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Manage Contractors

The leader must know that he knows, and must make it abundantly clear to those about him that he knows....

Clarence B. Randal, Author, Management Expert.

Author: Jim Wardhaugh

Location: 2.2.2 Large Complex Refinery in Asia


At the time the contracting culture in Asia accepted as a norm low wages, low productivity, significant over-staffing, low quality, and the inevitability of accidents. Contractors tended to be small family businesses run by entrepreneurs as individual fiefdoms. The managers had poor managerial skills. Harvard MBAs were particularly thin on the ground.

In the refinery, our contracts were largely fixed-price lump-sum. These were attractive in some ways because they minimized the administrative effort involved in managing the contracts. However, because the price was fixed, our site supervision held a view that productivity was of no interest to us. So our supervisors took no interest in the quality of contract workers or in their numbers. That was his business not ours. To my western eye, this hands-off approach brought a number of problems:

  • • Larger numbers of contractors than necessary
  • • Many accidents
  • • Incompetent workmanship
  • • Low productivity and low mechanization of work methods
  • • High ongoing effort on safety and induction training
  • • Extensive infrastructure to support the large workforce (transpo food, toilets, washing, etc.)

There was little factual information available on the contractors— ^whether management, supervision, or workforce. All we knew was that J

each day:

• A mass of unidentifiable workers of questionable skill came to the


  • • They worked on unidentifiable jobs.
  • • They worked for unidentifiable contractors or sub-contractors.
  • • They worked at unidentifiable cost effectiveness.
  • • They often worked unsafely.

We were putting in a considerable amount of training to raise the level of competence and safety awareness, but with a huge turnover of contract employees this was ineffectual. The situation was unacceptable in a cost and safety-conscious world. We knew we must drive down the numbers and attain a fairly small and stable workforce that could be trained to a high standard. We could not afford the hands-off approach any longer. Thus we started our drive to manage the contractors actively.

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Figure 33.1 Gate Access System Overview

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