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Procurement is Failing: Here is The Smarter Way to Buy, Manage, and Safely Execute Work With Shawn Galloway
123 Plays1 month ago
Episode 78 of The Better Contractor Podcast dives into the constant battle between cost and safety in various industries with Brent Oberlink and Shawn Galloway. Too often, procurement teams chase low-bid, completely ignoring the real risks that come with cutting corners. The guys break down why Low-bid culture leads to weaker safety, worse outcomes, and contractors who simply can't perform at a high level. They also highlight what strong partnerships actually look like. Clear expectations, real communication, and treating contractors like actual partners. If you are a contractor, or work in the oil or gas industry, this episode is a wake-up call to stand out beyond price and build real relationships with the people running the job.
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Transcript
The Role of Safety in Procurement
00:00:00
Speaker
you have to differentiate yourself. And if safety is the way that you want to differentiate, you have to tell your story. you have to give examples about what you're actually doing tangibly that produces better outcomes and how the procurement, how the organization is better served by partnering with you to compete this. But also if, if if you really feel the project is, is purely low bid, seriously, don't, don't bid it. Consider not bidding on those things. because that starts to change the story and that starts to change their experiences that they're having.
00:00:34
Speaker
All right, guys. Well, today am joined by Sean Galloway with Proact Safety. Hey, Sean, how are you? I'm good, Brent. How are you doing?
00:00:47
Speaker
fros all right guys well today i am joined by sean galloway with proact safety hey sean how are you i'm good brent how are you doing Hey, not too bad. It's been ah I try to remember the last time we had you, on here probably good six months ago, at least.
00:01:01
Speaker
Yeah, it was it was a different year. Yes. Quickly. Yeah. So Sean is someone. So if you guys, you know, follow the podcast or some of our YouTubes, Sean is someone we've had on before, uh, met him through something with safety years ago through a shared client. We both have, and just really value his approach to safety. Uh,
Understanding Different Buyer Perspectives
00:01:23
Speaker
In our industry, safety is hugely important and you run across a lot of different perspectives on how to manage it and how to do it. And some I agree with are very, very good. And some I think are, eh, that's more of a checkbox or they're not really getting the meat of the issue and how to actually handle this from a culture perspective. and
00:01:42
Speaker
Sean is one of those that I think gets it. So we've had him on once and now we're to have him on it again. So today want to talk to Sean a little bit about something I've seen in our industry, but also something I think a lot of our customers are dealing with, and that is the buying from a corporate perspective. So if I look at You know, and in our industry, there's usually two types of buyers. You either have procurement that is handling it completely for a field team or for, you know, a supervisor or the supervisor is actually able to make that ah buying decision themselves.
00:02:17
Speaker
Sometimes with procurement, just kind of over, you know, looking over their shoulder to make sure there's no fraud, no no way, something like that. And when I see that, I typically see two different buying ideas. Procurement typically, not always, is checking some boxes, meaning they have these basic things. you know Is this customer on safety verification website A, B, and C?
00:02:41
Speaker
Do they do these things? And it's a box check. There's not really anything
Challenges in Contractor Selection
00:02:46
Speaker
in depth of what this contractor is doing actually in the field. If the field team is doing it usually all by themselves, a lot of times I've noticed they look at more, hey, this is my experience with with this contractor.
00:03:00
Speaker
This contractor and this other one are both an A status in our system, but in the field, contractor ah one is way more ah responsive to safety issues. They mitigate hazards better. They're doing a lot of stuff in the field that is much, much better than contractor number two.
00:03:17
Speaker
And they may therefore, as long as the pricing is in the ballpark, they may therefore pick contractor one. And they take a different approach of looking at, hey, we're gonna look at more best value, meaning we're gonna actually look at safety, we're gonna look at their quality, did they make landowners mad? Do they check all of our boxes and then actually perform it in the field?
00:03:37
Speaker
And as long as their price is in a range, and what I've seen a lot of them do is they'll say, hey, we're gonna take five bids, Bid number one, we're going to assume that's probably too low. Bid number five, we're going to assume that's probably too high. We're going to toss those two out and we're going to look at the three that are more in the center. And that typically gets you a better actual
Accountability and Safety in Organizations
00:03:55
Speaker
number and a better contractor because you don't want the one that's astronomically high or the one that's way too low because they probably messed up. And if they messed up, they're going to cut corners. So...
00:04:05
Speaker
Anyway, Sean is someone who I think really understands the safety side of things. I just wanted to kind of pick his brain today and see see what he thought. But what do you think an underlying issue is or why do you think procurement may focus more on the price versus the other factors? And how can, well, we'll get into the how in a minute, but I guess first, what do you think that issue might be?
00:04:29
Speaker
By design, procurement should focus and does focus on optimizing whatever the organization measures, rewards and makes visible.
00:04:39
Speaker
So they're focused on, you know, reducing costs, saving money, capital for the organization and
00:04:50
Speaker
One of the things that's invisible, however, is safety performance. So procurement is measured, rewarded, compensated based on their job and their job is if it is to save money, reduce costs, et cetera, that's what they're going to focus on. Kind of the old Steve Jobs, what interests my boss fascinates the heck out of me.
00:05:09
Speaker
And they're focusing on what they're measured by and something as important as safety, which is a stated principle, value, priority, whatever state has in the organization, unfortunately, is not visible for them to be held accountable against. So we don't want to hold them accountable based on incident rate, because we know all the things that can come along with that of suppression and everything. But Usually, if at all procurement gets involved, it's after we've had some significant issue, we've had a you know, not even incidents, usually it's some fatality, then people like me come in and we're diagnosing what part of the system might have failed that produced this
Organizational Values and Safety Culture
00:05:50
Speaker
outcome. i love the saying that your organizational systems are perfectly designed to give you the results you're currently receiving.
00:05:57
Speaker
And if you are receiving subpar contract performance based on work, based on safety performance, that means that the system that brought them into the organization isn't doing its job or is doing exactly what it's set up to do, produce undesirable outcomes. So you can't blame it on an individual. You can't blame it on the system. So we have to look at offsetting accountability and how is procurement held accountable for bringing the right results into the organization.
00:06:25
Speaker
And if an organization is saying safety is our top priority, it's our core value, it's how decisions are being made, is it? If the people that are most responsible for bringing the people in to safely conduct the work aren't a part of that process or they're being measured against incongruent objectives, then safety is not really a core value. So I think it ultimately it comes down to one thing, Brent, that a a lot of organizations don't truly with candor answer this question at the top of the organization with regards to safety, what's our objective?
00:07:03
Speaker
If our objective is we really want world-class, we don't ever want to hurt anyone. We know mistakes are normal in a complex environment, so we're not chasing perfection, but we want to be on the path to excellence and safety. That requires a different allocation of resources, a different reestablishment of what the priorities are, how decisions are made. Then if the objective is we we just want to get incrementally better in safety, because there's no stasis. You're either either going forward or going backwards.
00:07:31
Speaker
And both of those answers are honest and they're at least pushing the organization towards improvement. But you send mixed signals in the organization, to your point about the people that are out there in the field, overseeing the work, watching the work, responsible for the work, and they're seeing incongruence in the values, then it also shakes the organization to its core. And not only do people that are outside the company like you and you and me look at this and say, well, this doesn't match the people inside the organization. And that starts to create a a ah crack within the organizational culture because culture fundamentally comes down to what people tolerate, what gets punished and what gets rewarded. And if we're just rewarding based on schedule and cost, well, That's what the culture is based on cost.
00:08:25
Speaker
Yeah,
Field Practices vs. Procurement Requirements
00:08:26
Speaker
and that's a good point. And I see, so a lot of our customers, shared customers, um if you look at when they hire an employee versus when they hire a contractor, that really should be the same criteria.
00:08:39
Speaker
Meaning if yeah if I have these core values and I'm hiring employees based upon that, when I go to hire my contractors, I should probably do the same, but a lot of them don't. And I think where that becomes such an issue A lot of these companies, if you look at the work that they perform or the work they do, they hire most stuff out.
00:08:57
Speaker
So they may only have, so let's say a job that they're working requires 100 employees. A lot of them, 10 of them may be their actual in-house employees, but the other 80 to 90 may actually just simply be contractors they've hired.
00:09:12
Speaker
So when you say this is the culture, this is our standard, this is how we treat our landowners, you know, those who work around us, But then when when the when the team shows up, if 90 of them are living by a different standard and different culture than the other 10, it changes things. and But I see that all the time. And kind of going back to your point, too, on procurement, this just happened this week, so I'll tell a story, i just won't name names.
00:09:38
Speaker
So we had performed a bid probably two months ago for a client, and I knew that the client probably had given this contract for several years to a different contractor.
00:09:52
Speaker
I've seen the work in the field because we live in the area and I drive by these pipeline segments all the time. And i had a feeling that the stuff in the ah RFP in the scope of work wasn't actually being performed actually in the field.
00:10:07
Speaker
So when we got ready to bid it, I thought, well, I'm going to bid it how I know it's actually being performed in the field. But then when I read all the documentation, the RFP, the legal language, I thought if I do that, because basically the difference is per crew, how I was bidding it per the ah RFP but would have been requiring five to six people on this job site per crew.
00:10:30
Speaker
If I bid it how I see it being done in the field, I only need three. That's a huge price difference on our end and a lot less equipment, personnel, per diem, everything. But since I'm legally bound to say, hey, if I submit this price, I need to be doing it for the scope of work, or if I get caught, I gotta make it right, but at that point I've underbid it. So anyway, we bid it the right way. We don't get the bid, surprise, surprise.
00:10:56
Speaker
ah The other day I was driving and I see that same contractor working one of the lines that we just bid. So I stopped and just watch, just verify to myself whether or not any of that stuff was being done. And in fact, none of it was being done. It was a three person crew instead of of five or six.
00:11:13
Speaker
And that's something that I've seen a fair amount and and you know in the industry and in the field. And it's very frustrating as a contractor just trying to do it right. But I go back to the contractor selection criteria.
00:11:26
Speaker
And it is based solely upon price. And that contractor has had that contract, I believe for 10 years straight, because they know they can get by with it. And anytime someone else comes into bid that maybe doesn't know I can get by with that, which isn't a good philosophy, but they don't bid it that way. So of course, no one ever wins that contract away.
00:11:48
Speaker
And The one of the reasons, and this is a safety thing, but like I drive by, there's basic safety things, you know, on this job site. Hard hats are obviously required ah for this specific job. They want you to line locate and verify the depth, flag the pipeline, all that type of stuff.
00:12:05
Speaker
When I drive by, there's no hard hats. There's nobody with a line locator, which means you can't locate the line if you don't have a line locator. And there's no flags on the easement. There's no flags in the on the and the above the pipe, letting them know here's where the pipe's at. So you could have shallow pipe, you could have exposed pipe. Those are all major safety issues that were just
Shifting Focus from Cost to Value
00:12:23
Speaker
thrown aside. And as you and I know,
00:12:26
Speaker
That may fly until, like you said earlier, one day someone strikes a refined gas or, you know, a refined line and there's an explosion. So, which has happened in our industry um where there's been people killed by, you know, a mulcher hitting a gas line or frying a jet fuels line and you have an explosion. So, anyway, just one story.
00:12:49
Speaker
But then I go back to, okay, we've identified the issues. We have a story in real life. but then how do you get procurement to change? I'm just kind of curious your take on that. If you're speaking to ah field person who's dealing with procurement, or maybe you are a above procurement looking back down, how does that philosophy change? that I think deep down, I think that's what procurement is taught is to save the company money.
00:13:17
Speaker
But at what cost? you know can Can I save money via best practices? And I look at some of our clients, and we have some that are both sides. Some of our best clients that we've had for a long, long period of time, 10 years plus,
00:13:30
Speaker
are our clients who value, you know relationship and they value best practices and they don't want a low bid contractor because they've been burnt and they know that's why they've been burnt. So they've moved on from
Continuous Improvement in Safety Practices
00:13:40
Speaker
that.
00:13:40
Speaker
But then we have others who come and go with that mindset based upon, Hey, we've had a rash of incidents. Now let's change this. Hey, everything's fine. And it kind of goes back to the low bid. Uh, not that low bid is inherently bad. There just has to be other criteria that's actually looked at and not just a box checked.
00:13:58
Speaker
Yeah, I think some of that falls on us being outside the organization to ask questions, to really ascertain and determine what what really is important to the organization. So I believe all progress begins by thinking differently. And just by design, my personality, I tend to ask contrarian questions. i tend to look at things and, you know, maybe maybe we haven't asked this question because the questioning mind is what kind of progresses things.
00:14:27
Speaker
So, you know, Sometimes it's if you had to choose a contractor that's 20% cheaper and has an average safety plan or safety performance versus one that might be 20% more expensive, but has a really robust approach to safety, oversight, et cetera, and procurements compensations based on the success of that project, which one did you choose and why?
00:14:55
Speaker
Sometimes that goes through to get to. so as So I think there's some questions that you can ask, but as you and I know, it comes down to the relationships and procurement.
00:15:05
Speaker
If our relationship is only with procurement, most RFPs and my 20, 30 years experience, are already predetermined. They're, they're, like you said, already based on established relationships, ah even ones that try to be very visible in the marketplace because their government or whatever it might be, um they're they're generally based on relationships. And if you don't have a relationship with the person ultimately that's funding that and has the budget that's, that this is serving, then you're down to the lowest cost. So I think some of the things like I see your organization doing is you're leveraging your approach to safety as a competitive advantage.
00:15:47
Speaker
That attracts organizations that are genuinely serious about the desire for great safety. And i know in my my organization, just by default to what I do, I'll turn down projects if I think the organization's not serious about this. There's three different types, I guess, for context. So there's three different types of projects that we typically get engaged on. One are organizations that are absolutely the best.
00:16:15
Speaker
And I can even give you some examples about this. And they want to make sure they're not in an echo chamber or breathing their own exhaust. And I'm kind of a human benchmark. I work across all industries. So what else aren't we thinking about? What what are some kind of back to that question? The other is an organization that is is very good, yet they've experienced a tragedy, of fatality, multiple fatality. And they want to look at this and say, is this systemic or is this just a you know an unfortunate event that happened that couldn't have been predicted or planned for? Those are the ones that I'm looking into it to see, is this about mitigating litigation or is it that they're truly serious about that? So I'm very careful about those types of projects, whether I'm serving as an expert witness or an advisor to the organization. Most of the work I do is helping organizations that are already pretty good pursue that level of excellence. So because of you know how I'm answering some of these questions, I won't get involved with an organization if I think they're not serious about
Aligning Contractors with Safety Goals
00:17:12
Speaker
this. So I'll even turn down ah RFPs unless I know the organization, know their intent, or already have existing relationships because because of some of the other issues. But when I see companies that are serious about this, and I will give you an example of Happen this week, there's a company I'm advising and I'm about to spend a day with the top 40 leaders in their organization. And to to really get to know the organization, I'm interviewing some of the executives across the enterprise. One happens to be at a location in and the Middle East. So he's the country manager in the Middle East for these high industry, heavy industry operations.
00:17:52
Speaker
And about 10 years ago, he and with support of the company made the decision that they really want to be on the path towards world-class, be excellent safety. So what they did, this is, and I've run into this before, they changed the tone expectations with contractors because similarly, a lot of the work that's done in the heavy industry is not self-performed. So they bring the contractors and several hundred people. And they provided them one example was top-notch PPE, including great boots. few days later, the country manager is seeing these contractors come in the gate and they're not wearing the boots. So they inquire. Turns out contractors sold them in their area because they're really expensive boots. And they thought that they didn't know that the expectation was we actually have to wear these things. And I've run into that before, but where they're at today,
00:18:40
Speaker
No work is performed by a contractor without an employee of the organization overseeing that work, not for micromanagement to ensure adherence to those performance, not just results expectations. And, and their line of work, even where they're at in the world, the operator that's providing that oversight is a highly paid individual. So this isn't just bringing in an outside low cost, uh, entry safety professional to look at this.
00:19:10
Speaker
These are, this is a dedication of resources because we are going to be great at safety and we want to identify deviations before they produce a desired block comes. Then you have the other end of the spectrum of, we just need to get the work done, go do it. And I've been an expert witness on those types of events. Again, very carefully choosing the projects I accept there. But when when I look at the initial discoverable information and you can clearly see that even the organization themselves don't take safety seriously for their own employees. They're not doing any training. They're not equipping them to be successful.
00:19:47
Speaker
Well, you see that definitely in the performance of contractors. And that goes back to what I started answering this question, trying to understand the own organization where practical is to inquire with procurement, what do they do internally for their own employees with regards to safety?
Evolving Industry Safety Standards
00:20:07
Speaker
Because being sensitive to reality of the world, we don't want to be chasing, you know, for lack of better terms, and this may bite me later, but bottom feeders and safety.
00:20:17
Speaker
You know, I think that we can kind of rising tide type of thing it raises all boats. I think we can continue to elevate the profession by having conversations like we're having today and start pushing back and inquiring truly what's of value to the organization and,
00:20:37
Speaker
making the determination, is this a company we want to actually work for and expose our own employees to this type of risk? Yeah, that's true. and That's good. And one thing I've noticed, and while you were talking, it made me think of it. ah I think both of us are very big on like continuous improvement.
00:20:55
Speaker
So like you said earlier in the in this in the video talking about how you ask those questions and you challenge things. And that's something we've always done as well. And I've done, even when I was little, but always wanting to be better tomorrow than today. And the one thing I think that frustrates me is with this, I've been in this business for 17 years in the industry for 18, 19.
00:21:17
Speaker
I don't feel like, and maybe it's the clientele we currently have, I do not feel like the industry is better from a safety standpoint than it was 10 years ago, which is weird to me. and And I've, I thought about this the other day and with some clients, we have had those clients for 10 years.
00:21:36
Speaker
there was a lot bigger push 10 years ago for safety. And really when it changed was during COVID. And I know a lot of industries had a spike of safety incidents and stuff. And we did too, just to be honest, during that COVID timeframe and the year after.
00:21:52
Speaker
Ours has since went back to what it was prior. um But I know during that timeframe, there was conversations about all contractors for the most part, we've we've seen this shift upwards a tick in incidents. And I do know some of our customers became more lax on their criteria.
00:22:12
Speaker
I don't know if that's what caused it, but what I don't like is seeing that a decade ago, at least with certain clients in the industry as a whole, and at least and through my lens, it hasn't gotten better in terms of safety. I can think back to,
00:22:26
Speaker
ah a conversation I was having with a customer that's actually the same contract that I'm talking about earlier in the story, where they actually let people, well, they let two contractors go for safety issues that this contractor today is doing every single day.
00:22:45
Speaker
But that shows how serious it was taken then is you basically had no strikes. It wasn't three strikes and you're out. There was one and you were done and you were gone. And that's actually how we got in with this customer.
00:22:57
Speaker
is they fired two contractors. We had a little bit of work with them. We were kind of brand new. They liked how proactive and and involved we were with safety. We took most of their work from them.
00:23:07
Speaker
And that's how we took off with that customer. But now I see a complete shift in that ah away from it. And so I'm kind of curious from your perspective, because you don't just work in oil and gas. You work in a whole broad range of industries.
00:23:21
Speaker
And I'm curious to see if you're like me, I will sit back and kind of study my competition even. So I have some competition that I admire and I respect and I like, you know what? They're doing this right. They do it as well or better than we do.
00:23:35
Speaker
It's working. I need
Managing Contractor Safety
00:23:36
Speaker
to study what they're doing and see if I can emulate, change it, make it our own, whatever. These over here, i don't want to be a part of. I don't like what they're doing. But I'm curious because you ah do a lot of evaluation and kind of digging into people's safety perspectives and stuff, these different companies.
00:23:51
Speaker
what are the best ones doing that oftentimes the worst ones are not? So if if I'm, yeah, go ahead. I was going to inquire, are you talking from a contractor side? are you talking about from those that are employing the contractors?
00:24:04
Speaker
Those who are employing. Okay. yeah First, I want to comment on, on the the experience that safety is not getting any better, you know, even in the, the right away. So there's a lot of different utilities that, that have those right ways. And,
00:24:21
Speaker
if you follow the money, if you look at changes in market conditions, I've seen, you know, some utilities more than others, they're just not investing in right away clearance, not investing in vegetation management. And that definitely affects things. And it affects the level of priority of what they're willing to invest in the safe clearing and and safe maintaining ah of all of that. So you follow the money and you kind of see that as well. the The other thing that you hit on the last 10 years, so about 15 or so years ago, the term serious injury fatality was coined. And it's basically, it's a term it and it helps socialize what leaders should be doing already. And that's better engineering and managing risk out of the organization through elimination, substitution, engineering controls than just putting more paperwork and PPE on folks.
00:25:12
Speaker
So it did elevate that conversation about what are we doing to prevent serious injuries and fatalities? So that's been very positive. Yet, despite this massive socialization of what are we doing to truly stop the life-altering events, there's been very little impact.
00:25:31
Speaker
So we have been focusing so heavily on the identification of and prevention of serious injuries and fatalities, yet the fatality rate, not just in America and a lot of the developed countries, has flatlined and in one or two of the years have actually gone up.
00:25:47
Speaker
And I'm really concerned. mostly in the construction space about what we're going to see over the next five years, just with the increase in construction and need for contractors and less people. And that's a different subject. So it does concern me too, Brent. And one of the things that drives me is I have a five-year-old granddaughter and I reflect on the last 10 to 15 years, haven't really made an impact.
00:26:11
Speaker
I'm concerned in the next 10 to 15 years, she's going to be entering into the marketplace. And I want her to enter into an environment where we have made an impact. So that's why, you know, these conversations and the things we do around, we've got to make a difference because we've been talking about this. It's been important, but we haven't really made an impact. So kind of definition of insanity, we keep doing the same thing. So I think we need to completely relook at how we're managing occupational safety with contractors and with with our own employees. Now to answer your question, The companies that do this right, they do a much better job with the five phases of contractor safety management. So they're not just pre-qualifying based on a tool or a service provider that that charges the contractors and charges the clients to say, yes, we have our documents in place.
00:27:04
Speaker
rubber stamp on it, let's move forward. They're doing a better job with aligning people to the expectations of the orientation, with training, with oversight, with audits, with inspections. And the hardest one to do is post-job before people just demobilize and and leave leave the work.
00:27:22
Speaker
So the kind of the companies that do a really good job, they have dedicated resources that are tied to both procurement and in safe operations. where procurement is a partner and ensuring we're getting the right people in. Procurement, back to my earlier point, is actually held accountable for the safety systems that are put in place and the execution and of safe work, not just on the incident rates.
00:27:49
Speaker
So that is a heavier lift for organizations. And based on the earlier comment I provided, some just don't have the bandwidth to do that. so It's all about risk tolerance because you can't engineer all risk out of any any setting. It's just not possible. Everybody wishes it was, but it's not possible. So it's a matter of acceptable risk and as low as it reasonably possible and acceptable.
00:28:14
Speaker
But that that goes back to the organizations having a clear understanding of what do we view as acceptable risk and what do we view as unacceptable risk. And those conversations at the top of the organization, even within the companies hiring contractors, are often misaligned. The CEO will have great intention. No, we we don't want that. Yet what gets rewarded and tolerated is not back in line with that. So the companies that do a really good job at this have the type of conversations we're having today. And the best ones have it before something terrible happens. Because I see a lot of companies that are passionately reactive after something terrible happens and then they change their systems.
00:28:56
Speaker
The best ones are out there seeking weak signals, seeking deviations and addressing them by buttoning up and strengthening how they select, how they oversee, how they partner with and how they conclude the projects.
00:29:12
Speaker
To your point about continuous improvement, we have a, what we call the military, the after action review. We have a post job, what went right, what went wrong, what can we learn together? And, you know even when you and i started working together it was looking at contractor safety performance for what became a mutual client of ours and that's exactly what what we learned during that is there was a better job that they could be doing to learn from their contractors because the contractors also see what management misses and that's the disconnect between work is imagined and work is done. And then the companies that are best at it, they develop the courage to fix those conditions that are causing that gap between work is imagined and work is actually done. And that scene in work is imagined, here's our plan of work, here's our safety plan for this job, but how it's actually getting done.
00:30:07
Speaker
Contractors see that with their own folks. but they also see it with the employees. So finally, thing I say the companies that do a really good job at this truly partner with their contractors to have a candid conversation about how could we improve our systems so that you could be successful on our property.
00:30:25
Speaker
That's a good point. It makes me think of a story from probably seven years ago. um We worked for a client and basically, You know, a lot of our bid selection, you know, a pipeline company may have, I don't know, 40 different segments go out for bid.
00:30:43
Speaker
And they could technically pick 40 different contractors to do that. Normally it's not. Normally there's probably 10 to 15 that are picked. That's one avenue, one way to do it. Back then we had a client who basically what they did is they did pick best value. So they aligned and partnered with usually about three contractors and that was it.
00:31:04
Speaker
And it wasn't just, you did this section and then we rebid for this section. They put their entire system out for bid a whole year prior. to us three contractors and you, they went through and they said, okay, minor corp is in this area. This company's in this area. This one's in this area.
00:31:22
Speaker
We're going try to give them stuff somewhat near their home base. We're going to try to give each of them about a third, give or take. And we were held accountable, not just on price. We did have to be compares comparable to each other. Like one of us can be double the other unless terrain dictated that.
00:31:40
Speaker
Um, But then you were held accountable because you wanted to keep this contract because it was a full year, usually large sum of money. And sometimes as long as you didn't mess up, you just got renewed into the next year.
00:31:53
Speaker
My accountability
Leadership's Influence on Safety Culture
00:31:54
Speaker
became, this is an important client. I need to perform. But anyway, I say that to say what love that they did, and I've not seen anyone do this, but maybe one other client.
00:32:05
Speaker
Because it was more of a partnership, at the end of every year, they paid they would usually rent a place somewhere in a central location, and they would pay to rent out a conference center and hotel, and they would have every contractor come, their entire safety team, the contractor safety personnel, and usually at minimum, the foreman that worked all the jobs for that client in that past year.
00:32:28
Speaker
You all got together, they would usually present, here's the stats of what happened this year. And then they would open the floor up and allow the foreman, some of the people in the field, the contractors, everyone to talk about, here's what we experienced in the field this year.
00:32:42
Speaker
Here's the safety instances that happened, here's the near misses. We would trend that data and say, hey, all of us had this happen. So it was a near miss, but we all had it happen. So that's obviously an issue.
00:32:53
Speaker
And we would work together to try to mitigate that as a group. Usually it was a one and a half, two day event. But what I loved about it is you had safety in there as well. And they were listening to the people. And I will say from a client perspective, I've never had my guys more bought into safety for the client than I have had on that project ever since. And I will say on that one,
00:33:15
Speaker
I didn't just learn from what happened with us. So there was one of the contractors, other contractors had an incident happened that year, a major incident. Well, we shut down work for all contractors for like the next week after that incident, because we were all doing the same, using the same piece of equipment.
00:33:31
Speaker
And we all huddled together and said, how can we make this safer than what, you know, so this doesn't happen again. And it changed how we all did our work. We still do our work differently because of that. But to my knowledge, us and those other two contractors the only ones that do it that way.
00:33:46
Speaker
But my point is, that is the difference between we're going low bid everything and everything's a commodity, meaning what we're doing is a commodity, or we're actually going to partner with people who align with us and we're going to work with them to actually make this program way better than it was prior. And I know that person has since retired away from that company.
00:34:08
Speaker
And they kind of went away from that. But I know when he was there, the quality of the work, the safety in the field, everything was completely top notch. And I've never seen it again like that anywhere since then. But I think that was a good, it's a good testament to the value in doing that though.
00:34:25
Speaker
Well, I think, you know, what what I find is, and it's, it's great that that organization experienced that. It tells me if the leader left things changed, that they didn't have a culture of safety. They had a mood.
00:34:38
Speaker
So it depends on the moods. And if if that leader left and all that went away, then it really wasn't cultural, which is unfortunate. um That's unfortunate. I'll tell you a great example of this to echo and build on what you said. About 10 years ago, i was brought in to support an organization and they build, well, they they own the electricity generated from wind farms. So to the European based organization and the project was outside of Belfast, Ireland. So what we did is they wanted to completely change how they did safety on these projects.
00:35:15
Speaker
I mean, they own the electricity once it's tied in, but They hired a one GC and all the subs. They, they wanted to develop a new playbook for how they build these wind farms and on the product. We got similarly two days. It it was when I, in a hotel outside of Belfast, it was a London dairy, dairy, Ireland.
00:35:33
Speaker
And we got together and we talked about, we brought the GC and the and the main the heads of the subs together and we talked about what what does success look like at the end of this project? And it wasn't just no incidents, no injuries. It was what would we see at the throughout the execution of this project when we have those results that we'll know why? Because it's not just a matter of setting expectations for the results, people have to be aligned for what performance is going to produce those results. So we all agreed on this is what performing the work safely would actually look like. Then the conversation evolved to how are we going to provide that oversight and that accountability to where we're not beating people up. It's not negative accountability. It's proactive and positive accountability. We agreed on some mechanisms and working together. 18 months later, when the project is over, we got all back together and
00:36:25
Speaker
I'll never forget this project because i had food poisoning right before the the end of that 18 mud wrap up. That's why it always sticks with me. But anyways, we got together and similarly, the i remember the GC saying, you know, for the first time, it felt like that the client cared more about the safety of our people than we even care about the safety of our people. And then as they started moving forward, word got out in the industry about how they manage and how important contractor safety is that people compete heavily to work for this organization because everybody knows how much they care. So it's not just safety is important. We send the message, we care about your people, which is a different message than we care about your safety performance.
00:37:05
Speaker
And that's why I think we we need to elevate these types of conversations. Even great executives are looking for what are those better practices. Great executives don't fall into the trap of best practices because they know there's always a better way. So they use terminology like better practices. But I think socializing those these better practices that produce better results and conferences and partnering with your clients to write papers on these things, to where we're influencing the executive mindset of others in their industry. And that's what it's going to take short of there being some terrible events that prompt a different behavior.
00:37:49
Speaker
Yeah, no, I agree.
Contractor Buy-In and Client Expectations
00:37:50
Speaker
I think one thing and in the contracting space that's hugely important, and I know this is a buzzword, culture is a buzzword anymore, it feels like, but I do believe it's super important in the contracting space, especially because a lot of times our people are not right here, meaning I don't get to see them every day. I don't get to monitor their work.
00:38:12
Speaker
They're out working remotely. And the only way I know with a little bit of confidence that they're doing what we're wanting them to do from a safety perspective, quality perspective, is by them caring.
00:38:24
Speaker
Like they have to deeply, deeply care when no one's watching. So whether or not boss is there safety guy is there or the customer is there, they're doing it because they've bought into the culture of doing it. And I think with your story, with the story I told right before it,
00:38:39
Speaker
that is where I've seen it most bought in. Like if if they're bought into mine, that's that's pretty good. But if they know, hey, Lander Corp wants it and this client deeply cares about it, they are so much more bought in. And I saw it with that project and I've used that as an example before in different conversations.
00:38:58
Speaker
just because i saw how well it worked and and i and if i put myself in my client's shoes and i'm saying i value that i'm looking at that and saying that was the top-notch program on all fronts whether whether it was safety whether it was quality landowner relations were insane because that culture of excellence permeated everything it wasn't just safety and pricing Looking back, it was still fair. It was right in the average in the middle, which is where I think it should be. And one other thought I had with that, a little bit ago, we brought up ah COVID. And we all know ever since then, there's been a little bit of a labor market shortage and just kind of, especially right after that, there was a lot of just, I can't find enough people. There was people that exited the job market.
00:39:44
Speaker
But one thing I've noticed, if I'm a client and I'm buying, so even if I'm building a house myself, I want the contractor to show up. I want his people to have the experience to build my house the best way possible. I don't want surprises later. and but But I know as as a home buyer, i know that takes money. I know he's not finding that A-plus carpenter to work for him.
00:40:11
Speaker
for 15 or 20, $25 an hour. I know i have to pay a higher wage for him to be able to afford to get what I'm expecting it to be.
00:40:21
Speaker
And I think in the contracting space, for some reason, a lot of buyers feel like I can undercut, I can buy cheap, it'll be okay. If I'm buying a car and I want like top-notch I don't go to the Rolls Royce dealer and ask for a bargain because I know their product is worth what they're saying, or they're not going to negotiate with me, period. They'll say, go on, go buy you ah and a, well, know whatever brand that's cheaper. I don't want to diss any brands, but that for whatever reason, a contracting that that is not expected, people are okay with expecting an A performance, but
00:41:01
Speaker
but paying a C or D cost. And I think that's something the industry does need to talk about, especially in the light of having, because a lot of what we do, i can go buy brand new equipment all day long, but if I don't have good operators to run it,
00:41:15
Speaker
doesn't matter that I have great equipment, the job's still gonna look crappy. So there needs to be a better job, I think, in the contracting space of saying, hey, we want to deliver to deliver you this. And there's gonna be clients that don't want it and don't care. And there's always gonna be contractors for that client. But for the ones that do care and say, I want an A-level in product or in service here, we gotta to be able to say, hey, that's great.
00:41:38
Speaker
But for me to provide you that, I have to hire the A-level team to be able to support that. So I think there needs to be more discussion, too, along those lines. And I think procurement needs to understand that, hey, some of this stuff I'm requesting, whether it's the safety, the quality.
00:41:54
Speaker
ah You know, we we even have one where they want the – take the average, crew you know, take the crew size and the average time with our company needs to be a minimum of a year.
00:42:05
Speaker
And the average time in the industry needs to be a minimum of two. I'm giving an example there,
Partnerships and Trust in Projects
00:42:09
Speaker
but like, but that takes not that a year and two years is even that long, but in today's world, that still takes me paying X amount of wage to be able to say, hey this crew is, there's no short service employees in this crew. They all have been in the industry or with the company, a minimum of a year.
00:42:25
Speaker
But to have that criteria, have to be also willing to pay for it. So that's right. Well, it comes back to what we've been talking about. is this a true partnership that we're establishing between client and contractor? Or are we just performing some work that they don't want to do?
00:42:40
Speaker
Or they feel is too dangerous for their own people to do? Whatever it is. Because if we have a real partnership and we we understand and we trust each other's intent, and our intent is to service the work you know, in the safest manner possible, then we can sit down and we can collaborate. And i believe, you know, in and my line of work, all of the projects we do, the proposals that are written to scope of work are collaboratively defined because it has to be. I learned a long time ago, projects don't fail in the end, they fail in the beginning because of misaligned expectations. And if I misaligned in what the client's expectations are, and if I don't have the opportunity to talk to the individual with true fiduciary responsibility of the organization, then I'm not going to really know what's important. And that's why we have to be able to push back within procurement. And yes, sometimes they'll invite it invite us in for asking questions. But even myself and in my line of work, some of the questions I ask are my competitive advantage. I really want those questions to be public knowledge. So that goes back to not you know not not responding to some of those things. But if we have the opportunity to truly understand what's of value, if we have the opportunity to talk to the operations who's going to own this work that we're doing, then we can figure out a way to even nudge procurement into understanding that this can't be a low bid cost because we've established these parameters by which the project has to be executed successfully. Then if we're providing something that's above cost, but we're meeting those expectations and then going back to holding the kind procurement accountable for the actual performance of the work, safety being included in that, then that starts to change things if they end up going with that low bid, but aren't providing the amount of people or the oversight, whatever that operations agrees is necessary to safely perform this work. Then we start, we start changing that. So it's a, it's a matter of trying to find where to nudge best.
00:44:47
Speaker
And there's a lot of different ways that we could do that in the marketplace with the relationships we develop, but it also comes down to not you know, not chasing those those bottom organizations. And eventually, they're they're going to realize that they're going lose their own license to operate if they keep having those issues that are out there. Because a company has to protect its brand. And a brand is how people think about you when you're not around. And safety absolutely is a part of that when terrible things happen and it changes your brand and can make you lose your own license to operate.
00:45:23
Speaker
Oh yeah. no that's a very good point. And it may not happen. You may buy some time, but usually bad practices will end up biting you in the ass at some point. But one thing I kind of wanted to end on. So we talked a little bit earlier, almost as if we were kind of giving advice to procurement on how to do things a little bit, maybe better.
00:45:43
Speaker
i wanted to talk to contractors or people who were, you know, in in my shoes or similar, how can they best, submit their bids, market to procurement to get them to see, I guess, the bigger picture. I wanted to see, I know marketing is not necessarily your specialty, safety is, but I wanted to see if you had any ideas on that front as a contractor, any, any recommendations.
00:46:07
Speaker
Well, I think for the contractors that are serious about safety and and I'd like to believe that they all are, I think they need to lead with their story. They they need to, they, remember stories and pictures, not facts and figures. So when we're talking about marketing, it's what's going to be sticky, what's going to be memorable to that procurement person. And if we're just looking at five pieces of paper with numbers on it, then there you're not differentiating. So you have to differentiate yourself. And if safety is the way that you want to differentiate, you have to tell your story. you have to give examples about what you're actually doing tangibly that produces better outcomes and how the procurement, how the organization is better served by partnering with you to compete this.
00:46:52
Speaker
But also it if, if you really feel the project is, is purely low bid, seriously, don't, don't bid it, consider not bidding on those things, because that starts to change the story and that starts to change their experiences that they're having out there in the field. And I think we need to hold organizations accountable for to those procurement practices, but without digressing too much on that, I think the organization needs to push harder to identify who, who the real relationship is with and consider not providing a response to the scope of work until you truly understand what those expectations are, how success is going to be measured, how you're going to be held accountable, what the end of the project is going to look like is at the end of the day, when you're putting your people out there,
00:47:47
Speaker
you're paying for those results yourself. And those results are either going to be injury free or they're going to be full of injuries. So contractors have to take a look inside and say, truly what's what's important to us? And if it really is our people and their ability to go home to the people that they they love, then we need to protect them. But I do think marketing is is a great way to do it and to tell your safety story, to tell why it's important to you and who your people are so we can personalize the contractor's company a little bit more than just being numbers on a piece of piece of paper.
00:48:24
Speaker
Yeah, I think that's good. And I think a lot of times with procurement, I've noticed you are able to kind of have a conversation with them. Sometimes you'll have an ah RFP to where it is through a portal and there's really no communication. Or if you do communicate, it's actually published out to everyone.
00:48:41
Speaker
Those are obviously trying to keep it extremely by the book. Those are the ones that are a little bit difficult, but i but I have on a few of those. where we bid those for a few years and literally never ever won.
00:48:52
Speaker
And finally just asked the question, is this is this literally a low bid only? And the answer with one of them was yes. The answer with another one, and I've never seen anybody do this. I just shared it because it's funny to me.
00:49:03
Speaker
They did low bid and then an auction. And I didn't, I'd never heard that in my life. So they take usually the bottom two. And if you're close at all, they offer you both one more chance to come down a little bit further. So needless to say, we don't bid them anymore. We haven't bid them in years, but that that was the first I've never heard of that before.
00:49:24
Speaker
But yeah, that's super low biz. What I called that one. Um, But I think you're right. I think when that's the situation and there's no relationship, there's no, nothing else put in there except for that. I think you
Balancing Costs and Safety in Procurement
00:49:37
Speaker
have to view it as you know what, there's we we can't do it. Because it's a fact at the end of the day, if, and this is just business, has nothing do with contracting. If my profit margins are squeezed so tight that if anything goes wrong on the project, whether that's weather,
00:49:53
Speaker
inflation, a war in iran whatever causes my costs to go up and my profit margins already squeezed at the bare minimum. In order to stay in business, if I have to make things work, you know, make some adjustments, that's what happens. And that's just what it is. And I think, you know, when procurement thinks that's not what happens behind the scenes, they're they're they're failing themselves, they're failing their organization by squeezing contractors or whoever they're buying from so tight that there is no wiggle room for any kind of issue. And therefore, safety gets cut back.
00:50:27
Speaker
You know, production becomes the sole focus. Not that production isn't a focus for everybody, it has to be, but it can't be the sole focus. It has to be safety, it has to be quality, it should be relationship, it could be customer, it should be a customer experience.
00:50:40
Speaker
I know for us, we value that a lot. We probably have way more back office support and staff than a lot of people our size of company, but it's because we wanna be the place that actually replies to your email the same day, or hopefully within 24 hours.
00:50:57
Speaker
If you have a complaint, we want to be able to deal with it right away. If anything happens in your job site, I want to be able to send someone out there to take a look at it. you know, if there's a safety incident, I want our director or someone associated with him to be able to be there within a few hours.
00:51:12
Speaker
That all takes time. It all takes money. It's all... you know, costs that we have to bid into every project because those people require a paycheck. So I think seeing that, I think as a buyer, you have to understand that is just business.
00:51:26
Speaker
If I want this, I have to at least be willing to pay for this. That doesn't mean I got to pay high costs, but probably i at least need to be paying average. So anyway, but that kind of wraps it up for me, but I want to kind of throw it back to you, Sean. Is there anything we missed? Any final words, thoughts that you'd want to say in regards to this topic?
00:51:45
Speaker
No, you remind me of a quick quick example I had of ah of a utility company that i was working with a few years ago. And at the upper level of the organization, they didn't realize what was happening until I brought them back this information. But because procurement and planning wasn't looking at their contractors as partners, the contractors, the poor contractors, they were unable to keep staff because they didn't they weren't ah the company wasn't forecasting you know what the projects are going to look like. And it's all these piecemeal little projects and they were they were struggling as an enterprise profit margin, obviously, because they they couldn't project six months out as an organization, let alone two months out. And when we brought that information back to the the heads of the organization that had delegated this to procurement, they realized that that they're creating a lot of problems with their contractors. And fortunately, this organization was
00:52:42
Speaker
they valued that partnership that they didn't realize what these decisions were producing. So they got back together and they started to create a forum between the operations, procurement and contractors to better understand how we can work together. And that's, that's what, just as you even talked about here, that after think you said 17 years, you've realized that chasing those low bids rarely produces any work and can compromise your own business. So, I think that's kind of what it boils back to bulls down to is continue to elevate with conversations like we're having today, but push to create a relationship, not just offer a service.
00:53:24
Speaker
Yeah, no,
Conclusion and Endorsement of Proact Safety
00:53:25
Speaker
that's good. And I think, well, I should have started with this in the very beginning. it Since we've had you on before, I just assumed everyone knows who you are and what you do. So as we end, if someone's listening to this podcast, they're like, what in the world does Sean do? And is he someone I should hire? Tell us a little bit about yourself and Proact Safety.
00:53:43
Speaker
Yeah, my my firm, ProAct, I'm based in Houston, Texas, but we operate globally. I'm generally brought in to help organizations build better capacity within their systems, culture, engagement, leadership, and overall strategy. So I take a very well-rounded look. I serve as an advisor to a lot of these executives, boards.
00:54:04
Speaker
I come in and assess the those areas, systems, culture, all of that. ah But primarily, I help the leaders make better decisions. to have better outcomes. And just as we talked about earlier, reduce the level and and potential for fatality and serious injuries within our organization. So I work across all industries, very easy to be found if you look me up, but no, I appreciate the opportunity to have these conversations and continue to kind of prompt some different thinking out there in the industry. So thank you for having me on again, Brent.
00:54:36
Speaker
Yeah, absolutely. And guys, if you found this video helpful, please do share it. If you think someone needs to hear it, send it to them. If you need someone like Sean, I will vouch. He is, to in my opinion, one of the best, or I wouldn't invite him on twice now. So, but ah he's excellent. And especially what what I like about Sean There's some people that I think are just so by the book that they lack a little bit of common sense and logic.
00:54:59
Speaker
Sean's by the book, but he also has common sense and logic. So ah he's definitely your guy. So Sean, thank you for ah joining us a second time, man. Thank you very much. All right. Thanks.