Statutory Compliance (Conference, 2007)

© 2007 CCI Pope Asset Management Services Group www.ccipope.com.au/ams

Improving the Statutory Compliance of Physical Assets

Chad Moffiet and Adrian Kuchta

Australian Mining Maintenance Conference, Brisbane 2007


Agenda

• Introduction to CCI Pope Asset Management Services Group• Introduction to Statutory Compliance of Physical Assets

– What is statutory compliance?– Why is it important?– How can compliance be improved?

• Case Study– Site Background– Project Justification– Opportunities– Improvement Methodology– Learnings– Results Achieved

• Questions


Asset Management Services Group

• CCI Pope’s Asset Management Services group offer a range of services to raise the level of asset management capability of our customers

• These services are designed to ensure statutory compliance and deliver improvement in equipment reliability, production performance and business processes

• We are committed to building and maintaining a reputation for delivering proven results and superior returns


How can it be Improved? What is it Important?

What is Statutory Compliance?

“Compliance is an outcome of an organisation meeting its obligations.”

(AS3806-2006 Compliance Programs )

What is Statutory Compliance?


Statutory Obligations

• Government Acts– Legal framework. Legislation made by Parliament

• Regulations– A regulation is law.

• Industry standards– Standards incorporated into Acts or Regulations legally binding

• Codes of Practice– Not law but should be followed unless there is better way. – Failure to observe an industry code of practice may be used as

evidence in proceedings for an offence under the Act

.

How can it be Improved? What is it Important?What is Statutory Compliance?


Statutory Obligations• Examples of Acts

– Occupational Health and Safety Act 2000 (NSW)– Dangerous Goods Act 1975 (NSW)– Coal Mining Safety and Health Act 1999 (QLD)

• Examples of Regulations– Workers Compensation Regulation 2003 – Coal Mining Health and Safety Regulation, 2001 (QLD)– Workers Compensation (General) Regulation 1995

• Examples of Standards– Pressure Equipment – In service Inspection AS3788 – 2006– Pressure Equipment – Hazard Levels AS4343 - 2005– Cranes, Hoists and Winches AS 1418.1 & 10-18 - 2005

.



Why is Statutory Compliance so Important?

• Failing to meet obligations increases the risk of safety and environmental incidents

• Companies and their employees are increasingly at risk of prosecution if an incident occurs

• Principle of proportionality in pursuing prosecution

“The approach taken by WorkCover during workplace interaction will be proportionate to… the level of non-compliance with legislative requirements.”

(WorkCover Prosecution Guidelines)

“On numerous occasions the courts have considered an organisation’s commitment to compliance when determining the appropriate penalty for contraventions of relevant laws.”

(AS3806 – Compliance Programs)



Non-compliance Penalties

Maximum penalty NSW OHS Act 2000 number 40:

….. the maximum penalties are as follows:

(a) in the case of a corporation—$1,650,000,

(b) in the case of an individual—$165,000 or imprisonment for 5 years, or both.



How Can Compliance be Improved?• AS3806 - 2006 Compliance Programs

– Commitment– Implementation– Monitoring & Measuring– Continual improvement

• AS/NZS ISO9001:2000 Quality Management Systems– Understanding & meeting requirements– Monitor program performance– Implement mechanisms for continual improvement

• A holistic systematic approach– Strategies– Processes– Systems– People



Case Study

• Tomago Aluminium Company – Newcastle, NSW– One of the largest aluminium smelters in Australasia– More than 1000 people– Annual revenue of more than $1.1billion– 3 potlines– 280 pots per potline– 215,000 amps in pots– Capacity of 520,000 tonnes per annum (as at Dec 2006)– Over 2000 items of statutory plant

ResultsLearningsImprovementsOpportunitiesJustificationBackground


Project Justification

• Newly appointed management had a good understanding of statutory requirements and wanted to ensure that all obligations were being met

• TAC approached CCI Pope to develop plan to improve statutory compliance on the site



Compliance Auditing

• CCI Pope performed preliminary review of asset compliance concentrating on pressure vessels and cranes (highest risk categories for the site)

• Review identified deficiencies in site compliance reporting process and identified need for full compliance management systems audit

• CCI Pope then performed a full compliance management program audit in accordance with the guidelines specified in AS3806-2006 Compliance Programs using a Process Management philosophy

– Strategies, Processes, Systems and People



Strategic Opportunities

• Improve and document compliance policy• Improve and document compliance procedures



Process Opportunities

• Improve & define processes– Single point of management - Inspection of 15 different asset

categories being managed by multiple processes– Consolidate Plant equipment register accuracy– Risk assessment process – Risk based inspection strategies

e.g. Pressure Vessel Inspection Timeframes– Corrective Action management– Monitoring of & budgeting for the cost of Compliance– Contractor Management – Service Agreements, Inspection &

Corrective Action reporting



Systems Opportunities

• Multiple, labour intensive management systems– 15 different asset categories being managed using multiple

information systems• SAP• Microsoft Excel files• Microsoft Word files

• Information difficult to find or collate• Report generation labour intensive due to system complexity



Resource Opportunities

• No documented roles, responsibilities or accountabilities regarding Statutory obligations

• Enhance management awareness of their statutory obligations• Training & understanding – Top down• Multiple people on site shared responsibility for statutory compliance• Improve compliance management budgeting process



Summary of Opportunities

• Opportunities existed to further reduce level of business risk associated with non-compliance

• Opportunities existed to improve level of communication and understanding of risk



Improvement Methodology

• Designed upgraded Statutory Compliance management program in line with AS3806-2006 Compliance Programs and ISO 9000 Quality Management Systems using a Process Management philosophy

• Implemented outsourced compliance management by providing site with a full time Compliance Manager



Strategic Improvements

• Developed and implemented site compliance policy• Improved, documented and implemented site compliance

procedures– For example

• Pressure Vessel Plantwide Procedure• Forklift Plantwide Procedure• Inspection & Repair Plant Equipment – Planners• Inspection & Repair Plant Equipment – Plant Services• Inspection & Repair Plant Equipment – Contractors



Process Improvements

• Developed and implemented standardised compliance process



Systems Improvements

• Collated all compliance information into single data source• Verified all site compliance related information

– Registration of equipment– Inspection status– Repair status

• Implemented Risk-Based reporting



Resource Improvements

• Updated role descriptions to include statutory responsibilities and accountabilities

• Conduct compliance training for all site personnel with compliance-related responsibilities or accountabilities beginning with senior management

• Implemented single point responsibility via a single site Compliance Manager role

• Site provided dedicated funding for compliance related activities



Learnings

• Site systems do not necessarily meet statutory needs and are often difficult to change

• Senior management support and commitment paramount to the success of the overall program

• Statutory compliance management requires dedicated resources outside the influence of production pressures



Results Achieved

Result Area Before After

Personnel Responsible Multiple 1

Number of Processes Multiple 1

Number of Systems Multiple 1

Level of Compliance(verified)

Confidential 100%(High to Moderate Risk Assets)



Customer Feedback


Customer Feedback

Documents

Statutory Compliance (Conference, 2007)