correlated to solid contractor management, KUC and Kepner-Tregoe (KT) partnered to enhance the existing Contractor Management System (CMS). The current CMS outlined policies and procedures for managing contractors, including the recognized need for a well defined scope of work. However, more precision was needed to ensure that roles and responsibilities were clear, expectations were identified, and Contract Administrators (CA) had tools to support consistent and defined scopes of work as well as safe practices specific to the contractor workforce. To create a solid foundation for the program, KT s robust Project Management and Issue Resolution tools were integrated into daily contractor management practices. In order to sustain improved performance, KUC and KT identified the critical elements necessary to change behaviors. These critical elements or building blocks ensure that this effort will not become a flavor-of-themonth training initiative. 2

Building Blocks: 1) Business Process Design 2) Business Process Performance Management 3) Business Process Ownership To identify the organization s starting point, KT conducted a current-state

3 Building Blocks: 1) Business Process Design 2) Business Process Performance Management 3) Business Process Ownership To identify the organization s starting point, KT conducted a current-state diagnostic review and gathered data to identify the organization s strength as well as areas for improvement. The diagnostic revealed that safety as the number one priority is communicated effectively to all employees. It also showed the process for managing standard maintenance was effective, well understood and controlled with little variance. Opportunities for improvement existed in contractor work definition and contractor management. Areas of improvement: Work scope identification Robust planning to minimize fire fighting and risks Identifying critical tasks and accountabilities Consistent management procedures Fast and effective measurement for monitoring work execution Reduce non-value added work At the close of the diagnostic, there was sufficient evidence to encourage agreement among KUC leaders that improving contractor performance would be beneficial to the health and well-being of all KUC employees. This effort became the Contractor Management Improvement Program. Work began immediately to identify and develop four tactical initiatives and two sustainability initiatives. 3

Tactical initiatives: Small Job: work scoping and planning process One Best Way: for project definition and planning Perfect Shift: process for shift start-up and sand-off Issue Escalation and

4 Tactical initiatives: Small Job: work scoping and planning process One Best Way: for project definition and planning Perfect Shift: process for shift start-up and sand-off Issue Escalation and Resolution: process for work execution Sustainability initiatives: Process Measurement and Management Identifying appropriate measurements (including leading and lagging indicators) to measure the performance of contractor management process Development of processes and tools to collect, report, and analyze performance information; provide corrective actions to deficient performance and identify future improvement opportunities Development of dashboards for easy access to process performance Determination of the optimal organization structure and appropriate job profiles Identify new roles, responsibilities, skills, and requirements necessary to support the improved work scoping, planning, and execution processes Documentation for who (is accountable) for what (activities) and when (during the contractor management processes) Evaluation and selection of an optimal organization structure (or modifications to existing structure) to support management of roles and functions 4

5 Primary work conducted: Process design and execution (with an emphasis on the ability to implement as well as the ability to transfer to other sites) Leveraging best practices (internal and external to KUC) Formal training on new processes (both contractor and KUC resources) On the job coaching Follow-up (debugging, fixing issues) Development of KUC Process Leaders and Process Coaches Through process design efforts, several tools were created to support new, easy-to-understand processes Tools included: Initial Pre-Scoping Worksheet Contains a clear definition of the work expected and measures by which the work will be evaluated Job/Project Scope Template Identifies major work deliverables including definition of KUC supplied resources, contractor supplied resources, a safety health and environmental analysis focused on the major deliverables, and a Potential Problem Analysis Issue Escalation Tracking Form Identifies key information a contractor needs to provide to KUC so that the critical issues are resolved by the appropriate people Ensures issues that contribute to scope creep are identified, documented, and managed Contractor Jobsite Book Communicates efficiently and effectively the job scope, safety risks, and other critical information required for every contractor to get the job done right at KUC 5

6 KUC executive leadership asked the smelter general manager to pilot this project. Careful thought and executive level commitment by several smelter leaders laid the foundation for successful definition, planning, and implementation of the project. Changing behaviors to create positive outcomes is difficult for any organization. Sustaining a positive change requires a laser-focused passion for this program. To ensure the initial and subsequent continued success for this program, several smelter team members were dedicated to shepherd the project from initial planning, through implementation. After months of dedicated effort, the KUC smelter team experienced considerable success as a result of this extraordinary project. Results At the conclusion of the project, contractors rate of injury dropped by 4-fold, equal to full-time workers, and continues to show stability well into the future Improved cost performance: At the conclusion of a floor repair project, a contractor asked for additional fees. A review of the Issue Escalation Tracking Form revealed no concerns, issues or problems that required additional work, were raised at any time during the project. Savings to KUC = $75,000 A contractor removed an agreed-upon volume of material from the east pond at KUC. This dredging project took more time than expected leading to a request for additional funds. A review of the Initial Scoping Worksheet revealed an agreement on volume not time. Savings to KUC = $75,000 A dispute arose regarding damages and delays associated with a slag bunker project. A review of the Issue Escalation Tracking Form provided factual details on weather and production delays, showing 50% fewer delays than claimed by the contractor. Savings to KUC = $30,000 6

According to Clayton Walker, COO at KUC, Zero harm and efficient and effective management of our resources are key areas of interest to KUC.

7 Conclusion The journey which began in the spring of 2010 continues through 2011, with a trend of positive results at the smelter. As a result of the Contractor Management Improvement Program, KUC is looking at other areas of their operation where significant improvement can be realized. According to Clayton Walker, COO at KUC, Zero harm and efficient and effective management of our resources are key areas of interest to KUC. We actively support many safety initiatives as we endeavor to drive KUC to a Zero Harm organization. The Contractor Management Program is a significant example of our determination to make each day a safe one so that all employees and contractors can go home safely to their families. 7

Debra specializes in helping companies to design and implement unique organization interventions that achieve targeted results.

8 Debra Evans Partner, Senior Consultant Kepner-Tregoe, Inc. As a leader in the Industrial Products Practice, Debra Evans serves KT clients in natural resources (Rio Tinto, Kennecott, Cinergy) and defense and aerospace (Lockheed Martin, General Dynamics, DRS). Debra specializes in helping companies to design and implement unique organization interventions that achieve targeted results. Her clients are drawn from manufacturing, service, high technology, and utility companies. Debra helps clients address their business challenges with solutions that use KT s proprietary technologies such as Strategy Formulation and Execution, Project Management, Problem Solving & Decision Making, and Performance System support. These engagements consistently ensure measurable and sustainable results for KT customers. Before joining Kepner-Tregoe (KT) in 1986, Debra was an organization and management development specialist with Martin Marietta Corporation. In this position, Debra facilitated organization development programs such as performance management, problem solving and decision making, organizational interventions, team building, and a variety of management skill-building programs. She also designed, delivered, and directed a productivity improvement program for the Procurement Division at Martin Marietta. Martin Marietta was later acquired by Lockheed Corporation becoming Lockheed Martin Corporation. Prior to her work with Lockheed-Martin, Debra spent five years with Tektronix, Inc. in Beaverton, Oregon. As a member of the Manufacturing Engineering Division, she created and delivered a successful employee involvement program aimed at increasing productivity and employing problem-solving skills. Her work at Tektronix was published as a part of Dr. Robert Leherer s book entitled, Participative Productivity and Quality of Worklife. A graduate of Northwest College, Debra has a bachelor of arts degree in Organization Management. Leo P. Jolly III Senior Consultant Kepner-Tregoe, Inc. Leo P. Jolly III is a senior consultant at Kepner-Tregoe (KT). His primary areas of focus are: major project facilitation, organizational culture change, business process improvement, and operations excellence interventions across industry markets. He has worked with all levels of organizations, from the shop-floor to the boardroom, in client organizations such as JR Simplot, Kennecott Utah Copper, MARS and Wrigley s. Prior to working with KT, Leo was an independent consultant for 10 years working with clients in the development of business strategies, long range business plans, leadership development as well as supporting the micro enterprise development in the state of North Carolina. Prior to his independent business Leo spent 18 years with Digital Equipment Corporation. He worked in several capacities throughout his career with DEC, including director of worldwide services for their hardware and software services. He also held positions in manufacturing, engineering, and worldwide logistics functions. For more information, visit us at or us at info@kepner-tregoe.com Kepner-Tregoe, Inc. P.O. Box 704 Princeton, NJ Fax info@kepner-tregoe.com 26 May 2011 KL749 Copyright 2011 Kepner-Tregoe, Inc. All Rights Reserved P430211

KT-CAPA: Skills are Not Enough. By Jamie Weiss Senior Consultant Operational Excellence Group, Kepner-Tregoe

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