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					     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:
     Continually improve upon the premier owner/contractor
     relationship in the utility industry
Goal Summary:
1. Continue to provide a safe, compliant work environment
2. Achieve Washington Gas optimal cost that assures
3. Produce a quality work product
4. Achieve NPL performance targets in the Washington Gas
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
                    • Over 1.1 million Customers.
                    • Approximately 11,737 miles
                      of main.
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
            Value Proposition
          NPL Construction Company
         to deliver a full-service menu
high quality, safe, reliable, best-cost solutions
             integrity and stability
       to meet the changing challenges
        energy distribution companies.
Bid vs. Alliance?
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.
Alliance or Bid?
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.
           Contract Safety Language

• Insurance Requirements
   – Insurance company ratings
   – Minimum Coverages

• Fair indemnification

• Legal worker requirement

• Damage Prevention Best Practices

• Unmarked sewer lines policy
                               The LDC-Contractor Models
                          The Historical Model                     The Flexible Model
                          LDC          Contractor (s)          LDC                           NPL
Contract Administration    X                                       X
System Planning            X                                       X

Standard / Specs           X                                       X
Project Management         X                                                                  X

Engineering / Design       X                                   X                              X
Permitting                 X                                                                  X
Scheduling / Routing       X                                                                  X
Customer Service           X                                 Managers                        Reps
Materials Procurement      X                                                                  X
Materials Management       X                                                                  X

Construction               X                 X                                                X

O & M Services             X                                       X                          X

Emergency Response         X                            First Response                  Second Response

Regulatory Compliance      X                                       X                          X
Restoration                                  X                                                X

Traffic Control                              X                                                X

QA / QC                    X                                    QA                           QC
Documentation              X                                                                  X
Records Retention          X                                       X
        NPL Services for Washington Gas
       New Business
         Materials Management
         Release/Coordination of Work
         New Construction Design
         New Construction Line Locates
         Plastic & Steel Mains/Services    Work Management
         Regulator Station Installation       Printing & Creating Job Jackets
       Replacement                            As-Built Completed Work
                                               Invoicing
         Mains & Services
         DOT/Pressure/Road Improvement
         Customer Requested Work
          including Estimates
Washington Gas’ Safety Approach

 “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
               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’
–   Back Assessment Program
–   Red Zone Training Program
–   2’ 4’ 5’ to Stay Alive Program

–   Fuser Program
–   Sewer Crossbore Policy
Previous Contractor Inspection Program

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
Joint Inspection Process
                    Job paperwork           OQ testing      Safety
 Job release
                    (field measurements,    and training    programs –
                    Service Record Cards,   (plan and       WG and
                    Field Order)            execution) to   Contractors
 function to
                    completed by
 contractor                                 contractors     aligned

 Multi Layered Inspection
      Contractor
         Multiple levels of supervision: Foreman, General Foreman,
         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.
                     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
                          Virginia Area Audits

        Audits:             Corrective Actions Taken:           Rating:
         3000                           68                      97.8%

        Audits:              Corrective Actions Taken:         Rating:
          4710                          144                     96.9%

Each Audit is comprised of 10 Inspection Categories.

Majority of corrective actions taken were PPE.

No significant violations/deficiencies were found or recommendations made.
  Washington Gas’ Audit Program
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
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
Report Data

Measure Washington Gas/Contractor performance

Identify Training Needs

Identify Issues With Codes and Standards
  (Evaluating Process to Enhance Effectiveness)

Follow up / Track Results
Safety Compliance Audits
                       All Audits
• Used to identify trends

• Target Daily Tailgate training

• Improve training efforts

• Update Codes and Standards

• Develop Joint Initiatives
                      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
•   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
        Alliance – How To Get There
•   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)
•   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)
Compensation Based Goals

   FY08 Goals – Applicable to VP, Division Head, Directors and Managers

Foster High                          MR                         ER
Performance Culture

Safety: Improve           Unit safety target achieved   MR plus corporate
employee safety results   and new program               OSHA target achieved
across the corporation    implemented by 2/15/08        (</= 5.3)

                                     94%                        96%
Installation Compliance
               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
    Alliance Performance Based Agreement
                     Current Arrangement

Performance Based Agreement (PBA)
•   Compensation at risk
•   Additional Revenue Reward
• Safety Goal is a modifier
• Annual targets established jointly based on Washington Gas’
• Targets weighted and tracked on a quarterly basis.
Even when it seems as though you were born to do the job, things
                    can and will go wrong.

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