1. Operator Qualifications & Contractor Safety
Compliance as a Service (CaaS)
Investing in Contractor Qualification and Management Solutions
Western Regional Gas Conference | August 23-24, 2016
Vincent Spadafora, JD, MBA
March 17, 2016
Texas Gas Association Safety Roundtable

2. Contractor Outsourcing Trends
60% to 70% of total work hours completed by contractors
Based on information reported by the International Association of Oil and Gas Producers at

3. Safety Myth – Fact or Fiction?
Contractors are just as safe as Operators
What do you believe ?

4. Quote from Retired Operator veteran and short-term contractor employee
“The contractor job just really never fit me, since I'm more of a "do it the right way" guy and this contractor, like all contractors, I assume, is more about get in fast and get out fast. Sometimes things are done right and sometimes not. That doesn't work for me.”

5. TRIR & FAR for Operators vs. Contractors
Contractors and Sub-contractors have higher incident rates
Based on information reported by the International Association of Oil and Gas Producers at

6. Agenda Contractor Qualification and Management Solution
Business conditions that make a compliance management solution an imperative
Assessing the economic value of a compliance management solution
Direct and indirect costs of “doing nothing”
Process for outsourcing to a Compliance as a Service (CaaS) vendor

7. Reasons to Invest in a CaaS:
Why It Makes Sense
Reasons to Invest in a CaaS:
Reduced Risk
Upstream Accountability
Litigation & Liability
Sarbanes Oxley
Measurement Matters
Errors Form Manual Data
Time-Consuming
Inefficient
Costs More

8. Economic Value
Studies show an investment in compliance management will yield returns.
Same costs can have different values to different organizations based on:
Risk tolerance
Size
Age of business
Industry

9. Cost of Compliance Management if Kept In-House
Companies must not overlook:
Adequate Staff & Resources to Manage the Program
Records Storage & Retrieval System
Auditing Costs
Software Packages to Manage Processes
Staff to Address Contractor Compliance Questions
Resources to Notify of Expiring Documentation/Deficiencies

10. The “Do Nothing” Alternative (Direct Costs)
Potential Direct Costs of an Incident
Fines & Penalties
Damages & Repair Costs
Lost Time
Ligation Costs & Civil Damages
Increased Insurance Costs
Potential Direct Costs of an Incident - related to not managing contractor compliance:

11. The “Do Nothing” Alternative (Indirect Costs)
Potential Indirect Costs of an Incident:
Strained Employee Relations
Overtime to Offset Production Down-Time
Management & Supervisory Investigative Time
Reputation Damage
Poor Employee Morale
Psychological Impacts on Affected Employees
Future Difficulty Hiring New Employees
Potential Indirect Costs of an Incident related to not managing contractor compliance:

12. You Don’t Have to Manage Alone
Do Your Homework
Implement Best Practices
Software Alone is Not Enough
Understand the Pricing
Beware of Hidden Fees
Communicate With Contractors
Building Organic & Living Processes

13. Critical Components
To ensure contractor compliance you need processes in place that will enable you to:
Prequalification
Monitoring
Requalification
Contractor compliance information needs to be verified at the:
Data Level
Information Level

14. Dig Into the Software At a Minimum the Software Should Feature:
SaaS/Web-Based Delivery
Uptime Guarantees (Disaster Recovery)
Hosting in High Quality Data Center
An User-Friendly Interface
Multi-Lingual Capabilities
Data Integration With Existing Systems (ERP)
Customization Options
Value Added Services: Training & Customer Service

15. Conclusion
Research has shown that a compliance management solution does correlate to reductions in the long-term costs of non-compliance.

17. ENERGY worldnet, Inc.
1210 S. Bus. Hwy 81/287
Decatur, TX
Vincent Spadafora, JD, MBA
Website:
Toll Free: (EWN-LCMS)
Thank you for participating in the TGA’s Safety Roundtable