The disease has been diagnosed. The cures are abundant. Yet Alberta’s energy megaprojects still struggle with low productivity levels, which have persisted through the past decade like a nagging cough or multi-million dollar migraine.
The numbers reveal an industry that has fallen out of step with its international peers. In a report published in June 2014, the Construction Owners Association of Alberta (COAA) benchmarked the productivity of the energy projects done in the province between 2009-14. Over that period, Alberta projects experienced average cost growth of 24.8 per cent and schedule growth of 17.5 per cent during construction, compared to U.S. projects where costs rose by 1.7 per cent and schedules grew by seven per cent.
The difference becomes even starker when a single task is highlighted. In Alberta, a worker can be expected to take 53.8 hours to install one ton of structural steel. The same task would take just 36.3 hours in the U.S.
None of this is news to anyone who works in the Alberta construction industry. Neither are the many possible responses, which range from adopting better management and benchmarking systems to appointing productivity officers, much as one would hire a safety officer. The challenge is not finding a solution, but rather implementing it.
“This is not a problem of productivity per se, but a problem of change, and motivating and really energizing people to do something about the productivity problem with the well established tools and solutions that are available,” says Larry Staples, a COAA advisor.
To that end, COAA and other industry members have made a pledge to be twice as safe and twice as productive by 2020. The initiative’s origins stretch back to the winter of 2013-14, when the association conducted an industry leaders roundtable with representatives from labour providers, engineering houses, contractors and owners. The discussions were frank and even a little heated at times. A few fingers may have been pointed and a few egos bruised. But the participants ultimately rallied around the realization that safe projects are productive projects, and vice versa.
It’s a conclusion shared by Go Productivity’s Project Alignment and Delivery (PAAD) task force, which is one of the other lead organizations on the initiative. There is plenty of anecdotal support for linking productivity and safety, according to Pieter Diedericks, PAAD’s director. Substantiating that connection with better data will be among the group’s contributions to the cause of better building in Alberta.
“If a safety incident happens on a site, the cost of a work stoppage is enormous, so that already tells you that they’re linked,” Diedericks says. “But there are still a lot of people that believe that safety is costing us too much, and we need to nip that in the bud.”
It’s tough to pinpoint when the province’s productivity levels first began to slide, but most would place it in the early years of the 2000s. Suncor Energy’s Millennium oilsands mine, for example, can be seen as one of the early warning signs of this downhill trend. At the time, there was disappointment over how the project performed. Today, people look back at its productivity rates with fond nostalgia.
It will be kind of a miracle in today’s terms if we can repeat Millennium and build a whole project in less than three years, from sanction to detailed design to full production,” Diedericks says. “Now we cannot build two boilers in three years.”
As productivity levels have fallen, safety rates have actually improved, due to a concerted effort by industry to address its safety record over the past decade. Back in 2000, the province’s lost-time incident rate across all sectors of the economy was 3.43 per 100 personyears of work. In 2013, the rate for the province was 1.31, while the construction sector was at 1.16. Yet despite such improvements, the construction industry leads all of the province’s major sectors when it comes to fatalities on the job. Between 2009 and 2013, there were 262 work related deaths, which represent 37.3 per cent of the total.
Clearly, more work needs to be done. Staples notes that total recordable injury frequency (TRIF)—COAA’s preferred safety benchmark—has been effectively halved in the past 10 years. On average, the industry sits at around 2.5 at the moment, but the top performers routinely achieve TRIFs of less than one. He wants to see all companies hitting those levels.
“It can be done”
“The whole industry has to consistently perform closer to where the leaders are now performing,” he says. “The leaders have blazed the way. They’ve shown that it can be done.”
Safety could not have improved so much if it wasn’t being effectively measured and monitored. The challenge—and a significant part of COAA’s work on the effort to be twice as safe and productive—is to create an equivalent to TRIF for productivity. The association is working with the Construction Industry Institute to help build a highlevel metric for productivity that can be applied across the entire sector. So far, they have received feedback from the industry leaders roundtable and are in the process of finalizing the metric, with the hopes of premiering it at the COAA annual general meeting in October.
“If we give people the tool to measure performance and measure progress, and we give them the language where they can talk to each other about how they’re doing on productivity, then over the next few years we should see the same kind of progress on the productivity file as we have in the past on the safety file,” Staples says.
As COAA works on measuring productivity, PAAD will be trying to give them something good to measure by focusing on four key areas: frontend loading and scope definition, competency, risk management and collaboration. Each one is overseen by a working group featuring representatives from the task force’s founding members, which include Jacobs, Aecon, Nexen, Fluor Canada, Teck, Mammoet, Suncor, Shell Canada, Waiward Steel and Supreme Group. Various pilot projects will be conducted in the four areas, with results expected to begin appearing within a year. The first project, already underway, is on the subject of frontend loading.
Diedericks emphasizes the importance of that subject. If a project starts badly, it tends to end worse. He argues that projects need to get back to basics and make sure engineering is done to a high standard before moving on to execution. Unfortunately, there’s a tendency—“the quarterly rush,” Diedericks calls it—to skimp on upfront costs and hope that the project will come together in execution. Of course, it rarely does. But it can be tough for an executive trying to balance the demands of shareholders looking for good quarterly returns with the needs of a project that could take four or five years before it even begins generating revenue.
“It’s not that these guys are dumb,” he says. “They’re pressured by this dumb market.”
The dumb market may finally do some good, however. With oil prices plummeting and businesses desperate to keep costs under control, the time has never been better to tackle the productivity problem. There was immediate interest in the initiative—no one is likely to turn their nose up at improved safety and productivity—but there’s also nothing like $50 oil to make industry sensitive to the need for change, Staples notes. Capital is mobile, and international companies feeling their budgets squeezed by the downturn may opt to spend their investment dollars in more competitive construction environments.
Diedericks, born in South Africa, knows the international market well. He spent years working at Sasol, the gastoliquids major, before moving to Alberta in 1998 and serving as a project manager on megaprojects like Millennium and Suncor’s 2008 refinery conversion in Edmonton. He has taken notice of multinationals like Statoil, Teck Resources and Total deferring or cancelling oilsands projects. Even when productivity is not singled out among the given reasons for backing out, there’s little doubt that construction costs weigh heavily on any investment decision in Alberta.
Not that the answer is a race to the bottom, Diedericks cautions.
“I’m not saying we need to take money away from every tradesman and everybody working here. Not a chance,” he says. “We’ve got highly paid, highly skilled craftsmen, and we should utilize these craftsmen and get every hour out of them that we can.”
Alberta can’t compete with the low wages found else where in the world, nor should it want to. The province is an expensive construction market, but it’s worth remembering that people place a premium on quality, and a highly productive—and safe—workforce is worth a lot on today’s market. Something is only expensive if it’s not worth the price.
Five productivity and safety success stories
The methods may differ, but the goal is the same—a safer worksite with higher productivity rates. Here are five companies that are helping prove "twice as safe, twice as productive by 2020" is well within the grasp of Alberta's energy megaprojects.
What it did: Integrated the safety and operations teams in its site services—civil and earthworks group so that safety coordinators reported to the project manager.
How it worked: The restructuring improved communication on key safety issues and resulted in better—and notably safer—job planning.
Result: A total recordable injury frequency of zero on 500,000 person-hours of work.
2. Voice Construction
What it did: Introduced the Voice Vision card program.
How it worked: Supervisors used the cards to track trends and recognize employees for demonstrating safe behaviour or going above and beyond their regular duties.
Result: Two projects that achieved a million person-hours without any recordable incidents.
3. Shell Canada
What it did: Brought together the contractor, owner and other external suppliers into a workshop setting to optimize indirect inputs on the Carmon Creek oilsands project.
How it worked: The collaborative approach led to revised labour recruiting strategies, as well as the combining of staff roles and the minimizing of on-site personnel.
Result: Increased productivity and reduced costs for a combined savings of 13 per cent.
4. ConocoPhillips Canada
What it did: Launched the “Not Even a Scratch” safety program on the Surmont 2 oilsands project.
How it worked: The program encouraged employees to be mindful of safety on even the most minor tasks, and watch out for hand injuries, dropped tools and materials, tripping hazards and potential crush threats.
Result: A 50 per cent decrease in potential crush incidents, a 31 per cent decrease in incidents due to dropped items and no increase in slips or hand injuries since 2013.
5. Imperial Oil
What it did: Implemented construction-driven engineering and advanced work packaging on a major earthworks project.
How it worked: The more rigorous front-end loading process—and the decision to hold off on field work until engineering was complete—allowed the company to provide more complete work packages to contractors and solicit firmer, more competitive bids.
Result: A 20 per cent cost savings.