Manukau City Council's procurement arrangements
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HEALTHY PEOPLE IN SAFE AND PRODUCTI V E WORKPL ACES Principals achieving health and safety outcomes Manukau City Council’s procurement arrangements Case study of best practice
Acknowledgements Prepared for the Department of Labour by Health Outcomes International Pty Ltd. The views expressed in this paper do not necessarily represent those of the Department of Labour. The authors wish to thank the Manukau City Council staff, contractors and other stakeholders for their time and feedback. In particular, we acknowledge the significant assistance provided by Manukau City Council’s Health and Safety Manager, Health and Safety in Contracts Officer and Craig Macdonald. Image Disclaimer: This evaluation has been undertaken based on information provided by Manukau City Council and external stakeholders who participated in key informant interviews. The authors have relied significantly on feedback and data provided by individual commentators, which has not been independently verified. The evaluation was undertaken during June–July 2009. The relatively short time available to undertake the evaluation meant that data analysis was limited to summary data from existing Manukau City Council reports. The Department of Labour has made every effort to ensure that the information contained in this report is reliable, but makes no guarantee of its accuracy or completeness and does not accept liability for any errors. The information and opinions contained in this report are not intended to be used as a basis for commercial decisions, and the Department accepts no liability for any decisions made in reliance on them. The Department may change, add to, delete from or otherwise amend the contents of this report at any time without notice. The material contained in this report is subject to Crown copyright protection unless otherwise indicated. The Crown copyright protected material may be reproduced free of charge in any format or media without requiring specific permission. This is subject to the material being reproduced accurately and not being used in a derogatory manner or in a misleading context. Where the material is being published or issued to others, the source and copyright status should be acknowledged. The permission to reproduce Crown copyright protected material does not extend to any material in this report that is identified as being the copyright of a third party. Authorisation to reproduce such material should be obtained from the copyright holders. ISBN 978-0-478-33396-1 February 2010 © Crown copyright 2009 Department of Labour PO Box 3705 Wellington New Zealand www.dol.govt.nz 2
Principals achieving health and safety outcomes Manukau City Council’s procurement arrangements Case study of best practice
Contents EXECUTIVE SUMMARY...................................................................................................3 1. INTRODUCTION..............................................................................................................7 1.1 Background................................................................................................................ 8 1.2 Methodology............................................................................................................. 9 2. THE MANUKAU CITY CASE STUDY.........................................................................10 2.1 Overview of Manukau CC’s approach............................................................ 11 2.2 Implementing the new arrangements.......................................................... 14 2.3 Impacts and achievements............................................................................... 21 2.4 Contractors’ perspectives................................................................................ 27 2.5 ACC and Departmental perspectives.......................................................... 28 2.6 Value for money...................................................................................................... 29 2.7 Good practice principles..................................................................................... 32 2.8 Looking to the future........................................................................................... 34 2.9 Conclusion................................................................................................................. 36 APPENDIX: EVALUATION OF MANUKAU CC’S APPROACH AGAINST THE DEPARTMENT’S DRAFT GUIDELINE................................................37 List of Tables and Figures Figure 1: Typical life cycle of a physical works contract....................................... 13 Table 1: Summary of key changes to Manukau CC’s procurement arrangements in relation to health and safety........................................................ 17 Table 2: Manukau CC data on health and safety in physical works contracts...................................................................................................................... 26 Table 3: Costs per case, by severity, injury and type of cost, 2004–05 ($)................................................................................................................................ 31 2
Executive Summary This case study was commissioned by the Department of Labour (the Department) to describe Manukau City Council’s procurement arrangements and assess their effectiveness in enhancing health and safety outcomes. It provides information that will be of use to other local councils and principals on meeting the requirements of the Health and Safety in Employment Act 1992 when contracting out services. Manukau City Council (Manukau CC) is the major purchaser of physical works in New Zealand’s fastest growing and most ethnically diverse city. In 2008/09, Manukau CC spent over $135 million on physical works contracts including roading, parks, solid waste, storm water and properties. In 2004, Manukau CC identified physical works1 as a major risk area for health and safety. A dedicated team was established to manage health and safety in contracts to ensure statutory requirements were being met. An independent consultant was engaged to assess risks and recommend a process for improvement. Implementation of the new arrangements commenced in 2005. In 2008, Manukau CC was awarded first place in the Department of Labour Best Initiative to Address a Safety Hazard category in the Safeguard NZ Workplace Health and Safety Awards. The award recognised Manukau CC as a leader in the use of procurement to achieve desirable health and safety compliance outcomes when services are delivered. 1. In this context, ‘physical works’ includes any work involving construction, maintenance or installation of physical infrastructure or equipment, for example, work relating to roading, use of boats, trimming trees, helicopter water 3 sampling, parks, storm water, waste water, waste collection, property construction/maintenance, events, community services such as construction or maintenance work in town centres, and temporary installation and operation of site investigation or testing equipment.
Overview of Manukau CC’s arrangements Manukau CC works in partnership with its contractors to maintain a high level of safety on physical works contracts. A systematic approach is in place to ensure that all physical works contractors, subcontractors and their employees prevent injury and comply with legislative requirements. Before physical works contractors can successfully tender for a Manukau CC contract, the contractor must either be a Certified Partner in health and safety with Manukau CC or be in the process of becoming a partner (and their application must be approved prior to the final decision in the competitive process). To become a Certified Partner, a contractor must have their health and safety processes pre-approved by Manukau CC. This process involves completing a pre-approval form, providing an example of a site-specific health and safety plan, nominating referees who can provide feedback on past health and safety performance and allowing a Manukau CC representative to conduct a health and safety audit of their systems if requested. Applicants must also provide evidence that their health and safety systems and processes meet an accepted external standard, including ACC Workplace Safety Management Practices (WSMP) or Workplace Safety Discount (WSD) schemes, AS/NZS 4801:2001, QEST (Quality, Environment, Safety – Total Integrated Management) or Operate Safe. Impacts Since the implementation of the new health and safety arrangements in physical works contracts: • Manukau CC has established processes and is growing organisational capability to effectively manage contractors’ safety • all stakeholders (internal and external to Manukau CC) have increased knowledge and awareness of safety in physical works contracts • contracts are being awarded to higher-quality contractors in regard to health and safety practices, due to the requirement for contractors to be Certified Partners • there is a faster and more streamlined evaluation process for tenders • contractor performance in health and safety has improved, and continues to improve • serious harm accidents and improvement notices issued by the Department have reduced • physical works contractors and professional services consultants are usually reporting their health and safety statistics monthly to Manukau CC, and the council’s Senior Management Team receives monthly reports on health and safety statistics and trends in physical works contracts. Stakeholder feedback suggests that subcontractors in Manukau are increasingly recognising the necessity and business advantages of providing evidence of their training and competency in health and safety to their clients and to have comprehensive hazard 4 management systems in place prior to work commencing.
Feedback from local Departmental and ACC staff indicates increased confidence in Manukau CC’s health and safety arrangements as a result of the new approach. Where the Department previously saw a need to take a proactive role in managing hazards identified in Manukau CC contracts, confidence in Manukau CC has now increased to the point where the Department will bring such hazards to Manukau CC’s attention with the expectation that appropriate steps will be taken to manage these issues as they arise. Similarly, ACC has noticed increased awareness of health and safety requirements among contractors and subcontractors and has received increased enquiries about the WSMP and WSD, which were attributed to referrals from Manukau CC. Benefits for Manukau CC and contractors are principally related to reduced risk. Although contractors’ reporting of accidents and incidents to Manukau CC is not 100% complete or accurate, available statistics suggest reductions have been achieved in accidents and serious harm injuries. Manukau CC data based on monthly reports from Certified Partners (see Table 2) suggest a reduction in the number of accidents requiring medical attention and first aid over the last four years, as well as a reduction in the number of serious harm injuries. The increasing number of partner contractors registered on Manukau CC’s website is also shown. For context, Table 2 also shows the total value of physical works contracts each year, which has remained relatively static. Good practice principles Manukau CC’s approach to health and safety in physical works contracts is consistent with legislation and broadly consistent with the Department’s draft guideline. A feature of Manukau CC’s approach to this overarching process is a practical focus, aimed at improving everyday business for the council and contractors and “taking the pain out of compliance”. For example, Manukau CC coordinates its site visits and audits with other organisations including ACC, the Department and professional services consultants to ensure their efforts are not duplicated and do not impose an unreasonable burden on contractors. This helps to support efficient use of collective resources as well as contractor buy-in. The practical focus also recognises that paperwork is a means to an end. While paperwork may be fully compliant, managing hazards on site is what improves safety, and this is more variable in practice. Therefore, Manukau CC concentrates more time and resources on assessing practices on site rather than compliance with documentation. Contractors and Manukau CC staff spoke highly of the inclusive and non-confrontational approach to implementation and the Health and Safety Team’s ongoing commitment to developing mutual trust through partnership. This was recognised as a success factor both in implementing the new processes and in their ongoing efforts to create awareness and bring about culture change within Manukau CC and its contractor community. 5
Conclusion Manukau CC is a leader among local authorities in its approach to health and safety in physical works contracts. Its policies generally reinforce the principles set out in the Department’s draft guideline.2 The systems are still becoming embedded at Manukau CC and in some contractor organisations – practice is catching up with policy and requires ongoing culture change. However, improvements have already been achieved in health and safety practices and outcomes. Importantly, Manukau CC’s arrangements enjoy strong support from external stakeholders as well as internally from senior management. Councils have the potential to significantly influence health and safety practices in small to medium-sized companies due to the scope and scale of physical works contracts for which they are responsible. Manukau CC experience shows that this influence is effective in enhancing contractor health and safety practices when it is linked to eligibility to enter into contracts with Manukau CC and links contractors to appropriate supports. To be effective nationally, consistent processes and consequences are needed across all local bodies. 6 2. Department of Labour, 2008, A principal’s guide to contracting to meet the Health and Safety in Employment Act 1992.
1 | Introduction The Department of Labour (the Department) commissioned this evaluation of the procurement arrangements of Manukau City Council (Manukau CC) in recognition of the council’s work in using procurement to achieve desirable compliance outcomes when services are delivered. This evaluation report presents a case study of Manukau CC’s procurement policies and practices and assesses their effectiveness in enhancing health and safety outcomes. The case study provides information that will be of use to other local councils and principals on meeting the requirements of the Health and Safety in Employment Act 1992 when contracting out services. Manukau City is the third largest of New Zealand’s districts, with a population of 328,968 at the 2006 Census. In population terms, it is the fastest growing city. It is also the most diverse and multicultural urban environment with over 180 ethnic groups, including 15% of its residents who identify as Maori, 28% as Pacific and 22% as Asian.3 The district covers 55,387 hectares of land, with more than 3,200 hectares of open space, including over 400 parks, 90 civic areas and 150 kilometres of esplanade.4 There are 10 council-operated leisure and recreation centres in the city, including six pools. Manukau also has 15 public libraries, six community arts centres and 23 urban marae. Manukau CC is the major purchaser of physical works in the district, spending over $135 million on physical works contracts in 2008/09, including roading, parks, solid waste, storm water and properties. 3. See www.manukau.govt.nz/default.aspx?page=statistics. 4. This excludes the 3,600 hectares of regional parks in the city, which are the responsibility of the Auckland 7 Regional Council.
Manukau CC identified physical works as a major risk area for health and safety and has incorporated health and safety within its capability criteria for pre-qualification and tendering in physical works contracts. Manukau CC also spot checks vertically through the supply chain to ensure that the standards required of pre-qualified contractors are extended to their subcontractors. 1.1 Background The Workplace Group of the Department of Labour is the Government’s principal advisor on employment policy, workplace health and safety policy and ACC policy. The Workplace Group also delivers employment relationship and workplace health and safety customer services. The Government has a 10-year Workplace Health and Safety Strategy for New Zealand for the decade to 2015. A central objective in its own practice is to “provide leadership in workplace health and safety through the Government’s role as employer and purchaser”. Among the actions it envisages to fulfil this objective is a “review of government purchasing and contracting guidelines and practices, to promote workplace health and safety within a fair and effective trading environment”. Some 30% of prosecutions under the Health and Safety in Employment Act 1992 are taken under Section 18(1) of the Act, which states that: Every principal shall take all practicable steps to ensure that (a) No employee of a contractor or subcontractor; and (b) If an individual, no contractor or subcontractor, is harmed while doing any work (other than residential work) that the contractor was engaged to do. Various industry sectors are concerned about principals’ liabilities in respect of contractors. The Department produced draft guidelines in June 2008 that set out a broad process for building health and safety into contract management. The guidance is able to be adapted to specific contractual situations or industries. This case study complements the draft guidelines by presenting one council’s experience in implementing new systems and processes to ensure it meets its statutory obligations for health and safety in physical works contracts. The case study: • describes Manukau CC’s procurement arrangements (including the current arrangements, how they came about, challenges and successes encountered) • benchmarks Manukau CC’s procurement arrangements against the Department’s draft guideline (including key areas of convergence/divergence to the guideline and rationale for this) 8 5. Department of Labour, 2008, A principal’s guide to contracting to meet the Health and Safety in Employment Act 1992.
• evaluates whether the investment has been worthwhile from several perspectives, including impacts on contractor behaviour, health and safety outcomes, value for money, good practice principles and opportunities for improvement. 1.2 Methodology The evaluation was conducted during June–July 2009. It combined a review of core documents, face-to-face interviews with key stakeholders and analysis of available data. Core documents included Manukau CC procurement guidelines, internal reports and memoranda on the implementation of the new arrangements, and the Department’s draft guideline. Stakeholder interviews were undertaken to collect narrative information on issues related to procurement practices. The evaluators interviewed: • representatives of Manukau CC, the Department and ACC • a sample of contractors and professional services consultants • the independent consultant who was engaged to develop and implement the systems and processes for Manukau CC. Quantitative data analysis sought to make use of available data from Manukau CC to address the evaluation objectives. Departmental and ACC data was also investigated but was not included due to an inability to distinguish accidents in physical works contracts for Manukau CC from work done for other principals. 9
2 | The Manukau City Case Study In 2004, Manukau City Council (Manukau CC) decided to establish a dedicated Health and Safety in Contracts Team to ensure Manukau CC met its statutory requirements for health and safety in physical works contracts. Physical works contractors6 (rather than council employees) had been identified as the highest risk group for accidental injuries and deaths due to the nature of work being performed and the risks associated with this work. An independent consultant was engaged in mid-2005 to assess risks and recommend a process moving forward, with the objectives of: • preventing injuries to Manukau CC employees, contractors (and their employees), ratepayers and members of the public • ensuring Manukau CC meets its statutory requirements for health and safety in physical works under the Health and Safety in Employment (HSE) legislation • ensuring that the processes introduced complied with the requirements of the ACC Partnership Programme (Tertiary). Securing buy-in from stakeholders was recognised as critical to meeting these objectives. Following the council’s acceptance of the recommended approach, the consultant was engaged to implement the new arrangements from August 2005 to April 2009. 6. According to Manukau CC’s guideline (see footnote 7), physical works includes any work involving construction, maintenance or installation of physical infrastructure or equipment. Physical works contracts are generally based on NZS 3910, but other forms of the contract may be used where this would be more appropriate. Examples of physical works include work relating to roading, use of boats, trimming trees, helicopter water sampling, parks, storm water, waste water, waste collection, property construction or maintenance, events and community services such as 10 construction or maintenance work in town centres. Physical works also includes temporary installation and operation of site investigation or testing equipment such as taking bore-logs or installing traffic counters.
2.1 Overview of Manukau CC’s approach The following overview is based on current arrangements as at July 2009. Full details of these arrangements are available on Manukau CC’s website.7 The approach continues to evolve, and this case study also highlights enhancements currently being developed. Manukau CC works in partnership with its contractors to maintain a high level of safety on physical works contracts. A systematic approach is in place to ensure that all physical works contractors, subcontractors and their employees prevent injury and comply with the requirements of HSE legislation. Before physical works contractors can successfully tender for a Manukau CC contract, the contractor must either be a Certified Partner in health and safety with Manukau CC or be in the process of becoming a partner (and their application must be approved before the final decision in the competitive process). To become a Certified Partner in health and safety, a contractor must have their health and safety processes pre-approved by Manukau CC. Contractors applying to become Certified Partners must: • complete and return a health and safety pre-approval form • provide evidence (such as a current Accreditation Certificate) that their health and safety systems and processes meet the requirements of: – ACC’s Workplace Safety Management Practices (WSMP) programme at a minimum of Primary Level, or – ACC’s Workplace Safety Discount (WSD) scheme, which is available to businesses with 10 or fewer employees, or – AS/NZS 4801:2001, or – New Zealand Contractors Federation’s QEST,8 or – Operate Safe • provide an example of a site-specific health and safety plan • provide a list of referees who can provide feedback on their past health and safety performance in physical works contracts • allow a Manukau CC representative to conduct a health and safety audit of their systems (if requested). 7. Manukau CC, 2009, Managing health & safety of physical works contracts in Manukau City Council. www.manukau.govt.nz/SiteCollectionDocuments/Managing%20health%20and%20safety%20of%20physical%20 works%20contracts.pdf. 11 8. www.nzcontractors.co.nz/qest.php?gclid=CKHAuKrA_psCFRwDagodeFFc-w
Part of the pre-qualification criteria involves demonstrating training/competency in performing hazardous tasks (such as qualified and competent to work at heights, confined space entry, safety supervisor’s qualification, traffic management and so on). To maintain their status, a Certified Partner must: • continue to meet the requirements of their external health and safety auditing body • continue to have a person appointed as Safety Officer within their organisation • comply with Manukau CC’s Contractor health and safety requirements for physical works contractors • provide monthly reports on health and safety performance during the life of each contract with Manukau CC • implement any corrective actions for any health and safety non-conformances as requested by Manukau CC or their authorised representative. Tenderers who are not Certified Partners (or in the process of becoming partners) are eliminated at the pre-tender qualification stage. Qualifying tenders are then assessed against a wider range of weighted criteria that include health and safety as well as price, track record and other factors. Manukau CC has published guidelines to be adhered to by their representatives when managing the health and safety of physical works contracts from the procurement stage through to completion.9 The guidelines reflect Manukau CC’s legal responsibilities to its contractors, subcontractors, their employees and the public, to ensure all reasonably practicable steps are taken to prevent harm from any hazards that exist in physical works procured by Manukau CC. Therefore, the guidelines emphasise the importance of health and safety being an integral part of the contract process. The typical lifecycle of a physical works contract at Manukau CC is depicted in Figure 1. The full procedure for health and safety in physical works at Manukau CC is available on their website. These processes may be adapted depending on factors such as the level of risk in a particular contract, the size/nature/duration of the contract, the type of work, the nature of the hazards and Manukau CC’s and the contractor’s knowledge of the work. 9. Manukau CC, 2009, Managing health & safety of physical works contracts in Manukau City Council. 12 www.manukau.govt.nz/SiteCollectionDocuments/Managing%20health%20and%20safety%20of%20physical%20 works%20contracts.pdf
Figure 1: Typical life cycle of a physical works contract Step 1 Step 2 Step 3 Step 4 Risk Select Develop Site Site Assessment Contractor Safety Plan Induction Step 5 Monitor Performance Step 6 · Review Overall Performance Source: Manukau City Council, 2009, Managing health & safety of physical works contracts in Manukau City Council. The guidelines identify key roles in the health and safety process as follows: • The Health and Safety in Contracts Officer is employed by Manukau CC and is the council’s health and safety representative who is responsible for ensuring health and safety standards and processes in the council’s physical works contracts are developed, implemented, reviewed and improved on an ongoing basis. This person is also responsible for maintaining health and safety records and databases including those of pre-qualified physical works contractors. They report to the Health and Safety Manager. • Professional services consultants provide technical and/or professional (such as legal) advice, opinion, review, analysis, design and/or documentation. This may include the management, observation, supervision and/or monitoring of the works provided by others. • Project managers are council employees responsible for the project/contract and its delivery. A project manager may also simultaneously be the project engineer. • Project engineers or contract managers are responsible for the day-to-day contract administration, supervision and/or monitoring of the physical works contract. They may be council employees or Professional Services Consultants. They are always independent of the physical works contractor. • Contractors are the entities engaged by Manukau CC to carry out all or part of the physical works. This includes any subcontractor engaged by a contractor. Each of these roles has particular responsibilities in physical works contracts with Manukau CC, which are detailed in guidelines available on their website. For example, contractors are responsible, among other things, for preparing and implementing an approved site-specific safety plan before work commences, keeping it up to date and communicating the safety plan to all affected parties for the duration of the contract. All personnel working on Manukau CC projects must have a minimum Site Safe Passport, and those supervising safety on projects must have a Site Safe Gold Card, safety supervisor’s certificate or equivalent. Additionally, proof of competency (such as training to NZQA unit 13 standards) is required in areas such as working at heights; confined space entry; traffic management; wheels, tracks and rollers; GROWSAFE and hazardous substances.
2.2 Implementing the new arrangements A staged implementation process was followed, with Manukau CC’s Senior Management Team (SMT)10 approving each successive step in the implementation process and being informed on progress throughout. The following paragraphs provide a chronology of key events in the implementation process. In March 2004, an internal report to Manukau CC’s Organisation Management Team (OMT) recommended the establishment of a Health and Safety in Contracts Team. The key objective of this team was to ensure Manukau CC meets its statutory requirements for health and safety in physical works contracts. Prior to this, contract managers were responsible for health and safety as part of their diverse and multi-faceted roles, but there was no dedicated team responsible for ensuring that health and safety requirements were being met comprehensively and consistently. In mid-2005, an independent consultant was engaged to scope a process for managing health and safety in physical works contracts. In August 2005, the consultancy was engaged to manage the implementation of the new process. The project reviewed current practice, defined best practice and developed processes and documentation for managing health and safety requirements in physical works contracts, to ensure Manukau CC would meet minimum legal requirements. The project comprised four stages of work, which were undertaken in the second half of 2005: • Stage 1: Finalisation of process development (in consultation with internal and external stakeholders). • Stage 2: Development of communications and training programmes for Manukau CC staff, physical works contractors and professional services consultants. • Stage 3: Implementation of communications and training programmes with staff, contractors and consultants across Manukau CC’s five portfolio areas that manage physical works contracts (Parks, Properties, Waste, Transport, and Storm Water). • Stage 4: Commencement of an ongoing process of health and safety audits and reviews in projects across the five portfolio areas. This was recognised as the beginning of a significant process to change behaviour and culture to achieve safe working practice with all physical works contractors, professional services consultants and Manukau CC staff. Accordingly, there was a strong emphasis on working in partnership with stakeholders and obtaining buy-in to the changes. The consultant interviewed representatives from each of the five portfolio areas and obtained documentation and processes used to manage safety on physical works contracts. This initial review found that Manukau CC’s health and safety processes to manage contract safety were generally robust but were: 14 10. The Manukau CC Senior Management Team has since changed its title to the Executive Leadership Team (ELT).
• inconsistent between portfolio areas, physical works contractors and professional services consultants, exposing the council to unnecessary financial and legal risks • duplicative across the five portfolio areas (for example, each business unit had its own approved list of contractors based partly on health and safety attributes), which provided an opportunity to centralise the management of contractor safety requirements and save time and effort for Manukau CC and tenderers during the contract process • costly – some business units were using external resources to manage health and safety in physical works contracts • limited in terms of monitoring and review of health and safety performance in physical works contracts, for example, safety checks during site visits were frequently not documented, there was frequently no reporting on health and safety performance in physical works contracts, and safety performance by physical works contractors and professional services consultants was not reviewed on completion of contracts. Following the initial review of Manukau CC’s processes, the consultant: • finalised a draft process to manage health and safety in physical works contracts, in consultation with representatives of the five portfolio areas • developed draft procedures, checklists and templates to manage safety on physical works contracts11 and the arrangements for partnership in health and safety with Manukau CC • reviewed the draft process and proposed minimum safety requirements with a small selection of physical works contractors and professional services consultants to identify areas for further improvement • developed a training module and training calendar to facilitate training in the new processes for Manukau CC personnel and relevant representatives from physical works contractors and professional services consultants • delivered the training to Manukau CC employees and representatives of physical works contractors and professional services consultants • established a database of pre-approved (for health and safety) physical works contractors and professional services consultants, containing all relevant information such as contact details, competencies, health and safety certifications (such as the ACC WSMP programme), Manukau CC workshops attended and correspondence sent • updated the health and safety section of the Manukau CC Contract Management Manual 11. This includes a process for managing health and safety in physical works contracts, contractor health and safety requirements (including guidelines for 20 significant hazards commonly found on Manukau CC physical works sites – such as fencing and barriers, traffic management, working in confined spaces, working at heights and signage – based on Department codes of practice and guidelines) and minimum training and health requirements for physical works 15 contractors.
• commenced random site safety assessments to establish levels of safety present ‘in the field’, with feedback going back to the physical works contractors, professional services consultants and Manukau CC representatives • obtained SMT approval of the draft process to manage health and safety in physical works contracts • implemented monthly health and safety reporting submitted by physical works contractors to Manukau CC and commenced quarterly health and safety reporting to SMT • updated the Manukau CC website to include health and safety information and documentation for physical works contractors and consultants • implemented initiatives aimed at enhancing the relationship between physical works contractors, professional services consultants and Manukau CC, for example, breakfast meetings were held for physical works contractors to discuss Manukau CC’s requirements, the support and resources available from ACC for physical works contractors and updates from the Department, and Manukau CC also issues quarterly newsletters to physical works contractors and professional services consultants highlighting safety issues (injury trends, case studies, training and so on) on an ongoing basis. At this point, the draft processes developed and training undertaken met the minimum legal requirements under the HSE legislation. However, Manukau CC recognised that it still had some way to go to bring its safety practices and safety standards on physical works contracts up to a level of best practice commensurate with the pre-existing practices of several of Manukau CC’s main physical works contractors and professional services consultants. This process is ongoing. In early 2009, Manukau CC appointed a permanent Health and Safety in Contracts Officer, replacing the independent consultant as the key person responsible for maintaining and enhancing health and safety standards and processes in physical works contracts. Further enhancements to the approach are currently being developed, as discussed elsewhere. 16
2.2.1 Summary of changes Table 1: Summary of key changes to Manukau CC’s procurement arrangements in relation to health and safety Previous arrangements Current arrangements Coordinated system across council Each council department had their own All contractor health and safety approved list of contractors based partly processes are pre-approved by one on health and safety attributes. person. The standards used to approve The contractor database is centralised contractor health and safety processes and maintained by one person. varied between departments. Step 1: Risk assessment Some council departments did not complete the risk assessment process on portal. All council departments and professional services consultants complete the risk Professional services consultants did not assessment process. use the council risk assessment process. The level of risk is included in the Level of risk was not included in contract/ contract/tender and EOI documents. tender and EOI documents. Hazards are listed in the contract/tender Hazards identified by council were listed in and EOI documents. contract/tender and EOI documents. Step 2: Contractors return contract information Pre-approved contractors return contract/ tender or EOI documents with Contractors returned contract/ tender hazard list only. or EOI documents, which included evidence Contractors not pre-approved provide of organisational health and safety evidence their health and safety system processes. complies with council requirements. Safety plan is not required at this stage. Step 3: Select contractor and approve safety plan Contractor selection based partly on Contractor selection based partly on health and safety abilities and experience. health and safety abilities, experience and safety plan. On acceptance, the safety plan is submitted by the successful contractor. 17
Previous arrangements Current arrangements Step 4: Site/contract safety induction A safety induction is carried out for every Little council involvement in safety contract, site, and project (as required). inductions for contracts by most council The council project engineer/manager is departments. involved in the inductions for high risk or extreme risk contracts. Step 5: Monitor site safety Not undertaken by most council Depending on level of risk, council departments – most departments representatives monitor site/contract relied on the consultant, contractor safety. or professional services consultant to All contractors formally monitor site monitor site/contract safety. safety. Step 6: Review overall health and safety performance A specific review of health and safety Very general review in contract appraisal is included in the contract appraisal at at contract close-out. contract close-out. Review of contractor health and safety Contractor health and safety performance performance not formally undertaken by is reviewed, and a pre-approved list of most council departments. contractors is updated accordingly. Communication There was no formal process in place A formal process has been implemented to allow health and safety issues to be to allow health and safety issues to be communicated and reviewed between communicated and reviewed between contractors and the council. contractors and the council. Some council departments received a Every contractor engaged by Manukau monthly report from the lead professional CC reports monthly on health and safety, services consultant, which included health enabling better reporting within the and safety. council. 18
2.2.2 Success factors for implementation The following factors were recognised as particularly important: • Strong SMT support and commitment to the changes. • Dedicated resources and personnel for implementation. • Clear policy, processes, standards and expectations for health and safety that are clearly communicated and made easily available and accessible for Manukau CC staff, contractors and professional services consultants. • A partnership approach with internal and external stakeholders. From the outset, the consultant treated the development and implementation of the new processes as a partnership with stakeholders. An inclusive approach was followed, providing information to internal and external stakeholders, updating them throughout the project and inviting feedback. Key stakeholder relationships included many stakeholders who strongly supported the changes (including SMT, ACC, the Department and larger contractors and professional services consultants) and a diverse range of stakeholders who needed to be convinced about the necessity and value of the changes. This latter group included a significant proportion of the medium and smaller sized contractors as well as some Manukau CC staff. Success factors for securing buy-in from contractors and staff included the partnership approach and effective communications. The consultant used a non-confrontational approach, pointing out the benefits of the changes (such as managing legal risk) and a practical focus (including site visits to discuss real hazards and approaches to managing these on site, with a primary emphasis on practice rather than paperwork) to establish credibility and convince those who work on site. The approach included both ‘carrots’ and ‘sticks’ to encourage buy-in. The use of local contractors and keeping work opportunities and funding within the local community was supported, showing that Manukau CC was committed to giving equal opportunities to small businesses where possible. At the same time, it was made clear that non-compliant businesses would not win contracts with Manukau CC. Together, these factors provided a strong incentive for contractors to bring their health and safety practices up to the required standard. Feedback obtained from stakeholders was taken on board and influenced the design of the new systems and processes. For example, stakeholders commented on the paperwork, time and costs associated with preparing a site-specific safety plan at the tendering stage, which Manukau CC had previously required. Consequently, the process was changed. Now, contractors are required to submit a safety plan as soon as they have won the tender and cannot start work until the safety plan is in place. In this way, the inclusive and consultative approach to implementation enhanced stakeholder buy-in and ensured that the new system was practical and feasible for Manukau CC’s partner contractors. Another factor that contributed to the success of the project was researching exemplar and comparator organisations. For example, during Stage 1 of the project, a meeting was 19
held with Vector Energy, where Vector presented its health and safety ‘journey’ over the preceding seven years, including managing the safety of approximately 1,000 contractors in multiple locations, adverse environments and dangerous roles. Vector’s experience showed that zero lost time injuries were achievable once the safe working practices, culture and behaviour were embedded. During the course of the project and a similar project undertaken by the same consultant for North Shore City Council, research was carried out on the processes other councils had in place to manage health and safety in physical works contracts. It was identified that Manukau CC’s baseline procedures (prior to implementation of the changes) were at the same standard as some other councils at that time – Hastings District Council, North Shore City Council, Waitakere City Council and Auckland City Council. 2.2.3 Implementation challenges The key implementation challenge has been (and continues to be) the gradual process of culture change that is necessary to ensure all Manukau CC contract managers, contractors and subcontractors fully comply with the health and safety provisions in physical works contracts. For example, during implementation, challenges were experienced in getting contract managers to complete basic Site Safe training. One reason was that these personnel considered they already had the requisite knowledge, yet the health and safety review had found the required processes were not being followed. This challenge was overcome when the CEO became involved and advised staff that attendance was required. Experience to date is that compliance with the new arrangements has varied between portfolio areas and between contracts of different sizes and types: • Non-compliant tenders have not always been excluded from evaluation. For example, in some small tenders, contract managers may rely on a tenderer’s track record with Manukau CC as an indicator that contractors already understand relevant health and safety information, without seeking evidence of that understanding. • On occasion, contracts have been awarded on the basis of price, with health and safety arrangements being negotiated after the contract is awarded. This runs the risk of appropriate health and safety measures being outside the contractor’s capability or unaffordable to the contractor within the contracted price.12 • Some processes may be routinely completed, but not always to the intended depth. In some instances, contract managers have ascertained that a safety plan exists but have not assessed whether it comprehensively and appropriately manages the hazards associated with the specific project. 12. When the process is followed correctly, price is weighted heavily in the tender evaluation process but non- compliant tenderers are excluded from the process. Compliant tenders (that meet pre-qualification criteria including health and safety) are evaluated against various weighted criteria. Typically, 60–70% of weight is given to price, 20 and the remaining 30-40% is shared among all other criteria including health and safety, track record, experience, personnel, financial viability, technical skills, resources, management skills, methodology and so on.
• Tenders may comply in terms of paperwork but, on occasion, insufficient investigation has been undertaken to ascertain whether actual health and safety practice is up to standard. • Monthly reports required under Certified Partner arrangements are not always being submitted. In general, health and safety processes have been followed most thoroughly for larger, longer-term and higher-risk contracts, suggesting that staff have made judgements of cost-benefit and prioritised their limited time and resources to projects where health and safety appears to be more critical. However, the experience of the Health and Safety Team has been that these judgements are not entirely consistent between portfolio areas, contract managers or contract types and can, at times, be skewed by other factors such as time pressures to award a contract (for example, to meet scheduled closure of a swimming pool for maintenance over a two- week period), suggesting that more effective forward planning is sometimes needed to allow sufficient time for procurement processes to be followed. Manukau CC contract managers’ knowledge of the requirements of the Certified Partner arrangements is reported to still be variable, signalling an ongoing need for training. Addressing these issues also requires ongoing checking and feedback, which the Health and Safety Team is undertaking with the Manukau CC’s business units. As a last resort, the Health and Safety Manager is able to put in a stop order until serious health and safety issues are addressed (such as where a contractor is working without being a Certified Partner). It has also been recognised that compliance may improve if further enhancements are made to improve the flexibility of procurement arrangements with regard to project size. These enhancements are discussed in section 2.8. 2.3 Impacts and achievements Since the implementation of the new health and safety arrangements in physical works contracts: • Manukau CC has established processes and is growing organisational capability to effectively manage contractors’ safety • all stakeholders (internal and external to Manukau CC) have increased knowledge and awareness of safety in physical works contracts • contractors are now required to be Certified Partners in health and safety to undertake physical works for Manukau CC – as a result, Manukau CC is awarding contracts to higher-quality contractors in regard to health and safety practices • Manukau CC and contractors follow a faster and more streamlined evaluation process for tenders • in the last 12 months, no tender worth over $200,000 has been approved where unaddressed health and safety risks were identified 21
• serious harm accidents and improvement notices issued by the Department have reduced (see section 2.3.4) • physical works contractors and professional services consultants are usually reporting their health and safety statistics monthly to the council, and the Senior Management Team receives monthly reports on health and safety statistics and trends in physical works contracts. Additionally, Manukau CC has won three significant awards for health and safety: • 2007 Safeguard NZ Workplace Health and Safety Awards – ACC ThinkSafe Best Leadership of an Industry Sector or Region. • 2008 Safeguard NZ Workplace Health and Safety Awards – Department of Labour Best Initiative to Address a Safety Hazard. • 2008 NZ Post Local Government Excellence Awards – Building Organisational Capability Commendation – Safe Staff, Secure Staff at Manukau City Council. 2.3.1 Contractor performance Contractor performance in health and safety has improved as a result of the changes, and it continues to improve. The impact on contractor performance varies with the size of the contractor. In general, larger contractors and professional services consultants have taken a comprehensive approach to health and safety for many years and have dedicated health and safety staff. These organisations were already performing at a high level in regard to health and safety and welcomed Manukau CC’s commitment to bringing all practices up to this level. As one contractor commented: [Manukau CC is] finally starting to catch up and recognise [these organisations’] long-standing investment in health and safety. These larger companies were very willing to join the Certified Partner arrangements. They did not need or want to be told how to follow good health and safety practice. This did not mean that there was no room for improvement, however. For example, one major contractor with an accredited health and safety system was found to have excellent paperwork in place, but on site, its practices were not always exemplary. As an example, one site audit found that a hazard board had been brought in from a previous site but not updated to cover hazards at the new site. Among medium-sized contractors, there was greater variation in health and safety practices. Some were already working to a high level of competency. Others had been planning to make improvements for some time, and Manukau CC’s requirements provided the impetus to get started. Generally, medium-sized contractors welcomed the changes and recognised the benefits of these. 22
Among small contractors (10 employees or fewer), health and safety practices were even more variable. The majority were reasonably safe on site but lacked formalised systems. Smaller contractors were usually, but not exclusively, involved in lower-risk work. However, there were some key exceptions such as grass cutting and cleaning windows at heights. Smaller contractors tend to be owner-operated and do not have a dedicated health and safety manager. Because these companies are small, there were challenges for those who had significant work to do to meet Manukau CC’s requirements. Key challenges for these businesses included: • investing management time developing and implementing required documentation such as risk registers, site drawings and so on (and, in some cases, engagement of consultants to assist with this) • staff and management time and costs of attending site training • difficulties for some in dealing with performance issues among staff and subcontractors that may have previously gone unchallenged. Despite some resistance to the additional paperwork, most contractors were persuaded of the benefits of managing liability by documenting evidence of good practice. Where contractors require assistance to establish health and safety systems and documentation, Manukau CC refers them to the local ACC office, which offers advice, support and templates in relation to the WSMP programme and WSD scheme, thereby helping contractors to meet the requirements of Manukau CC’s Certified Partner arrangements as well. Contractors gave very positive feedback on the assistance they had received from ACC. The Health and Safety Team were aware of only one instance where a contractor openly elected to cease doing business with Manukau CC rather than join the Certified Partner arrangements. As such, the new arrangements have improved health and safety in physical works contracts with Manukau CC principally by influencing contractors to improve their practices rather than by reducing the pool of contractors performing work for Manukau CC. 2.3.2 Subcontractor performance From the outset, subcontractors were recognised as a key area of risk, and Manukau CC gave careful consideration to an appropriate approach to managing subcontractor performance. A deliberate decision was made not to extend the Certified Partner arrangements to subcontractors, as this would have flooded the database with a multitude of small companies over which Manukau CC has no direct influence. Instead, contractors are required to have robust processes in place for managing their subcontractors – similar to the health and safety processes Manukau CC uses in working with contractors. This requirement is included in Manukau CC’s pre-qualification questionnaire, and Manukau CC monitors the extent to which contractors follow these processes in practice. In general, large companies have relatively robust processes in place, and Manukau CC has found that they usually manage their subcontractors well. Medium-sized and small companies 23
are more variable in this regard, and Manukau CC has found that “often, contractors don’t manage their subcontractors effectively in relation to health and safety”. While Manukau CC places contractual obligations on contractors to manage their subcontractors and employees – and monitors this – there are limits to the number of audits that can be carried out. Contractors and subcontractors are prioritised for audit based on Manukau CC’s assessment of risk. Currently, this is undertaken by the Health and Safety in Contracts Officer, but in the future, it is intended that this will become the responsibility of contract managers. Where contractors have been audited and deficiencies have been found in subcontractor health and safety practices, the new arrangements have been effective in bringing about practice change – at least in relation to the specific site and project. This can be assisted by issuing a stop order and/or blacklisting a contractor. However, to date, the Health and Safety Team has not been satisfied that more generalised improvements have been achieved in relation to subcontractor health and safety. Manukau CC is also committed to supporting the growth of small businesses in Manukau because “the subcontractors of today may be the contractors of tomorrow”. Accordingly, underlying the procurement and audit processes is an ethos of growing capability and trust, based on a shared objective of successful business as well as good health and safety. Stakeholder feedback suggests that subcontractors in Manukau are increasingly recognising the need to provide evidence (documented and practical) of their training and competency in health and safety to their clients and to have comprehensive hazard management systems in place prior to work commencing. 2.3.3 Health and safety reporting It is a requirement of the Certified Partner arrangements that contractors provide monthly reports on health and safety performance during the life of each contract with Manukau CC. The content of these reports includes signed confirmation of site safety compliance, the number of accidents requiring first aid and medical attention, the number of near miss accidents, the number of serious harm injuries, the number of improvement notices issued by the Department of Labour and total lost time (days) due to injury. According to the Health and Safety Team, most, but not all, contractors comply with this requirement. Currently, there are no practical consequences for those who do not comply, i.e. contractors who do not file monthly reports are not being removed from the Certified Partner arrangements. The Health and Safety in Contracts Officer is currently working on tightening the monitoring and enforcement of this requirement. Many of the larger contractors also have their own processes in place for monitoring their health and safety performance internally.13 No evidence was identified of Manukau CC’s changes having influenced these, however. 13. For example, one national company reports against a range of key performance indicators (KPIs) including injuries, 24 near misses, long-term injuries and medical conditions per 200,000 worker-hours per month. Area safety meetings are also held to monitor leading indicators such as critical activities and compliance with health and safety policy.
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