What does contract structures have to do with the safety of an industrial plant? A whole lot, actually. First, let us consider how contract structures regulate who does what on a large engineering and construction project. Normally, there will be an operator company that wants to build a new plant, be it a refinery, a chemical plant or an offshore oil platform. Such companies do not normally perform planning and construction themselves, nor do they plan what has to be done and separate this into many small work packages. They outsource the engineering, construction and installation to a large contractor – in the form of an EPC contract. The contractor is then responsible for planning, engineering and construction in accordance with contract requirements. Such contract requirements will consist of many commercial and legal provisions, as well as a large range of technical regulations. On the technical side, the plant has to be engineered and built in accordance with applicable laws and regulations for the location the plant is to be commissioned and used, as well as to company policies and standards, as defined by the operating company.
What is the structure of the EPC contractor’s organization then, and how does this structure influence the safety of the final design? There is a lot of variation out there, but common to all large projects is:
- A mix of employees and contractors working for the EPC company
- Separation of engineering scope into EPC contractor scope and vendor scopes
- Interface management is always a challenge
So – the situation we have is that long-term competence management is difficult due to a large number of contractors being involved. Communication is challenging due to many organizational interfaces. There is a significant risk of scope overlap or scope mismatch between vendor scopes. Finally, some interfaces will work well, and some will not.
Management of functional safety is a lifecycle activity that ties into many parts of the overall EPC scope. Hence, it is critical that everyone involved understands what his or her responsibilities are. Unfortunately, the competence level of various players on this field is highly variable; and an overall competence management scheme is hard to implement. The closest tool available across company interfaces is functional safety audits – a tool that seems to be largely underutilized.
Contracts tend to include functional safety requirements simply by reference to a standard. This may be sufficient in the situation where both parties fully comprehend what t this means for the scope of work, but most likely, there will be need for clarification regarding split of the scope, even in this case. In order to make interface management easer (or even feasible), the scope split should be included in the contract, as well as requirements to communication across interfaces and the existence of role descriptions with proper competence requirements. This would then be easier to work with for the people involved, including HR, procurement, quality assurance, HSE and other management roles.