Contractor management

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Erika Ustailieva, Annick Starren, TNO, the Netherlands


Introduction

Companies function more and more in networks (i.e. contractor chains with contractors, suppliers and/or other companies.. This asks for several companies/parties to work together to get the work done. Working in contractor chains is very common in sectors like maintenance , construction, cleaning, and catering.[1]. On the workfloor this collaboration can become difficult because of differences in approaches, ways of working, schedules, working cultures, specific company risks, and the perceptions of risk, etc.

Although it is hard to quantify, there is considerable evidence that working contractor chains has implications for the working conditions and health and safety of There are several mechanisms that cause this. In the first place, contractors are in many cases more at risk than staff because they are new to the working environment. Also, some companies tend to use contractors for specialist tasks, often involving hazardous activities. This could lead to a greater potential for harm if their work is not properly managed. It is the coordination of these different companies, their different activities, the interactions, and the variation in risks, that makes the management of these processes very crucial.

Adequate contractor management asks for specific measures and close co-operation of all parties involved, e.g. a thorough assessment of (sub-) contractor competence, the selection of safe contractors, sound supervision and reviewing and recording of OSH performance at contract termination. N.B. Other related wikis deal with specific issues related to the contractor chain and the supply chain and their influence on OSH.

Who counts as a contractor?

The growth of contracting in work relations has its origin, according to Walters & James [2], in companies’ tendencies to improve their market position, their seeking opportunities for increasing profitability and enhancing flexibility in their responsiveness to market changes [2]. The prioritisation of the market aspect within companies can be observed in recent decades. While playing their role as 'host companies' or 'clients', organisations tend to carry out only core functions, outsourcing subsidiary or specialised functions like cleaning, maintenance, construction, waste disposal and catering to other companies – the 'contractors'. Usually the definition of this kind of relationship is defined as ‘outsourcing’. According to EU-OSHA, this is very common in several industries, such as construction, chemical, transport, and energy [3]. Contractors are external companies, organisations or individuals having a contractual relationship with the client. They can act as either production suppliers or service providers. Therefore, contractors are not employees of the client company, and they can involve other companies – the ‘sub-contractors’ – in order to assist them in fulfilling the contract. In this way the chain of companies emerges as presented in Figure 1.

Figure 1: The contracting chain

Pngraphics.png

Source: Nunes, 2012 [4]

The following definitions are used further in this article and are visualised in the figure above [3]:

  • client or host company – is the company (any employer in the public or private sector) that outsources the (osh-)task. The work is usually done at the client site;
  • contractor (and workers) – is the company that signs the contract with the client for providing (osh-) goods or services and who is not an employee of the client;
  • sub-contractor (and workers) – is a third company contracted by the contractor, for example, for specialised or minor ancillary (osh-)works.

Why manage contractors?

Working with contractors and sub-contractors in complex chains appeared to be a critical issue for occupational safety and health (OSH) and thus is already well explored in EU-OSHA reports [3] [[5] [6] [7] [8] [9].

Safety and health risks when working with contractors

Walter and James [2] concluded that contracting is related with a significant rise in ‘non-permanent’ labour, particularly in the form of self-employment and temporary work, and with a reduction of employment in large companies as well as a growth of employment in small and medium-sized enterprises (SMEs). SMEs often have less adequate and sophisticated systems of risk management. The commercial contracts with SMEs can limit the ability of those contractors to invest in preventive health and safety measures [2]. Also, in small companies job insecurity is high; workers are poorly paid, have low access to training and low control over working time, which in turn contributes to a lack of knowledge and awareness regarding safety issues and complaints [2][3].

The problems regarding the safety and health performance of contractors may be increased by a lack of skilled and experienced labour and by the low frequency with which they are inspected. This leads to less secure, and more likely illegal, employment, where workers have limited access to trade unions and other forms of collective representation – organisations that can promote better health and safety and more adequate risk management systems [2] [3].

Since contractors perform their job in the client’s facilities, they can be exposed to unknown hazards, like biological agents, chemical products, asbestos or noise. Conversely, workers of the client company can also be exposed to hazardous situations derived from the work performed by contractors. These situations mainly originate in activities unfamiliar to the company workers or in activities that are performed unexpectedly [3].

Specific health and safety risks are illustrated by the following example on outsourcing of cleaning services (taken from the EU-OSHA report on contractor safety, [3]). Cleaning is a generic job carried out in all industry groups and all workplaces, outside and inside, including public areas. Cleaning is one task that is mainly contracted out. The cleaning industry is dominated by small businesses, most of which employ fewer than 10 workers. The working patterns of the cleaning sector tend to increase risks to worker health and safety, namely:

  • the workforce in this sector tends to be employed on a part-time and temporary contract basis; it often does more than one job, is female-dominated, and has a high proportion of migrant workers and workers from ethnic minorities;
  • cleaning is often done outside normal working hours, usually in the early morning, evening or night.

Besides this, cleaning workers have a poor perception of the safety issues that can affect their jobs. This problem sometimes is common also for managers of cleaning services and clients. Clients of cleaning companies appear to base their business decisions on price alone, without taking into account issues such as safety and health requirements, quality criteria, or even the security or trustworthiness of a contractor. Therefore there is heavy pressure on cleaning companies to cut costs. This can result in an inadequate investment in training and other management activities essential for worker protection. A good procurement practice that benefits all (client companies, cleaning enterprises, and workers) should be applied with consideration paid to value for money instead of monetary aspects only.

Statistics of accidents involving contractors

Most accident statistics are registered on company level, sector level and national level. Overviews of statistics involving contractors are relatively hard to find. However, statistics from HSE in the UK do show that out of the 49 fatal injuries amongst construction workers, 23 of these fatalities were to the self-employed (RIDDOR)[10]. In a study on the eMARS database, which consists of over 800 reports of chemical accidents contributed by EU member states and OECD countries, 45 accidents were identified where a contract worker was killed or injured or was involved in the accident [11]. Moreover, the Dutch ‘Arbobalans’ shows that in the Netherlands employees with flexible contracts have generally more occupational accidents than permanently employed workers [12]. The registration database for Dutch organisations with a safety certificate for contractors (VCA) shows that in the period 2006–2011 the accident frequency is stabilised at around 7.6 accidents per million man hours (per year) [13].

Estimates of accidents involving contractors can also be made based on sector statistics. For instance, sectors such as [[Construction Safety | construction], maintenance and cleaning are sectors in which most work is subcontracted. It is known that in Europe, every year more than 1,000 workers are killed in the construction industry and over 800,000 workers are injured [14].

What the law says about contractors

The EU-OSHA report [3] on ‘Promoting occupational safety and health through the supply chain’ summarises the main points from the EU and national OSH legislation related to contractor management. Attention to OSH matters when working with contractors is to some extent set out in the European OSH legislative framework and related national legislation. In the European Union, the Framework Directive (Council Directive 89/391/EEC of 12 June 1989) [15] imposes that within the context of their general obligations, employers have to take the necessary measures for the safety and health protection of workers, including prevention of occupational risks. As a general obligation, in order to perform a risk assessment, the client should take into account the nature of the activities to be performed in his company (§3 Article 6). However, the legal OSH framework regarding working with contractors is not clearly defined and regulated. Some implications can, though, be derived from the Framework Directive [15] namely:

  • ‘Cooperation between client and contractor is needed in order to avoid putting their workers in hazardous situations. To accomplish such a goal both employers (client and contractor) shall inform one another and their respective workers and/ or workers' representatives of the hazardous situations they are exposed to. They shall also coordinate their actions in matters of protection and prevention of occupational risks’ (§4 Article 6).
  • ‘The client shall also provide the contractor with adequate information and appropriate instructions regarding safety and health risks and safety measures during their activities in his undertaking’ (§2 Article 10 and §2 Article 12).

The EU Framework Directive was complemented by individual Directives on the implementation of minimum safety and health requirements, addressing different types of risk exposures. For instance, the Council Directive 92/57/EEC of 24 June 1992 [16] that addresses the minimum safety and health requirements at temporary or mobile construction sites (or shortly, the 'Construction Sites Directive'), establishes that the client or the project supervisor shall appoint one or more co-ordinators for safety and health matters for any construction site on which more than one contractor is present. Temporary or mobile construction sites means any construction site at which building or civil engineering works are carried out, which include repair and maintenance activities. Based on the need to reinforce the implementation of the Construction Sites Directive 92/57/EEC, addressed by the Community strategy 2007-2012 on health and safety at work (COM, 2007) and the Commission communication on the practical implementation of the Health and Safety at Work Directives 92/57/EEC and 92/58/EEC (COM, 2008), the European Commission (COM, 2011) recently published a non-binding good practice guide providing explanation, good practice suggestions and information for all stakeholders involved in construction projects, including clients, project supervisors, co-ordinators for safety and health matters at the preparation and execution stages, (sub-)contractors, etc. Chapter 3 of this guide mentions the important role of public authorities in giving incentives to companies with regard to socially responsible and OSH management, by means of their procurement approach. As public purchasers command a large share of the market (e.g. in construction), their impact on their (sub-) contracting chain is significant. The legal basis for public procurement at EU level is provided by the Procurement Directives, namely Directives 2004/17/EC (EU, 2004a) and 2004/18/EC (EU, 2004b).

The importance of the 4 CS: Control, communication, co-ordination and competence

The involvement of clients and (sub-)contractors in providing adequate OSH to their workers requires careful attention at all phases of the interaction between the entities. It begins at the pre-contract stage with a thorough assessment of (sub-)contractor competence and selection of safe contractors. It continues throughout the job execution via close co-operation of all parties and appropriate levels of supervision. At contract termination, it ends by reviewing and recording the OSH performance of contractors and sub-contractors. Furthermore, the complex chain of organisations involved in outsourcing leads to complex forms of communication [3].

The literature addresses several approaches that can be used to achieve safer and healthier workplaces in outsourcing, thus contributing to diminishing work accidents and work-related diseases. These approaches focus on issues such as contractual clarification of responsibilities and planning; communication, co-ordination, co-operation and training; joint control procedures; and contractor evaluation.

Some literature stresses the importance of openness, integration and sharing that are part of such arrangements do create a positive joint approach to OSH that led to its improved performance. There is some evidence that a better focus on OSH is more a result of working together on Health and Safety (OSH) issues than a result of working with the individual client or contractor. The formation of collaborative contracts that foster this approach is therefore recommended. It is clear, however, that time and effort is required and it is necessary for all parties to work hard at developing a partnering culture throughout the projects or services, so wherever appropriate and possible, long-term partnerships are preferred. It is essential that the parties with their different background cultures work together as one unified team with agreed common goals. The process of changing behaviours and values to those required in a partnering culture is a deep-seated one. There will be many challenges along the way, which will test individual resolve and the strength of the relationship. At these times, in particular, strong leadership focused on the common objectives is critical to success [17]. Some recommendations related to the 4 Cs (Control, communication, co-operation and competence) that help to create a positive safety culture can also help in contracting [3]:

  • Outsourcing should be based on a strong relationship between client and (sub-)contractors supported by information and communication.
  • Companies should select ‘safe contractors’ based on a sound procurement strategy that considers ‘best value for money’ rather than ‘lowest price’.
  • Client company, (sub-)contractors and workers should combine efforts in order to find the best solutions to ensure an adequate performance and safety of outsourced tasks.
  • The outsourcing contract should contain information on the potential hazards and the measures that have been taken to eliminate or limit them.
  • It is advisable that a third-party certification exists in order to evaluate, certify and ensure the performance and competencies of individuals (workers) or companies (contractors, and those working for them: sub-contractors), with regard to OSH (and environmental issues).
  • Training (sub-)contractors in OSH issues for aligning procedures, harmonising safety culture and improving OSH performance is necessary.
  • Companies should implement control procedures.

How to manage contrActors: What to consider when selecting a suitable contractor

In appropriate management of contractors the definition of a sound profile for the contractor (qualifications, skills, competencies and experience) is important, including also a job description with health and safety implications. Moreover, vetting procedures or listing of approved contractors can help in the selection of contractors. When contractors are working for longer times for the same company this is beneficial for safety. Collaboration with professional training institutes and vocational schools can be helpful.

Examples of what questions you can ask a contractor during the selection phase are:

  • What arrangements will you have for managing the work?
  • Who will be responsible?
  • How will the work be supervised?
  • What checks do you make on equipment and materials, etc.?
  • Will subcontractors be used? If so, how will they check their competency?
  • Are language and/or (interorganisational) culture barriers identified and managed?
  • What is their recent health and safety performance?
  • How many accidents and cases of ill health have they had over the past five years?
  • Can they provide a risk assessment for a similar job? What qualifications, skills and experience do they have in these types of work?

Of interest is the Finnish initiative called ‘Shared work places’ [18], meaning that employees of different organisations share the same work premises and, of course, the potential safety risks as well. There are, for example, ‘shared workplaces’ on construction sites, industrial production lines and also in commercial shopping centers. Many of the “shared workplaces” require that all working in the same premises have a valid “occupational safety card” [[19]. The training for qualifying to this card provides standardized basic safety training – although the main employer is always required to provide workplace specific safety instructions. There are many industrial plants that require to all subcontractor employees to have a valid “occupational safety card”. The Finnish national legislation stipulates that employers of shared workplace need to work together to prevent risks, for example, by appointing a joint safety manager [20].

Before the contractor commences, it is important to know how risks associated with the works are assessed and by whom, and how control actions with the contractor are agreed. During the work, the following aspects are important:

  • introduction procedures for new contractor’s onsite – what should be included;
  • what information, instruction and training should be provided to contractors?
  • managing and supervising the work – by whom and how?

Afterwards an evaluation of the contractor’s work should be undertaken, based on the earlier mentioned profile and risk indicators. For the evaluation of the contractor and its work it is beneficial if the start-up is performed with care. In the contracting and start-up of a project, agreements are made on responsibilities, project outcomes and collaboration partners. At the end of the project these agreements can be evaluated and positive and negative experiences can be shared and learned form.

References

  1. EU-OSHA – European Agency for Safety and Health and Work, E-fact 62 - Safe maintenance - Working with contractors and subcontractors, 2012. Available at: [1]
  2. 2.0 2.1 2.2 2.3 2.4 2.5 Walters, D., James P. Understanding the role of supply chains in influencing health and safety at work. Leicester: Institution of Occupational Safety and Health (IOSH), 2010
  3. 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 EU-OSHA – European Agency for Safety and Health and Work, Promoting occupational safety and health through the supply chain, 2013. Available at: [2]
  4. Nunes, I.L., 'The nexus between OSH and subcontracting', IEA 2012, Recife, Brazil, 2012
  5. EU-OSHA – European Agency for Safety and Health at Work, Occupational safety and health in marketing and procurement, Luxembourg, Office for Official Publications of the European Communities, 2000. Available at: [3]
  6. EU-OSHA – European Agency for Safety and Health at Work, Recognition schemes in occupational safety and health, Luxembourg: Office for Official Publications of the European Communities, 2002, pp.81. Available in English at: [4]
  7. EU-OSHA – European Agency for Safety and Health at Work, Building in Safety - Prevention of risks in construction - In practice, Luxembourg: Office for Official Publications of the European Communities, 2004, pp. 64. Available in English at: [5]
  8. EU-OSHA – European Agency for Safety and Health and Work, Preventing harm to cleaning workers, Luxembourg, Office for Official Publications of the European Communities, 2009, pp. 225 . Available at: [6]
  9. EU-OSHA – European Agency for Safety and Health at Work, Safe maintenance in practice, Luxembourg, Office for Official Publications of the European Communities, 2010. Available at: [7]
  10. HSE – Health and Safety Executive (no date). Construction industry. Retrieved on 15 April 2014, from: [8]
  11. MAHB bulletin 2 - Lessons Learned Bulletin No.2, Chemical Accident Prevention & Preparedness: Major accidents involving contractors. Available at: [9]
  12. Hooftman, W., Klein Hesselink, J., Verbiest, S., van der Klauw, M., Starren, A., van der Beek D., Arbobalans 2012: kwaliteit van de arbeid, effecten en maatregelen in Nederland (in Dutch), TNO, 2012
  13. VCA, Analyse VCA Incident Database Ongevalfrequentie (Analysis VCA Incident Database accident frequency). Available (in Dutch) at: [10]
  14. EU-OSHA - European Agency for Health and Safety at work, ‘Actions to improve health and safety in construction’, Magazine 7, 2004. Available at: [11]
  15. 15.0 15.1 Council Directive 89/391/EEC of 12 June 1989 on the introduction of measures to encourage improvements in the safety and health of workers at work, OJl L 183 , 29/06/1989 P. 0001 – 0008. Available at: [12]
  16. Council Directive 92/57/EEC of 24 June 1992 on the implementation of minimum safety and health requirements at temporary or mobile constructions sites (eighth individual Directives within the meaning of Article 16 (1) of Directive 89/391/EEC), OJ L 245, 26.8.1992, p. 6–22. Available at: [13]
  17. Winkler, C., and Mice C.E., Client/contractor relationships in managing health and safety on projects, Research report 462, HSE, 2006
  18. Eurofound – European Foundation for the Improvement of Living and Working Conditions, Shared workplaces, 2009. Available at: [14]
  19. TTK, The Occupational Safety Card – Työturvallisuus kortti, presentation slides, no date. Available at: [15]
  20. Act on Occupational Safety and Health Enforcement and Cooperation on Occupational Safety and Health at Workplace, no. 44/2006 (as amended by 701/206), Ministry of Social Affairs and Health (in Finland), unofficial translation. Available at: [16]

Links for further reading

EU-OSHA – European Agency for Safety and Health at Work, ‘European good practice awards 2010/11 - a European campaign on safe maintenance’, Office for Official Publications of the European Communities, Luxembourg, 2011. Available at: [17]

EU OSHA – European Agency for Safety and Health at Work, ‘Use of good safety management practices (in Finland), Case study. Available at: [18]

Safety performance indicators – 2012 data, Report no. 2012s, OGP Data Series, June 2013. Available at: [19]