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2008 Alliance Charter

AGA Safety Leadership Summit “Pursuing Excellence in Safety Leadership” Contractor Safety November 18, 2008 Alliance Safety Doug Staebler, Washington Gas VP Engineering, Marketing & Construction Mike Kemper, NPL Construction Co. President & CEO. 2008 Alliance Charter. Alliance Vision:

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2008 Alliance Charter

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  1. AGA Safety Leadership Summit“Pursuing Excellence in Safety Leadership”Contractor SafetyNovember 18, 2008Alliance SafetyDoug Staebler, Washington Gas VP Engineering, Marketing & ConstructionMike Kemper, NPL Construction Co. President & CEO

  2. 2008 Alliance Charter Alliance Vision: Continually improve upon the premier owner/contractor relationship in the utility industry Goal Summary: • Continue to provide a safe, compliant work environment • Achieve Washington Gas optimal cost that assures competitiveness • Produce a quality work product • Achieve NPL performance targets in the Washington Gas franchise

  3. Service Territory • One of the strongest economies in the nation. • Eight of the nation’s 20 wealthiest counties are served by Washington Gas. • Washington Gas’ franchise area covers 6,213 square miles. • Over 1.1 million Customers. • Approximately 11,737 miles of main.

  4. Service Territory • 16.5M feet installed and replaced in 2007 • 5.7M work hours in 2007 • Fleet of over 3000 units ranked in Top 20 in construction industry • 1.59% Total Recordable Case rate in 2008 • 0.18% Time Lost injury rate • 0.67% 5-year Average EMR

  5. Value Proposition NPL Construction Company exists to deliver a full-service menu of high quality, safe, reliable, best-cost solutions with integrity and stability to meet the changing challenges of energy distribution companies.

  6. RFI to pre-qualify bidders Traditional Safety Data: TLT, TRC, DART, EMR Safety Program OQ Program Drug & Alcohol Program Once on bid list, all contractors are equal – even though they’re not. Take (or get taken by) low bid, then manage (fight) ‘em like crazy. Bid vs. Alliance?

  7. Invest heavily in pre-qualification effort vs. ongoing management Presentation to group of users Visits to office and jobs Culture of Safety & Quality Strong management Industry knowledge Tools, equipment and fleet downtime Integrity & Professionalism Develop matrix with desired factors, weighted by your team. Negotiate a fair, win-win Agreement. Avoid program development and monitoring. Let them do their work, expect results, and Audit them. Alliance or Bid?

  8. Contract Safety Language • Insurance Requirements • Insurance company ratings • Minimum Coverages • Fair indemnification • Legal worker requirement • Damage Prevention Best Practices • Unmarked sewer lines policy

  9. The LDC-Contractor Models

  10. Work Management Printing & Creating Job Jackets As-Built Completed Work Invoicing NPL Services for Washington Gas • New Business • Materials Management • Release/Coordination of Work • New Construction Design • New Construction Line Locates • Plastic & Steel Mains/Services • Regulator Station Installation • Replacement • Mains & Services • DOT/Pressure/Road Improvement Projects • Customer Requested Work including Estimates

  11. “3rd Party” Objective Audit Program Random audits of both Contractor and Company Crews Documented improvement in results Safety Performance-based Compensation for Construction Personnel Alliance Contract - PBA “Always Safe” Initiative launched Winter 2008 Top down support (ESC) Awareness training for all employees Proactive, positive approach – culture change TBD – Contractor inclusion Active Participation on AGA Operating Committees, Safety and Occupational Health Committee Multiple year winner of AGA’s Industry Leader Accident Prevention Award Washington Gas’ Safety Approach

  12. NPL’s Safety Approach NPL objectives are to provide a safe working environment and leave a quality work in the ground that meets or exceeds our customers’ requirements. • Back Assessment Program • Red Zone Training Program • 2’ 4’ 5’ to Stay AliveTM Program • Fuser Program • Sewer Crossbore Policy

  13. Close to 100% Contractor Oversight – predominately Washington Gas Contractor Inspection driven. Complement – 1-2 Crews per Inspector, approximately 70 FTE’s Inspector Released Work – site readiness for construction Completed Paperwork Assisted in Training of Contractor Crews Limited Authority for Pay Item Approval Work Reviewed by Supervisor Previous Contractor Inspection Program

  14. Multi Layered Inspection Contractor Multiple levels of supervision: Foreman, General Foreman, Superintendents Safety/Quality Program and Audit Program Washington Gas Oversight Construction Supervisors Job estimating, pay item approval, and review safety/quality Compliance Audit Program – random Jurisdictional Regulatory Agency Inspections VDOT, PSC, etc. Job paperwork (field measurements, Service Record Cards, Field Order) completed by contractors OQ testing and training (plan and execution) to contractors Safety programs – WG and Contractors aligned Job release (construction readiness) function to contractor Joint Inspection Process START

  15. NPL’s Audit Program • At Area Level • Every NPL Area conducts internal Area audits for compliance with Customer, NPL and regulatory requirements • These audits are conducted by the Area Safety & Quality Director or the Area Safety Director & Quality Auditor(s) in larger Areas • All are trained in accident investigation, OSHA, Customer standards, OQ and NPL requirements • All oversee Area Safety and Quality committees • At Corporate Level • Every NPL Area has a Corporate audit for compliance with Customer, NPL and regulatory requirements at least once a year • This audit is conducted by a full-time Central Office Auditor • Audit Reports go to the CEO and Vice President of Operations

  16. Virginia Area Audits 2007 2008 Each Audit is comprised of 10 Inspection Categories. Majority of corrective actions taken were PPE. No significant violations/deficiencies were found or recommendations made.

  17. As a result of a strategic initiative to improve the overall quality and safety with the installation of our underground system, an audit program was established. Responsible for enforcing federal, state, local, and company requirements as it applies to operations of company facilities and the installation of the piping infrastructure. Responsible for the follow up of outstanding issues. Auditor observes work performance for compliance Auditor cites any deficiencies in performance Auditor intervenes if an immediate safety hazard is observed Upon completion the Auditor reports findings and any necessary corrections to be made, to the responsible party Washington Gas’ Audit Program

  18. Measure Washington Gas/Contractor performance Identify Training Needs Identify Issues With Codes and Standards (Evaluating Process to Enhance Effectiveness) Follow up / Track Results Report Data

  19. Alliance Safety Compliance Audits

  20. All Audits • Used to identify trends • Target Daily Tailgate training • Improve training efforts • Update Codes and Standards • Develop Joint Initiatives

  21. Joint Initiatives • Joint Safety & Quality Training • NPL’s Annual Safety & Quality Kick-Off • WG’s Pipetown • Co-participation in Washington Gas’ standards review process and OQ plan management • Safety & Quality reps are members of Alliance Operations Team • Coordinated claims management • Joint participation on VA SCC activities/issues: • Sewer Line Marking Initiative • GPS Pilot Program for Line Locating • Grounding of tapping tools • Line Locating • NPL performs gas locates on New Business work • Improved Quality, Efficiency and Cost

  22. Alliance – How To Get There • Strategies: • Define goals that will factor into reward/penalty calculation, i.e., Washington Gas total cost reduction, safety goals, customer satisfaction (complaints, on time installations, etc.), NPL profitability & growth in the region • Determine how each goal will be measured - use both companies data • Determine calculation of when and how either side will receive (or pay) compensation • Manage Culture Change • concept differs from anything done before at Washington Gas • Manage Performance of Individuals • Goals roll down throughout both organizations so that individuals’ compensation is impacted (positively and negatively)

  23. Compensation Based Goals

  24. Compensation Based Goals • Compensation of every employee based on zero Safety & Quality incidents • Management compensation (Foremen-CEO) based on Area incident ratings and cost of claims

  25. Alliance Performance Based AgreementCurrent Arrangement • Performance Based Agreement (PBA) • Compensation at risk • Additional Revenue Reward • Goals: • Safety Goal is a modifier • Annual targets established jointly based on Washington Gas’ requirements. • Targets weighted and tracked on a quarterly basis.

  26. Even when it seems as though you were born to do the job, things can and will go wrong. THINK SAFETY

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