At a time when cost improvements and productivity are more important than ever, collaboration with your contractors is key says Matt Smith, General Manager – Business Development at ATIVO and Mainstream Conference speaker. Instead of viewing your contractors as just another cost, it makes more sense to turn your contractor engagements into a source of competitive advantage.
For many asset owners, it’s just not feasible to maintain the staff numbers required to do some of the more specialised or resource intensive activities like shutdowns. That’s where contractors can provide valuable support. As well as enabling you to reduce fixed staff costs, contractors can prove useful when you don’t have the in-house expertise to deliver specialised work. And the added bonus? No staff performance issues to grapple with – if contracted staff are not doing what they should be, an effective contracting partner will proactively manage or replace them for you.
But dealing with contractors comes with its own set of complexities. The temporary nature of contract work means there can be ownership problems. If people aren’t always on-site they may not have the emotional investment that others have. Therefore the perception can sometimes be that they’ll turn up, do the work and not really care about the outcome as much as what a permanent employee would do.
Another issue I see at the moment is asset owners are only outsourcing at the very height of their peak times and are bringing in the absolute minimum number of contractors required. While this may make sense from a budgetary point of view, this can affect the safety and quality of work performed by limiting the continuity of contractors returning to site.
So how do you overcome these issues and help your contractors work for you? Here are my top four strategies for getting the most out of your contracting partners.
1. Integrate Contactors Into Your Team
The sites that I believe get it right have a certain number of base maintainers that are integrated into the team and not fully outsourced. They can take on lead roles and bridge that kind of cultural ownership with the top-up crews that come and do the work.
So that might mean in the planning and scheduling team you have four of your own planners or schedulers and one or two from your contracting partners that can share expertise and knowledge gained from the multiple sites that they have been exposed to on an ongoing basis. That way you are not outsourcing your whole team and you avoid losing your intellectual property and control to some extent. That same philosophy can be applied to your core preventative maintenance crews. Sure you could say that we’d love to have 40 people in-house to do all the preventative maintenance, but why not have 30 in-house and 10 from your contracting partners? When peak load contractor resources arrive, that core 10 is familiar with your plant, knows where the work fronts are and is familiar with the cultural and safety expectations of the site. This means that they can take on lead roles in the shutdowns or project work and reduce the management burden on your core maintenance team. They feel more ownership as well because they are on-site all day every day interacting with the same people and are therefore part of the on-site culture. From a flexibility perspective, if your core team needs scaling back during lower periods, then the contractor team can be reduced far more cost-effectively than your own core staff.
2. Set, Maintain and Communicate Clear Expectations From the Start
If you want to implement point one above, the most important thing you can do is be upfront. Saying right from the get-go “here’s the mode of delivery, here’s how much work we are going to give you and in what format. Here’s the base and here’s what the peaks and troughs are”. From there you are in a good position to agree on getting higher retention rates from your top-up labour and a safer, more consistent level of service delivery.
There is also an “emotional contract” that needs to be formed with your contracting partner, including the expected behaviours and approach to achieving key objectives. Whilst our industry is good at producing the technical and commercial elements of contracts, we often forget the importance of forming relationships with key stakeholders on both sides of the partnership. The benefit of investing this time with your contractor can’t be understated – it can be the difference between getting a premium level of service during a tough period (e.g. unplanned outage) or spending time and money changing out your contractor every three years.
3. Hold Contractors Accountable for Their Work
Just because a contractor’s workforce is not permanently on-site, it doesn’t mean they aren’t expected to do the same quality of work and they should definitely be held accountable for this. For larger sites, one idea is having a panel of two or three contracting partners you use instead of “putting all your eggs in one basket” so to speak. That way you can measure all your contractors on the same metrics and you can allocate the workload accordingly depending on how well they perform. It creates a sense of healthy competition among contractors and promotes safe, quality work.
You could take it one step further by putting a performance based contract in place, where a portion of the contracting partner’s profit is put aside and only paid if and when agreed KPIs are achieved. These KPIs may be around retention, cost improvement, safety, achievements etc.
4. Listen to Your Contractors’ Advice
Even on a busy site, an experienced supervisor who’s been there for five years may have only done 20 shutdowns. We’ve got supervisors that do a shutdown a week, meaning they do over a 50 a year, of varying duration and complexity. This kind of experience doesn’t come along every day and ignoring contractors’ advice is a big missed opportunity.
Truly engage your contracting partners by being prepared to listen to their thoughts and ideas and incorporate them into your business. A massive part in getting your total costs down is involving more stakeholders and encouraging your contractors to bring forward their ideas. Fully engage them rather than just asking them to turn up at the gate with 10 people once a quarter. Try it and see how many ideas come forward, particularly from the guys “on the tools”.
At a time when cost improvements and productivity are more important than ever, collaboration is key. Instead of viewing your contractors as just another cost, it makes more sense to turn your contractor engagements into a source of competitive advantage.
Matt Smith is General Manager – Business Development at ATIVO and past presenter at Mainstream Conference, the asset management conference for companies that care about leadership, people and culture.