The Contractor Management Challenge for Power Utilities

Neil HartleyHealth & Safety Issues/TrendsLeave a Comment

The Contractor Challenge for Power Utilities

As we’ve discussed before, the UK power utilities sector is entering a period of disruption brought on by a combination of forces including skills shortages and the availability of ‘free’ energy to the consumer afforded by renewables.

Particularly for the asset-heavy side of the sector, requiring significant on-going investment, this disruption will create a tough investment environment, one which will threaten on-going investment across the board including health and safety.

Is that something we should worry about? We think so, yes. Why? Because the health and safety statistics as reported could be creating a false sense of security and one of the disruptive forces is about to expose it…

Let’s take a quick look at the HSE statistics for fatality rates in UK power utilities vs. all industry sectors (using Electricity, Gas, Steam and Air Conditioning as a proxy for Power Utilities).

This shows almost double the fatality rate in power utilities vs. all sectors. However, it could be argued that the number of workers is relatively low in power utilities (just under 200,000) and 7 fatalities over the past 4 years may not be statistically significant compared with 144 fatalities across 32 million workers. It shouldn’t be argued but it may be so let’s look at accident rates from RIDDOR.

Much more reassuring. An accident rate of almost half the rate of all sectors over the past 4 years.  However, this is the data that could produce a false sense of security – the fatality rate is a statistical anomaly and the accident rate is better than other sectors experience. However, note that the accident rates are only for employees – self-employed data is excluded by RIDDOR, presumably because it is so under-reported. Also, power utilities uses far less self-employed workers (c5%) than do other sectors (c15% across the board).

Accepting that: 1) RIDDOR is reported data and inevitably understates accidents involving self-employed workers (which, if presented, would further increase the rates for all industries), and 2) that reporting self-employed data is not the same as ‘contractors’; any increase in the use of contractors within the power utilities sector will likely drive accident rates upwards to be more in line with those across all sectors.

Current forecasts indicate 221,000 vacancies in the UK utilities sector by 2027 with almost half of these coming from retirees – a bad combination with experience leaving the sector too. The UK energy and utilities sector is also one of the hardest to hire for (according to a 2015 Employer Skills Survey) leading to an inevitable increase in the use of contractors. Combined with the introduction of new technologies, the industry supply chain is becoming increasingly complex and fragmented.

The increasing magnitude and complexity of managing contractors comes amid a toughening environment for investment. Hence, if there is a misplaced sense of security around health and safety performance in UK power utilities, it needs to be replaced with an imperative, and the requisite investment, to figure out how to integrate and safely manage the increasing reliance on contractors.

To read more on this topic, please download our eBook: UK Utilities – Yes, Investment is Tough, but Ignore Health and Safety at Your Peril!

To see how e-permits can help your organisation discharge your legal and moral responsibilities when it comes to contractor management, please watch our recent webinar: The Contractor Management Imperative.

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