Transcript Safety Incentives

1st PMI AGC ENERGY FORUM: DMS DEBATES
EPCs Should be on a Bonus Incentive Scheme
to Exceed Contract Expectations
June 2, 2010
Jose Luis Bustamante
Vice President & General Manager – MENA Region
Fluor Mideast Limited
®
Dependability, Expertise, and Safety
EPCs Should be on a Bonus Incentive Scheme to Exceed
Contract Expectations
Table of Contents
• Type of Incentives
• Outcome of Incentives
• Considerations on LSTK Projects
• Potential Indicators
• Safety Incentives
• Case Example, Ras Laffan Common Offplot
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HO20090617.ppt
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Type of Incentives
 Cost Incentives
 Performance Incentives (SAFETY)
 Schedule / Delivery Incentives
 Combination Multiple Incentives
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Outcome of Incentives
 Induce Actions or Motivate Efforts
 Discourage Inefficiency and Waste
 Promote Partnering Approach to resolve issues
 Creates Expectation of Reward / Punishment
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HO20090617.ppt
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Considerations on LSTK Projects
 Traditionally, lump sum contracts may create an
adversary relation between contractors and clients.
 An alignment on certain project objectives can be
reached by establishing incentive programs.
 Since price is fixed, other areas available are safety,
schedule and quality.
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Considerations on LSTK Projects (cont)
 Schedule
• Agreed upon milestones with gain/pain programs (i.e.
mechanical completion, meet specific milestones)
 Quality
• Based on audit reports monetized as per an agreed up front
scheme or a combination with Schedule (i.e. time to ramp
up production)
 Safety
• Fluor is an industry leader and with significant experience
on these programs.
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Fluor Safety Performance versus Industry
Fluor – Total Case Incidence Rate (recordables)
2.0
1.67
No. of Cases
(per 200,000 hours)
1.5
1.03 1.02
1.23 1.16
0.88
1.0
0.94
0.78 0.74
0.5
0.63 0.58
0.0
99
00
01
02
03
CII *
0.72
0.58
0.68
0.45 0.47 0.45 0.40
0.33 0.29
04
05
06
07
Fluor Objective: Zero Incidents
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0.57
© 2009 Fluor Corporation. All rights reserved.
08
09
Fluor
Fluor
Sources:
*Construction Industry Institute (CII).
Latest data available
Safety Incentives
Contractor Incentive
• Part of the Fee at risk
Project Team Incentives
• Shared by all project parties (client,
contractors and subcontractors)
• Could be monetary or not monetary
Project Funded
• Ideally site wide
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Safety Incentives at Work
 Client:
RasGas (QP/ExxonMobil and partners)
 Name:
Ras Laffan 3 Common Offplot Projects
 Contract: EPCM
 TIC :
1.5 billion USD
 Schedule: 4Q05 to 3Q09
 Lost time Incidence Rate: 0.06
460 million hours and 950 days
WITHOUT A LOST TIME INCIDENT
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Ras Laffan 3 Common Offplot
Schedule
• The industry was extremely busy and the volume
of ongoing work in Ras Laffan was very large
– RasGas LNG Trains
– QatarGas LNG Trains
– Laffan Condensate Refinery
– Shell Pearl GTL
• Pressure on schedule was high.
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Ras Laffan 3 Common Offplot (continued)
 Site Conditions
• Busiest time in Ras Laffan City.
• Manpower peak: 9,000 workers with tens of thousands trained
 Resources
• Lots of growth in EPC industry forced the sourcing of labor and
supervision with limited experience and skills, from new places,
with limited safety culture.
• 40 nationalities under Fluor supervision in the project
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Ras Laffan 3 Common Offplot (continued)
Zero Accidents Program in Place
• All Fluor employees are assessed on
annual basis on safety performance.
• Fluor believes that all accidents are
predictable and preventable.
• Fluor follows a proprietary Safety
Program called Zero Accidents Program
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© 2009 Fluor Corporation. All rights reserved.
Ras Laffan 3 Common Offplot (continued)
 Program Includes:
• Orientation / Education
• Pre Task/ Pre Job Planning
• Assessment / Audit
• Recognition / Incentives
• Incidence Investigation
• Substance Abuse prevention
 Program indicators:
• Training (excluding orientation) – amount on weekly basis.
• Hazard elimination – number of hazards eliminated on daily basis
(Over 982,000 over the Ras Gas project life)
• Management-attended walk abouts – number on weekly basis
• Adopt a Crew meetings – number held on weekly basis
• Safety meetings – number held on weekly basis
• Weekly self-assessments – number performed on weekly basis
• Near misses – number of near misses recorded on weekly basis
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Ras Laffan 3 Common Offplot
In addition to the daily and weekly activities the project had a
Quarterly Safety Celebration.
• Participation of all employees, Client and
Fluor project teams and senior
management
• Recognition of individuals and team
performance
• Rewards to significance contributors
• Lunch / Dinner Celebration
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Ras Laffan 3 Common Offplot (continued)
 Bottom Line
“The Common Offplot Projects have set new
benchmarks for project execution excellence
particularly in the area of safety performance,”
Dave Marchak, RasGas Venture Group Manager.
®
© 2009 Fluor Corporation. All rights reserved.
Thank You
FLUOR MIDEAST LTD
P.O. Box 46858, Abu Dhabi, UAE
Tel. +971-2-6172700
®
© 2009 Fluor Corporation. All rights reserved.