Raising the standard of loss prevention
We understand what a safety management system entails and how such segments such as leadership commitment, organizational guidelines, policies and procedures along with training, emergency preparedness are just a few of those components. However, today I want to drill down a bit deeper and talk about loss prevention and how safety is one component of an overall package.
Safety is only one of the five components of an overall effective loss prevention program. Note we don’t call it a loss management program. Our job is not to simply manage loss, that’s similar to a lagging indicator, its already happened. It’s our goal to prevent the loss from occurring in the first place by ensuring proactive systems are in place and that a program moves forward through ongoing, continuous improvement and yes, that is where our SMS comes into play.
In talking with clients about their challenges they presently operate with, we hear some astonishing statements regarding the prevention of loss. For example, a pipeline contractor didn’t see the correlation between dozens of pickup trucks on the right of way with dented fenders, doors, boxes, busted lights and overall loss and reduced margins on the project. His comment was that the events were investigated, yet they still continued to have wrecks with their equipment and was basically the cost of doing business. After pointing out the fact that at the end of the job and whether the trucks went back to a lease company or to auction, somebody was going to be paying for the depreciated values of the trucks and it won’t be the leasing company. His next comment was even a little more disparaging, “well, we are self insured.” Or, ‘we budget it into the project cost estimate.” Excuse me? You are losing money. Of course this can cover a wide spectrum from injured workers, to damage to the environment, loss of materials, equipment or tools.
The bottom line is that on a hard dollar job with tight margins everyone has to control costs to remain not only competitive, but also to remain in business. Too many jobs with uncontrolled loss effects the bottom line from the onset. That $500,000.00 gross from the last project could have as many as 15-20 vehicles with a varying degree of replacement costs damage repair. We are all aware of the price of a part or the rates for shop work. Those unit repairs might be the difference to making any money on the project to actually losing money.
I’ve seen literally dozens of contractor incident investigations regarding vehicles. Yes, they failed to do the walk around if that’s the policy, they didn’t use a spotter, yes the worker received a verbal warning, if that’s the policy there’s a variety of generic factors that contributed to the event. Where I see part of the issue is in the incident report when it comes to estimated damage. Many times its simply left blank or a TBD is inserted which of course, never gets followed up. Somebody at the home office signs off on the report, somebody produces a nice pie chart or graph that outlines the events for the quarter of half year or yearly summaries, but is anyone really counting the actual cost? If they were, there should be some questions from senior management or the owner.
Many of us are familiar with the term loss prevention and many of us see it only as a function as it relates to the retail sector. We see ads for loss prevention personnel who basically are engaged in the prevention of, or arrest of shoplifters. In our businesses or sectors we work in, we utilize systems to prevent loss from occurring that can harm people that represents their health, and that our imprint on the environment we work in is eliminated and that all items are secure from theft and our systems, processes, procedures and policies provide our workers with a safe place of employment, then we have evolved into an effective loss prevention system that functions with all components in alignment and related to one another.
The fifth component depends on delivering the product that your client wants and that is quality. A quality service or product creates more opportunity for more future work. It enhances a company’s reputation and that of their workforce that in turn provides more opportunity, job pride with a company that has an inclusive safety culture that demonstrates their overall commitment to a fully integrated loss prevention system. Finally, by delivering a quality product the first time, it eliminates the need for expensive rework that reduces margins, detracts from a company’s reputation but the NUMBER ONE reason is that rework exposes your personnel to additional safety challenges by sometimes having to go into awkward or comprising situations in order to affect repairs. Yes, others can counter well that’s why we have JSAs, Hazids, FLHAs, etc so we can identify hazards and control them, but if we did the work right the first time, we wouldn’t have to be doing the process all over again. Doing it right the first time should be everyone’s target. It’s just good business sense.
Xi Safety Inc is “CANADA’S CERTIFIED SAFETY PROFESSIONALS AND SPECIALISTS(C)
Xi Safety has a solid track record among oil and gas safety companies as well as construction and other industries in Western Canada. We offer consulting, training, staffing, and the benefit of our extensive expertise in safety and compliance.
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Aaron Braaten is a former Surveyor and Economist turned Safety Consultant. He has worked for Moody's, The Alberta Energy Regulator, best selling authors and Nobel Prize winners. As the President of Xi Safety, he is developing a new approach to HSE called SafeNomics, which balances, production, people and planet. He holds a Master's Degree in Economics from the University of Alberta, in addition to other certifications through NEBOSH and the Alberta Construction Safety Association.
