We have previously written on Chain of Responsibility (CoR) compliance for the construction sector, identifying the unique compliance considerations that arise in this sector, the authorities' focus on the sector and what compliance architecture needs to be in place for construction projects.
In this article, we briefly recap on CoR compliance for the construction sector before considering some aspects of construction CoR management plans that are an essential component to winning construction project work.
What makes CoR compliance in the Construction Sector different?
The concentration and sheer scale of activity across the construction sector make CoR compliance and safety risks unique.
Major construction projects can have hundreds of truck movements per day. The WestConnex M4 East project is estimated to involve approximately 170,000 truck movements associated with soil removal alone, without taking into account equipment movement and delivery of construction materials.
Managing such volumes of heavy vehicle movement is a logistical nightmare or a feat of brilliance (depending on whether you are looking from the inside or outside). The sheer volume of truck movements and complexity of operations adds significant complexity to the management of CoR compliance on such large-scale projects.
Is the Construction Sector a target for enforcement?
The concentration and scale of activity, the complexity of managing compliance and the risks and likely outcomes if compliance is not managed properly mean that the regulators have compliance on large-scale construction projects squarely within their sights.
In NSW, Roads and Maritime Services (RMS) representatives have previously identified the construction sector and civil contractors as having limited awareness of CoR compliance requirements and low implementation of CoR compliance practices, saying:
"With a significant increase in the number of infrastructure projects taking place across the state, it is crucial heavy vehicles being operated as part of these projects are compliant with road transport law and any associated risks are properly managed".
RMS also indicated that the increase in infrastructure project activity would bring with it:
"targeted enforcement... to change industry culture and practices".
We have seen this in practice, with police operating targeted enforcement campaigns on trucks servicing almost every significant construction project in recent history. The concentration of heavy vehicles makes enforcement action much easier – it's like shooting fish in a barrel!
WARNING:
With maximum penalties for breach to rise to $3 million for corporations and $300,000 for executive officers in mid-2018, non-compliance could have a significant impact on project return. In addition, if non-compliance were to result in the grounding of major contractor fleets, project disruption and delay would be inevitable and very, very costly.
CoR Managment Plans can mitigate your risk
As part of project risk mitigation, principal contractors and transport operators are usually required to submit a CoR management plan to project stakeholders, either as part of the tender process and/or before being permitted to commence any work on a project. The CoR management plan then is one of the keys required to open the lock and be engaged on a project.
Project stakeholders, including private developers and government agencies or corporations, want assurance that principal contractors awarded the design and/or construction work will properly screen and manage the compliance of subcontractors that will be performing the work.
Principal contractors want assurance that the subcontractors they engage to perform the work can either comply with the project CoR management plans or have in place or design their own CoR management plans. They don't want subcontractors to expose them to breaches and potential penalties under the design and construction award.
Subcontractors, including transport operators, equipment suppliers and construction material suppliers, need to be able to demonstrate that they have in place working practices to ensure their own compliance with the project CoR management plan. Their own internal compliance policy and working procedures need to ensure compliance by them and any further subcontractors engaged down the chain.
IMPORTANT:
Businesses (either principal contractor or subcontractor) that develop and implement an acceptable CoR management plan are more likely to be awarded project work. They will win potentially lucrative business in favour of their competitors who cannot assure project stakeholders of compliance.
Three common shortcomings in CoR management plans
In our experience, the three most common shortcomings in CoR management plans (from the point of view of those assessing them and awarding project work), and those which you should focus on are:
- Passing the buck – Seeking to assign sole responsibility of certain compliance functions to certain parties in the Chain (e.g. work/rest hours' compliance is the responsibility of drivers and transport operators who are required to monitor their driver log books for compliance) and failing to recognise that CoR compliance is a shared, joint and several responsibility. The organisation above you in the project chain wants assurance that you are managing all aspects of compliance below you, not blindly delegating it to those below you.
- Incident assessment, response and rectification – Adopting a "some incidents will happen in a project of this size and scale" attitude. This leads to failing to assure those above you that you are:
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- investigating any compliance issues and assessing their cause as against your compliance policies and practices; and
- adapting them, if necessary, to changing circumstances or behaviours.
- CoR compliance metric reporting – Failing to define, collect and report on meaningful compliance metrics that can help demonstrate, at a glance, that your CoR management plan has been designed effectively and is working in practice.
CoR management plans play two vital roles in the construction sector. First, they can help you mitigate your compliance and project interruption risk and provide a framework for managing subcontractor performance and compliance. Second, they provide assurance to the project principal that you are aware of and managing the CoR compliance obligations on the project and will not expose them to compliance risk through your breach. For these reasons, CoR management plans should be in place for all constructions projects.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
