We will consider 5 key topics: 1) critical information contractors need to know; 2) involving contractors in front End Loading; 3) pros & cons of various contracting options; 4) understanding a contractor's capabilities and readiness to perform; 5) minimizing risks to cost and schedule constraints.

I. What Contractors Need to Know - Contact Information

Throughout this paper, we're assuming "contractor" means a company (that is not a site resident) who is contracted to perform either on-site or off-site shutdown related services. Let's begin with basic knowledge a contractor needs when he and his crew arrive on site.

Assume your plant has hired Acme Scaffolding Company to erect and remove scaffolding around tanks and other process vessels. Put some thought into a customized list of plant contacts for Acme - actually for John - Acme's foreman on-site. Obviously this list begins with the Contract Coordinator - John's primary contact. In addition, John should have the name and mobile phone/pager numbers for someone in Maintenance, Operations, and Safety should he have questions related to those functions. Depending on the services performed by a contractor, in addition to the above, a Process Technical and a Capital Project contact may be appropriate.

Some would say the contractor needs only one point of plant contact so all information to the contractor is funneled through that point, thus minimizing mixed communications. My response is ‘how available is the primary plant contact?' During a shutdown, time is of the essence. Holding up work because the contractor can't get answers can add hours, or eventually days, to a turnaround schedule. How many contract crews is an individual Contract Coordinator covering? Is he working the same schedule as the contract crews he is responsible for? How large is the plant area he is covering? Does the work involve fields of specialty the Contract Coordinator is not experienced in? Forcing a contractor to work through a single contact who may not be able to answer his questions is frustrating and time consuming.

What Contractors Need to Know - Roles & Responsibilities

Contractors need to be clear on the extent of their decision-making responsibilities. For instance, if a welding contractor goes into a column to weld cracks in tray supports and he finds cracks in nozzles, does he repair them also? Does he have to get verbal, or written, permission to proceed outside the original scope of work? If he's doing a lump sum contract on column tray supports, can the owner insist that nozzle cracks were included in the intent of the work scope? Who gives the contractor the go-ahead to repair ‘found work' - the Contract Coordinator, or the Shutdown Manager, due to the potential effect on the shutdown schedule? Who handles management of change issues relative to permits, approvals, documentation, etc? Who is responsible for identifying risk points in the job scope where bad things might happen (contingency planning) on critical jobs? Is the contractor responsible to analyze risks and contain them?

What kind of variance reporting process is expected of the contractor relative to schedule and cost status? How often does he report his progress, and by what method (verbal, email, input to Primavera, etc)? Does reporting escalate depending on the severity of the variance?

If the contractor's schedule is slipping, what authority does he have to take corrective action, possibly increasing spending, prior to contacting the owner's representative?

What Contractors Need to Know - Site Orientation

New contractors need a good site orientation and returning contractors would benefit as well, if it's been several months since they were on site, or if they have new crew members. Obviously they need to know where the equipment is they are working on, but beyond that, they need to know if there is a sequence for working on multiple pieces of equipment.

For instance, on one shutdown the contractor was asked to remove control valves and safety relief valves from a multi-floor process area, to shop them and reinstall them. No order of priority was given, nor was the contractor told where the valves were, just given a list of valve numbers and pointed to the building. It so happened that this process area had multiple process trains that were started up in sequence. Not knowing this, the contractor started on the ground floor and worked his way up. When it was time to start up the first train, those valves had not even been removed yet! Yes, there was obvious lack of oversight on the owner's part in monitoring progress of the contractor, but if the owner had presented the contractor with building plan diagrams showing the location of each valve and a schedule for removal and replacement, that part of the shutdown would not have been extended.

Part of site orientation is showing the contractor how to get things done from a paperwork perspective. Depending on the type of work he does, he may get involved in various plant procedures. Where does he pick up work packages? How does he get permits approved? How does he get a drawing printed? How does he requisition parts from Stores? What is the MOC process for documenting as-built drawings and found work modifications? If the owner shares equipment and utilities with the contractor, how does he requisition ladders, man-lifts, wagons, etc? Where can he connect to breathing air, nitrogen, or water for high pressure cleaning, etc?

Where should he lay down his materials? Which bathrooms, smoking areas, and break areas can his crew use? Your contractors will eventually figure this information out for themselves through trial and error. But you can't afford trial and error during a shutdown. Better to prepare an information package customized for the contractor, then conduct training prior to the shutdown start date for all of the contractor's leadership who will be on site.

What Contractors Need to Know - QA/QC Expectations

One definition of quality is fitness for use, that is, it's good enough for the application. The equipment owner is responsible for clearly defining what is good enough for his particular application. If provincial, state or national codes are applicable, they are a great starting place. What other requirements, specifications, fits, finishes, etc are necessary for describing the results the owner expects? This is Quality Assurance - the description of the features, capabilities, dimensions, tolerances, etc., of the product or service contracted for. Quality Control is the method(s) for ensuring or determining if the QA requirements have been met. This is often done by inspection, sampling, measuring, testing, checklists, etc.

What are the QA specs for Acme Scaffolding Co? How will the Quality Control be done to ensure the Quality Assurance specs are met? Suppose a high pressure water cleaning company is brought on site, told to remove the head of a vessel and clean it. How clean is clean enough? How will the work be evaluated? Who decides when the contractor is finished?

What Contractors Need to Know - Disposal Rules

The contractor needs to know the disposal and housekeeping rules. Where he can put his scrap materials? What to do with waste product cleaned out of vessels? Who must approve disposal of hazardous materials? What permits are needed? Who is responsible for getting rid of it? Who supplies the trucks, tanks, wagons, etc? What are the housekeeping requirements around his work site?

What Contractors Need to Know - Safety Rules

Most sites do this well, given the human and business losses, and regulatory costs for lack of safety enforcement, so I won't spend much time on this subject. It's a given that safety rules will be covered with all contractors. But how they are covered can make all the difference.

Is there formal classroom training, with discussion time to clear up questions? Is there a competency test, written or demonstrated? Are contractors given quick reference cards on critical rules? Or do the contractors simply watch a video and then receive their safety training completion cards? Are contractors audited periodically for compliance with the rules? Is the auditing by observation, or are workers asked questions on the job to check for understanding? Are they given "what if" scenarios to test their response to unexpected occurrences?

Safety rules can vary widely from company to company. Make sure your contractors know all your rules pertaining to their work. Government regulations can vary between countries, states and provinces. Make sure workers from another jurisdiction are brought up to speed on local regulations.

II. Contractors and Front End Loading

Proper Front End Loading sets you up for success both during and following the shutdown. It helps ensure a smooth startup and improved equipment operation. So bring key contractors in early in the shutdown preparation phase. Make them part of the shutdown Core Team including attending planning meetings. Utilize their expertise by letting them help write job scopes. Their ideas could save valuable time during execution of the shutdown schedule. Ask "What do you need from us (the owner) to ensure your success"? If the contractor has worked for you previously, ask "What hampered your success before"?

This point was brought home to me on a turnaround involving extensive high pressure cleaning of process pipe containing a hard, sticky substance. One contractor was responsible for cleaning the pipe once another contractor had taken apart the flanges. The second contractor had numerous pipe joints to break, in addition to process vessels to open. The turnaround core team brought in both contractors and asked them a series of questions about how we could assist them in being more efficient than in previous turnarounds. They answered with lots of good ideas. Things as simple as "When we have multiple pneumatic guns going busting bolts, the air pressure gets too low and it takes a lot longer to open pipe flanges and vessels. Can you give us a larger header to ensure adequate air pressure". The other contractor said "We have limited sources of water for our high pressure cleaning. So we have to run hoses long distances. Can you put in connections closer to the work areas?" This contractor also suggested we request a backup high pressure pump unit in case the primary one broke down. Repairs, or replacement, would have taken many hours, delaying startup since cleaning was on the turnaround's critical path. Obviously if we had not asked these questions far enough in advance of the turnaround, there wouldn't have been time to make the modifications needed.

III. Contracting Options - Owner or Contractor Responsibility?

There are decisions to make in each phase of shutdown preparation and execution regarding who has the responsibility for a successful outcome. We will discuss 4 phases: 1)shutdown preparation, 2)equipment takedown, prep and lockout, 3)execution, and 4)startup.

Beginning with Front End Loading, I believe it's a mistake to turn management of this phase over to contractors. The owner should initiate and manage this phase. In particular, he should set measureable goals and objectives for the shutdown; he should set the criteria for which jobs will be included in the shutdown to control the scope; he should set the date for the start of execution and provide guidelines for duration; finally he should establish an auditing process to monitor progress and quality of contractor responsibilities.

During Front End Loading, potential contractor responsibilities could include detailed job planning, detailed schedule building, detailed cost estimates, resource management, and routine status reporting.

The next shutdown phase - equipment takedown, prep, & lockout - is usually handled by the equipment owner since Operations has the primary responsibility for these activities.

When it comes to the third shutdown phase - execution - the owner should manage certain aspects: cost and schedule control, change control process, subcontractors and the safety process. Let's begin with cost and schedule control. Having a contractor monitor daily costs and schedule compliance during execution can free up the owner's resources from such duties. However the owner should retain control over changes in scope that would affect cost or schedule. Deciding how much latitude a contractor has to alter the scope of his job without owner input (e.g. responding to found work, etc) is best done during Front End Loading where roles andresponsibilities are spelled out. The owner can allow a contractor to make decisions affecting cost up to $X or affecting schedule by X hours. Doing a thorough job of contingency planning can highlight risk points where the job scope might be affected.

Now let's address the change control or Management Of Change process during execution. Anticipated changes in equipment design, materials of construction, function, placement, etc., will have hopefully already been addressed prior to start of the shutdown. Found work presents the largest unknown during a turnaround. The owner should decide in advance how much latitude, if any, a contractor has to make any physical changes to equipment, then secondly decide whether he wants the contractor to handle any part of the documentation and approval of the change.

Regarding the management of subcontractors, it's generally not in the best interests of the owner to have one contractor manage another contractor, especially during turnaround execution. I will acknowledge exceptions, but the larger the subcontractor workforce, the more risk the owner incurs by taking a hands-off approach.
In a company I worked for previously, safety was a line management responsibility. It was not delegated to a contractor to oversee. The owner should always set the tone for safety management. Contractors can be assigned to duties such as fire watches or enclosed space entry standby's, but the owner should establish safety rules (e.g. PPE, barricades, housekeeping, lifts, etc.) for the shutdown and provide most of the daily auditing to ensure compliance.

Potential contractor responsibilities during execution could include: first breaks, blanking/blinding, waste disposal, maintenance jobs, construction projects, resource management (people, materials, equipment), cost & schedule reporting, equipment alignment, and functional checks. For new or modified equipment, it's wise to have the owner's craftspeople working alongside the contractor to gain familiarity with the changes.
The fourth phase of a shutdown is startup. That is usually done by the owner.

In summary regarding responsibilities, Owners should not shift responsibility to contractors for managing and leading the following activities: front end loading, control of cost, schedule & modifications, subcontractors, equipment takedown, shutdown execution, and startup.
When responsibility for the above is shifted, the following results can be expected, according to multiple shutdown analyses by industry experts: Shutdown execution schedules are longer, costs are higher, startups slip more, and transitions between shutdown phases are more difficult. The costs of turning shutdown preparation and execution completely over to contractors is so great that the owner could spend 10% of his shutdown budget on additional competent employees and still come out ahead.

IV. Assessing Contractor Capability to Minimize Cost & Schedule Risks

How do you know if a contractor is competent to perform the tasks you have for him? Start by contacting previous clients for their opinions. Even if he did different work for another client, his general approach to that work could give you some clues as to how he might perform on your site. Interview the contractor and discuss similar jobs his company has done. What is his general level of confidence? What guarantees or warranties will he agree to? Select contractors for auditing based on the criticality of the work they will do. For highly critical work, visit the contractor and audit his equipment and its maintenance records. Does he have spare parts or complete backups in case of a component failure to his equipment during the shutdown? How long will it take him to repair or replace broken equipment?

Audit potential contractors for labor force experience, hiring & training practices, labor availability, retention history, and quality/experience of supervision.
To assess contractor readiness to begin the shutdown, set up regular audits during shutdown preparation. Ask the following questions during these periodic audits - What per cent of materials have been ordered and received? What per cent of jobs have been planned? How much of the schedule has been built? What are his projected costs? What is his cost monitoring & control process? What per cent of the needed resources have been identified & confirmed?

V. Additional Ways to Minimize Risks With Contractors

It should be obvious that you want to deal with true shutdown contract companies. Bubba's Rent-A-Crew may offer lower prices, but Bubba and his crew may have little shutdown experience. Deal with a pro who has been through a number of shutdowns and understands the importance of things like following a schedule, meeting cost constraints, and contingency planning.

As part of contractor orientation, walk the jobs with the contractor's representative. Where will the lockout box be located? Where can he stage his materials? Where can he set up cranes? Where should he put up his barricades? What other work will be going on in the same area? Where can he access electricity, water, breathing air, etc? Where are the safety showers?

As part of walking the jobs, go over job risks & develop contingency plans with the contractor. Identify any step in the job plan that could result in unexpected scope increase, or that could require additional parts or materials beyond what is being planned for, or that otherwise could add more than 10% to the job duration, etc. The contractor's input could be very valuable here, especially if he has done similar work in the past.

Make sure the contractor has complete work packages with good scope definition. On one shutdown the owner's Contract Coordinator sent job packages to the contractor's head office, but they didn't forward them to the foreman who showed up on the job empty handed with no idea of the work he was supposed to do.
It's critical that the Scheduler integrates any work done by contractors into the overall shutdown schedule. All work - capital projects, maintenance jobs, production tasks and any contractor activities - should be incorporated into the same shutdown schedule to that conflicts over work spaces and shared resources (people and equipment) can be identified.

VI. Getting a Contractor's Best Workers (and best effort)

If you have key contractors who will play a major role in the success of your shutdown, bring them in months in advance to get their advice on job plans. Discuss the overall shutdown objectives with them, go over work policies and inform them of metrics that will be used to measure the contractor's performance.

Establish clear roles & responsibilities around all the things discussed previously in this paper. Let the contractor know exactly what is expected in terms of performance and quality. Develop a R.A.C.I. chart (Responsible, Accountable, Consult, Inform) that will leave no room for doubt around what the contractor is expected to deliver.
Tell the contractor in advance that you are going to recognize good performance. This could be a monetary reward, a BBQ dinner, pictures in the plant paper, or whatever means you think appropriate to tell others of the successful completion of the shutdown. We all work for the money, but there's a lot of satisfaction in just being recognized with a token memento for a job well done.

The more the contractor feels like a valued part of the shutdown team, and the more confidence he has that the owner can help him be successful, the more likely he is to schedule his best workers and supervisors to your shutdown. Everyone wants to be part of a winning team. Make the contractor feel confident that the owner can deliver success. Top quartile contractor teamwork is one of the hallmarks of companies truly in search of Operational Excellence.

In Summary:

Help your contractors be successful by providing the support and information they need

Do everything reasonable to create a winning environment

Clearly spell out the contractor's roles and responsibilities

Everyone wants to be on a winning team and to feel that they have contributed to something significant

Article submitted by Tom Walker, Lakeview Enterprise Assoc, Inc.