For pipeline construction contractors, the demands of keeping up with the multiple prequalification and invoicing requirements mandated by each client is costly and labour-intensive.
But, to be eligible to work on lucrative projects, companies must be willing to jump through a few hoops. Furthermore, working for multiple clients often calls for prequalification from multiple contractor management companies, as well as learning and implementing separate invoicing systems and paying a slew of subscriptions. The ROI becomes challenging to identify – there is no bonus for the extra input; the time and money spent is simply a pay-to-play cost.
Prequalification
The introduction of third-party contractor management companies was meant to create a standardized method of assessing and comparing pipeline construction firms, streamlining the process of awarding contracts for the big midstream players. But, as many contractors are aware, an array of management companies emerged and continue to persist in the market. The responsibility of remaining compliant with multiple vendors falls to contractors and results in redundant uploads, submissions and subscriptions. Too bad hoop jumping doesn’t burn calories.
Keeping up with the demands of remaining compliant has become a full-time endeavour and is carried out in addition to a company’s functional safety program. Once awarded a contract, it’s safety business as usual: client expectations regarding the customization and administration of a safety program remain, including vetting and managing subcontractors.
Where the trouble begins:
ISNetworld®, PICS® (now Avetta®), PEC, ComplyWorks, ContractorCheck, COR™, CQN – the list is an alphabet soup of acronyms representing a multitude of service providers all striving to be the premier contractor prequalification partner. Thanks to the free market, they each occupy enough overlapping space to impact a pipeline construction company’s ability to manage and administer their HSE programs. While many contractors are familiar with obtaining the safety certification specific to their provincial or state requirements, a predicament arises when multiple clients require different assessments from different prequalification partners. If, for example, a pipeline construction company is bidding on projects for three potential clients concurrently, there is a strong possibility that prequalification with three separate firms will be required. The increased workload of applying to (and remaining compliant with) each prequalification partner is significant, straining department resources and requiring additional personnel.
How did the pipeline industry get here?
It appears prequalification requirements may originate with Canada’s pipeline tribunal, the National Energy Board. The NEB is Canada’s independent federal regulator (a Young Guns reference was successfully resisted here) which has been mandated to “promote safety and security, environmental protection and efficient energy infrastructure and markets in the Canadian public interest.” Pipelines and transmission lines that cross provincial or national boundaries fall under their jurisdiction, as well as oil and gas exploration, drilling, export of oil, natural gas imports, pipeline tolls and tariffs – the list is extensive. The need for an independent energy regulator became apparent during a particularly acrimonious period in Canadian politics. The pipeline debate of 1956 involved such intense inter-party feuding and public embroilment that it effectively ended the Liberal government’s 20 year tenure. On the consequent recommendation of two separate commissions, the NEB was created to ensure that the Canadian energy sector could operate free from political encumbrance.
Speaking of encumbrance, this is where the dots connect: for numerous projects, the NEB mandates that ISNetworld® is used to carry out the “contractor competency evaluation process”. The list of prime contractors regulated by the NEB (and therefore required to comply with process requests) includes virtually every energy infrastructure company with assets in Canada. If you cross a border, any border, you’re invited to the party. Contractors that plan to bid on a project regulated by the NEB will not successfully prequalify until their questionnaire, safety program, insurance, and OSHA/WCB certification have been reviewed, assessed and assigned a grade by ISN®. Not so bad – one and done, right? Not necessarily. A phone call to the ISN® customer service line confirmed that while the primary ISNetworld® questionnaire contained one to two thousand questions (no joke), each hiring client can require additional questionnaires and customize the type documents to be uploaded by each contractor. Also, on projects not regulated by the NEB, clients can choose any of the other service providers, such as ComplyWorks. It’s not uncommon for smaller contractors to require extra, part-time staff solely to manage compliance requirements. As one consultant notes, “the big producers like to do things their own way and that means the little guys have to run to keep up to multiple systems.”
With regard to multiple systems, compliance isn’t the only area where clients request the use of particular platforms.
Invoicing Systems
Besides prequalification requirements, big companies are able to stipulate that contractors submit invoices using specific accounting software. It definitely seems reasonable for a company that receives 5000 invoices a month to streamline the process, saving time and money. But what does this look like for contractors? It could mean entering information into Open Invoice, Ariba®, and/or Cortex, as well as an in-house system for internal accounting. These additional demands on an accounting department become truly overwhelming if invoices from subcontractors are arriving in a coffee-stained stack of handwritten, generic invoices torn out of a book.
