| Contracting Policy and Procedures | No formal contractor policy or procedures exist. Everyone manages contractors differently, or applies the same approach to all contracts. |
A number of contracting procedures exist to ensure compliance and control: • Procedures are primarily driven by financial requirements. • Compliance with health and safety regulations is covered in detail. • There is a general understanding that different contracting types exist. • Contractors are largely managed based on instinct. |
A formal contracting policy ,with supporting procedures, exists: • Contractor categories are defined based on work criticality, costs and risks. • The policy defines criteria for deciding when work should be contracted out. • The policy specifies how different contractors should be managed. • Detailed contracting procedures with steps and responsibilities exist and are accepted by all role players. |
The contracting policy and procedures have been expanded and refined: • The current policy and procedures have been implemented and evaluated. • The performance management process for contractors is defined. • The policy and procedures provide sustainable development guidelines. • The contractor development focus is defined, e.g. develop locals, reduce dependency, or improve performance. |
The policy is reviewed regularly in line with the AM Strategy: • Changes in legislation and/or working conditions are addressed. • Changes in operational conditions or the AM Strategy are addressed. • All contract incidents or problems have been analysed and addressed. • Contractors from all categories are included in the review process. |
| Contractor Selection | There is no guideline or process for selecting a contractor. Everyone uses his own judgement, which is normally based on price or some ulterior motive. |
The policy specifies that contractors are selected based on the lowest price: • A procedure defines the format and number of quotations to be obtained. • Extensive motivation is required to accept a higher quotation. • A list of approved contractors is available for a small amount of generic outsourced work. |
Contractor selection criteria are category specific: • Selection criteria have been defined for each of the 4 contractor categories. • These criteria include price, technical competence and EHS track record. • A formal selection procedure defines the steps and responsibilities involved. • A list of approved contractors exists for all significant outsourced work. |
Contractor selection is based on more advanced criteria: • Previous performance is considered. • EHS compliance is considered. • Additional value-adding services are considered. • Affirmative action and economic empowerment are considered. • The list of approved contractors is kept up-to-date. |
The selection process is dynamic: • The criteria are updated in line with the organisations strategy and circumstances. • The selection process supports the sustainable development policy. • It considers the contractors own continuous improvement programme (e.g. ISO 9001 or 14001). |
| Contractual Agreement | No formal contracting agreements are documented. The contractors quotation is the only form of agreement available. |
A generic contractor agreement template is available for contract work: • The agreement is updated for each new contract, but only contains the agreed price and high level deliverables. • EHS requirements are specified. • Formal acceptance is acknowledged by the contractors signature. |
The format of the contractual agreement and the process have been formalised: • A standard agreement template exists for each contractor category. • The contractual agreement covers all aspects defined in the contracting policy. • Specific deliverables and responsibilities are listed in an SLA. • The payment process enforces compliance with the agreement. • The standard guidelines facilitate fast negotiations between parties. |
Formal agreements are in place according to a standards: • All categories of contracts have signed agreements. • Agreements cover all aspects of contractor management, including payment, EHS, performance and roles. • Forward purchase agreements are in place for regular non-critical contracts. • Formal recognised contract negotiation practices are used to define the deliverables and price. |
The EAMS is used to manage the agreements with contractors: • Contractors are aware of their role in implementing the AM Strategy. • The EAMS can facilitate full contractor management and quality assurance (QA). • Performance targets are benchmarked to ensure that they are realistic. • Contract negotiations focus on developing a win-win agreement for both company and contractor. |
| Work Management | The work performed by contractors is managed in an ad hoc way. Instructions are normally verbal, leading to poor control and misalignment with the internal asset management systems. |
Contract owners manage contractors informally with different levels of success: • Field releases or purchase orders are used for instructions to contractors. • The use of the internal safety procedures (e.g. permits) is enforced. • Safe working procedures are available to contractors but not always used. • Contract owners have not had any training in contractor management. |
Contractors are managed via internal work orders from the CMMS/EAMS: • All contracted work is issued via WOs. • Completed WOs are returned and captured as history in the CMMS/EAMS. • The return and completeness of WOs is a pre-requisite for payment. • Safe working procedures are referenced on the WOs. • Persons responsible for contractors had training in contractor management. |
Contractors are managed via the Work Planning and Control system: • All contract work is formally planned and scheduled. • EHS requirements such as permits and risk assessments are included on the WO. • Contractors participate in weekly scheduling meetings to align with maintenance and operational activities. • No contractor is allowed to work on assets without a formal WO. • KPIs such as schedule compliance and backlog are applied to contractors. |
The EAMS enables real time management of contractors: • Contractors record work progress and feedback on-line (via a PDA or tablet.) • WO status is tracked on-line. • Response times are monitored in real time for critical SLA elements. • Problem areas are automatically escalated to the appropriate authority. • Contractors participate in problem solving and improvement initiatives. |
| Performance and Quality Management | The quality of contract work is not checked via a formal process. This leads to frequent rework, repetitive failures and allocation of blame between the organisation and the contractor. |
Performance management is limited to an informal review of work quality: • Ad hoc checks are performed by supervisors during walk-abouts. • Completed work is checked for sign-off before payment. • Extra quality checks are done when using a contractor for the first time. • Some disputes occur because the scope of work and standards are unclear. |
Performance management is formalised: • A formal procedure with clear roles exists for over-inspections and QA. • More effort is spent to manage critical contractors. • Less critical contracts are frequently not managed closely. • Most contract KPIs are generic and not always objective. • Contract work is reviewed at least once during execution, with a final review after completion. |
The performance management process has been streamlined: • The process is category-specific and focuses on significant contracts. • Specific and objective KPIs are used, with predefined incentives and penalties. • The performance of all contractors is regularly reviewed against their SLAs. • Over-inspection results are managed and recorded via the EAMS. • Results are used for future contractor selection. |
The EAMS facilitates the performance management of significant contracts: • The EAMS is used to measure contract deliverables against the SLA. • WOs make provision for detailed quality assurance steps. • Contractors use the EAMS to view their performance and drive improvements. • Response times for critical SLA items are monitored electronically and problems are escalated automatically. |
| Contract Admin. | Contract administration is done in an informal and ad hoc manner, since it is not recognised as a specialist function. As a result, there are conflicts and confusion, and time is wasted in processing transactions that involve contractors. |
Contract administration is more structured but still informal: • Standard procurement rules apply to contracts and contractors. • Contractors are paid on receipt of formal invoices. • Meetings and interactions with contractors happen on an ad-hoc basis. |
A formal contract administration process is in place: • A detailed procedure exists with clear responsibilities and support documents. • People responsible for contract administration had formal training. • A system exists to store and access contractor records and documents. • Interaction with contractors happens according to clear guidelines. |
Contract administration is a streamlined specialist function: • Forward purchasing agreements are in place for frequent low value contracts to facilitate automated payment. • Payment of penalties and incentives are integrated with these FPAs. • Contract agreements are reviewed at set intervals. • Disputes are managed formally. |
Contract administration effectiveness is measured and automated: • Contract administration staff are measured on contract performance. • Contract close-out reports cover lessons learnt and contractor performance. • Closeout reports are stored and used for future contractor selection. • FPAs are used extensively across all contractor categories. |
| Contractor EHS Management | Contractors are expected to perform the work with minimum effort and expense. The contractor is also entirely responsible for all EHS problems on the contract. As a result, there are frequent EHS incidents on contracts. |
EHS performance on contracts is treated with varying levels of importance: • Contractors have to meet initial EHS pre-qualification requirements. • The focus on EHS frequently decreases during the contract execution. • Standards are frequently lowered when contractors do not meet them. • Contractors have to use their own resources to achieve EHS standards. |
EHS is a key focus area during contract allocation and execution: • Contractor pre-qualification requires proof of a working EHS management system conforming to minimum criteria. • EHS induction programs are developed for each contractor category. • The organisation and contractors run joint EHS initiatives. • EHS conformance is a key element of the performance and quality review. |
The organisation invests in contractor EHS capability to ensure full compliance: • All the standard internal EHS practices apply in full to all contractors. • Contractors are rewarded for reaching the organisations EHS targets. • EHS training is provided to contractors. • Formal EHS risk assessments are done jointly before contract commencement. • Safety checks are implemented prior to all contracted work. |
There is a joint zero tolerance approach to contractor EHS practices: • EHS problems are solved jointly and proactively with contractors. • Both parties expect and accept that work will be postponed until EHS standards are met. • Evidence proves that the contractors EHS performance is world class. |