Statutory Compliance (Conference, 2007)

Improving the Statutory
Compliance of Physical Assets
Chad Moffiet and Adrian Kuchta

Australian Mining Maintenance Conference,
Brisbane 2007

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

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


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

(AS3806-2006 Compliance Programs )

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


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
.



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

Background Justification Opportunities Improvements Learnings Results

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 Confidential 100%
(verified) (High to Moderate Risk Assets)


Customer Feedback


Statutory Compliance (Conference, 2007)

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