How Should a Company Plan to Optimize Its HSE Practices in a Low Cost Environment?

With regards to the major catastrophic incident, BP Deep Water Macondo which happened on 20 April 2010, many companies in the oil and gas industry tend to heavily invest in extra Health, Safety and Environment (HSE) programs in order to raise the HSE awareness and standard for their employees. These non-compulsory HSE plans have been introduced into a company in different ways such as in-house initiatives and third party HSE training services. For many years, the price of oil was slightly above 100 $/bbl and the spending extra budget on safety programs was an acceptable practice across the industry. Therefore, the budget at HSE has increased dramatically over this period of time.

However, since mid-2014, the oil price has drastically dropped from about 110$/bbl to 50$/bbl as of October 2016. Most companies in the upstream business have had extremely bad effects on their incomes; they therefore have looked into ways to reduce operating expenditures without compensating their reputation, safety, reliability, and product quality and harming their people. One aspect to help corporations achieve this goal is to optimize the HSE practices.

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There are 5 main areas that a company should implement in order to optimize HSE practices.

1.  Clearly Communicate Objectives of HSE Optimization to Employees and Set Goals

Due to the oil price slump, companies need to make efforts in cost cutting. It is important to set objectives for the organization and communicate them to everybody. The upper managements need to clearly state their vision, their expectations, and the ways that each and every employee can help cost saving. Once decision is reached that HSE optimization is one area that a company needs to focus, managements may have a meeting with employees to clearly communicate to employees why a company need to do, what a company plan to do, when the plans will start, how this will affect employees, etc. Clear communication can help emphasize the importance of the plan and make employees fully aware and prepare for future change.

After employees acknowledge the company’s goal, managements should encourage employees to set their goals to align with the company’s to support the HSE optimization. The alignment of employees’ and their companies’ goals is also important because it will ensure that certain results are reached by the end of the year. The process of goal setting is also an opportunity to encourage employees to bring their thoughts to support the HSE optimization program, and it is crucial to conduct at the first step because it can eliminate any confusions or rumours which may have negative effects on both workplace morale and company performance.

2.  Identify Required HSE Policies

A company should identify which HSE policies and/or procedures are essential to the operation. Two parts of HSE are HSE policies at a company level and at a specific department level. They must be classified their essentials to a company. Managements may consider forming teams that consist of experienced people in several backgrounds such as managements, engineers, safety officers, and field personnel to help review the company’s policies and verify which HSE policies are necessary. Then, these teams can utilize their expertise to decide what area is needed or not needed and revise its HSE policies. It is very important that experts in teams should hold different backgrounds to give diverse perspectives about the policies, helping to come to the right decision.

3.  Simplify HES Procedures and Workflows

Simplifying HSE processes and workflows is one of the main critical areas to create high efficiency processes and reduce repetitive workflows. Over time, many HSE programs become more complicated to understand and follow. The over complex HSE workflows can make people confused or feel frustrated and sometimes require employees to do many paperworks to ensure the compliance with company procedures instead of starting to perform operation, resulting in ineffective works.

There are several methods that can be applied to simplify processes. One is Lean Six Sigma, a process improvement methodology relying on a team effort to improve product quality and remove waste in the process . This methodology consists of five steps for improvement which are Define, Measure, Analyse, Improve, and Control. These five core steps will help reduce waste and determine improvement opportunity in HSE processes. The scale of Lean Six Sigma may be small or big depending on how complicate the company HSE policies are. However, the most vital point to successfully perform the process is to have teams of experienced employees to execute these tasks because the process cannot be improved if people do not understand it. The simplified HSE procedures are easy for employees to understand, save time on workflows, and provide more time to focus on their tasks at hand. The companies will also benefit from other value-added activities created from spare time left from paperworks.

4.  Maintain Good Training Programs

Maintaining high-quality training programs helps employees fully understand of all aspects of safety related to the jobs. Lack of training can lead to severe results in a high risk operating environment in oil and gas industry. However, some training programs should be evaluated to ensure whether they are suitable for people in particular jobs, or they are too general and not applicable to relevant tasks. A company may classify this topic as a non mandatory course because the content may not be used in the near future, and the crews will eventually forget what they have been trained. As a result, unnecessary training can be costly with little benefit to a company and employees. Following are three aspects of training programs that the company may incorporate in its plan to save cost while maintaining high standard of training programs.

4.1      Identify What Needs to Be Taught

Determining training requirements for each job function is a key because each job function requires different areas of training to be able to efficiently perform its tasks in a safety manner. HSE training should include both safety and technical aspects. For instance, all offshore facility operators are required to train the Basic Offshore Safety Induction and Emergency Training (BOSIET), but personnel in a procurement department are not because the procurement staffs are in the office and rarely have a chance to perform offshore safety and emergency situation. Hence, each department should develop its training need analysis that tailors to specific department, ensuring that employees have all necessary technical knowledge for their jobs. Furthermore, a company needs to integrate local regulation or requirements into the analysis because each country has different legal requirements on how many mandatory training courses which employers must provide to their staff members.

Once the training requirements are identified for each job function, it is imperative to compare them with existing training programs to determine what inessential training is. Then, a company should consider cancel all non-compulsory training to save operating costs.

4.2      Make Training Relevant to The Operation

The effective training must include real task examples which directly relate to personnel in a training session. Nonetheless, regularly, HSE training courses convey both safety and technical contents that are too generic and lack relevant examples to help employees relate to their experience and obtain more understanding in the topic, resulting in inefficient training. Furthermore, interactive training sessions that include specific case study instead of only lectures benefit employees. This can be done by having discussion sessions which are relevant to a working background of workforce integrated into classes.

Making the HSE trainings relevant to the workforce will save a lot of time and a budget to a company because the employees will learn what they need and be able to apply knowledge to their tasks. Therefore, no extra trainings are required to have the employees study irrelevant subjects to their work and no extra budgets spent for the non-essential training classes.

4.3      In-House Training

Some outsourcing classes are expensive and may not meet a company’s HSE requirement, so this area can be optimized by substituting with some in-house training. With the low oil price situation, there will be fewer activities in oil and gas industry. Therefore, some of experienced personnel will be free from the busy period. A company should take this opportunity to train some of fully skilled employees to be next trainers so that there will be no extra cost to hire new trainers in the future. Following are some advantages of in-house training. Firstly, the company can save budgets such as travelling and accommodation cost, and training cost from outsourcing. Secondly, in-house trainings can be more effective than outsource programs because in-house programs can be specifically designed to serve a specific location and use real work cases from the company. Finally, the company will be able to retain knowledge and experience within the organization and maintain excellent quality training to current teams.

5.  Optimize Cost of Safety Equipment

Safety equipment is one area that should be optimized because several safety initiatives have introduced new model of safety equipment into work places. Previously, people had a tendency to buy new safety equipment because new tools were assumed be better tools. This is possibly valid; however, the company eventually has several models of safety equipment which have similar functionality in a stock. Single item of safety gear does not cost much when compared to other operating budgets. Unfortunately, when costs of many safety tools are added into a workplace, this ultimately becomes a substantial hidden cost piling up in company’s expenses.

To optimize the safety equipment cost, a company may consider some recommended steps listed below;

1. Identify what is needed – experienced groups of employees investigate what types of equipment are in inventories and identify what essential safety kits a company should hold.

2. Establish a standard – a company should set standard operating procedures on what types and models of safety equipment are acceptable to use.

3. Utilize Information Technology (IT) – an inventory of safety equipment must be kept in computer database so that all inventories can be properly managed.

4. Deplete non standard equipment – all non-standard equipment will be used first to remove it from the stock.

5. Estimate what needs – once standards are established, each department must follow the standard and estimate how much equipment is required for each operation.

6. Purchase bulk volumes – when the quantities of safety gear needed is determined, a purchasing department can provide quotations to suppliers to get competitive prices. Cost per unit of HSE equipment will be decreased by applying this purchasing strategy.

7. Replenish only standard equipment – a company may utilize IT and computer data base to monitors the usage and level of safety equipment to replenish the inventory. The computer can automatically inform employees who are in change of a safety equipment inventory. Therefore, they can verify the stock and inform a procurement department to start a buying process again.

Conclusions

Due to a down turn of oil and gas industry, many companies are not able to sustain high expenses on extra safety Health, Safety & Environmental (HSE) programs. Therefore, a good HSE optimization plan should be considered and implemented to continue high HSE standard and reduce excessive spending. Five recommended optimization plans that should help a company to reach their goal are as follows;

1. Clearly Communicate The Objectives of HSE Optimization to Employees and Set Goals

2. Identify Required HSE Policies

3.  Simplify HES Procedures and Workflows

4.   Maintain Good Training Programs

5.  Optimize Cost of Safety Equipment

Referred Source – https://www.linkedin.com/pulse/how-should-company-plan-optimize-its-hse-practices-pongtepupathum?published=t

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