June 2016, Vol. 243, No. 6


Sorting Out Inspectors’ ‘Box of Chocolates’ Quandary

By Dan Lorenz, President Joe Knows Energy

While conducting a client interview after we provided inspection services for a pipeline project, I posed this question to gain feedback: “How’d we do?”

He responded with, “You are just like all of the other third-party natural gas pipeline inspection companies and inspectors. I don’t trust any of you.” The client then went on to say: “Buying inspection services is like getting a box of chocolates. I never know what I’m going to get.”

This paraphrased version of the famous line from the movie Forrest Gump hit me light a lightning bolt. How widespread is this sentiment? Does everyone have this feeling of uncertainty about inspections companies? I felt a compelling need to know the answer. Having built several businesses over the past 30 years, I had developed an appreciation for what this kind of sentiment could mean. Generally, the bigger the issue, the bigger the opportunity.

Over the next six months, I spoke to dozens of potential clients, including transmission, gathering and midstream companies, as well as dozens of pipeline and facility inspectors. To my surprise, they all nodded in agreement with my client’s comment.

Clients shared:

 “If you can find a solution to this issue, I will put your picture on a billboard here in Houston. This is a huge issue in the industry that we talk about every day and certification alone is not the answer.”

“Our inspection team did such a poor job our company has changed how we do work. We have elected to buy EPC [engineering, procurement and construction] services to avoid the risk of building the project ourselves.”

Inspectors shared:

 “There are a lot of gray areas. Without many years of being an inspector, it is hard to know what is expected.”

“What I want most is to be supported when I make that tough call.”

My takeaway:

 After these discussions, I realized there is a great opportunity for improvement between what owners want and what inspectors provide.

 Why ‘Box of Chocolates’ Exists

  • Pipeline operators have different taste and needs, and variety is valued. Not only are pipeline companies structured differently, every project is different. Until 20 years ago, most had “company men” who inspected construction projects. But after a few industry downturns, most pipeline companies decided they could not afford to keep company inspectors during lean times. This created the need for third-party inspectors when new construction work arose.
  • The pay for inspectors is significant, often more than operators pay company employees. As such, the inspection bill has their attention. Most inspector bills are in the $4,000-5,000 per week range.
  • An inspector is a short-tenured outsider on the team. There simply is not enough time taken to understand each other’s jobs and motivations. Hundreds of people are thrown together to build a project with a tight schedule and tight budget, often in a difficult environment. This can create enormous pressure. As a result, opportunities for team-building exercises and preconstruction communication are limited, making it difficult to produce an environment of clear expectations.
  • Good inspection is 80% non-technical. It is all about effective communication, which is often not taught or defined. The technical knowledge must exist, but the effectiveness of an inspector is mostly judged by helping to achieve the client’s goals. This includes holding the contractor accountable, mitigating risk and dealing with change. Many of these skills are not taught in typical industry training.
  • Pipeline companies realize how important the inspector’s job is to success. The role the inspector plays in ensuring the quality-management system is critical. In essence, the job itself is dependent on how well the inspector performs. The pipeline inspector’s performance matters!

Why Should We Care?

The natural gas pipeline industry is increasingly fighting against well-organized and vocal opposition, particularly from the environmental community. This opposition, emboldened by the rejection of the Keystone XL pipeline, seeks to thwart efforts by pipelines to permit and build a project.

At the same time, other, often less vocal Americans recognize that domestic oil and natural gas is abundant and could help the country toward a competitive economic advantage when it is produced and delivered in a safe and environmentally sensitive way. Inspectors, working with the contractor, serve on the front lines in ensuring this happens.

The Pipeline and Hazardous Material Safety Administration (PHMSA) and Federal Energy Regulatory Commission (FERC) are the two federal agencies overseeing pipeline safety and pipeline permitting. While PHMSA primarily ensures the safety of pipeline systems, FERC looks at the economic need for the pipeline and ensures that a project’s route minimizes impact to the environment and local community.

While PHMSA and FERC have the authority to “inspect the inspectors” hired by the pipeline companies, in most cases, these agencies do not have the resources to physically inspect the pipeline construction.

Instead, the federal regulators review reports produced by third-party inspectors hired by the pipeline owners. In many ways, these inspectors are the primary persons tasked not only with ensuring that the pipeline owners achieve their goals, but also protecting the public and environment.

Learning From Other Industries

The pipeline industry is not alone in needing to raise the level of performance and reliability of their frontline professionals. For example, the education industry has been working to bridge a similar gap. Over the past decade, many have posed the question: “Why does our work in schools need to change?” When asking a teacher of 15 years, her response created this mental image:

“Many can take themselves back to their first steps into a classroom where desks are neatly in a row one-by-one with one voice being heard, the teacher. This working environment created an environment for children to be expected to keep up with limited interactions with their teacher. Take steps into a classroom today and you will see tables pushed together, students sharing supplies and working on a project collaboratively with assistance of technology, while the teacher personalizes his or her instruction by conducting small groups of subject-based learning.”

What can we learn from this example comparison? The world in which our students live is ever-changing and is less equal than ever before, requiring our work to be more personalized. In addition, student expectations by teachers and school leaders must translate to equity in access and high performance.

“In reflection about my journey, I would have never imagined that, after 37 years, my view of our work as teachers and leaders would change – but it has,” an educator said. “Accountability is more than a test score, it is about monitoring and evaluating all processes required for every student to achieve at the highest level.”

Improving Pipeline Inspection

The U.S. Department of Transportation (DOT), through PHMSA, has awarded Battelle Research Institute and three partner firms a contract to identify the factors that influence inspector performance, and address the effect on the quality of inspections of existing pipelines.

“The end game is to raise the performance and reliability of the average inspector,” said Jennifer O’Brian, research scientist and a team leader.

To this end, David Wourms, a senior research scientist and principal investigator, commented, “The methodology we’re using will help us and our partners to determine the most effective intervention through a series of in-depth interviews of high-performers and pilot projects.”

He added that the program is initially focusing on four types of interventions: training, personnel identification and selection, motivational incentives, and inspection technologies.

In 2014, the American Petroleum Institute (API) launched a certification program, Recommended Practice 1169, Basic Inspection Requirements for New Pipeline Construction. This recommended practice along with the application of a strong construction quality management system (QMS) is crucial to ensure that safety and quality are built into pipelines from the start.

The qualification requirements for this program are based on a combination of years of experience acquired within the past 10 years, plus education and, in some cases, other certifications. Once qualified, the inspector is required to pass a test to receive certification.

The INGAA and CEPA Foundations, recognizing that delivering and maintaining safe and reliable pipeline systems provides the natural gas industry the social license to operate, endorsed the certification plan and set out some common principles:

  • Inspections shall be completed by trained, qualified and competent inspectors.
  • Inspectors’ credentials must be documented, verifiable and consistent.
  • Inspection is required for the purpose of compliance to design and to help manage risk.
  • Inspection should provide a predictable result.

To achieve these principles, the INGAA and CEPA Foundations, together with their parent organizations, the Interstate Natural Gas Association of America (INGAA) and the Canadian Energy Pipeline Association (CEPA), jointly adopted a recommendation to have all inspectors’ API 1169 certified by the end of 2018.

The associations are working with API to modify the test to make it more “practical” for general inspectors. To this end, they have developed a document, Practical Guide for Pipeline Inspectors, commonly called the Body of Knowledge. This was developed by many representatives from the industry, and is viewed as the logical next step to complement API 1169.

A related program for pipeline construction foremen has been developed by Caterpillar, working with 10 industry partners. They have produced a Safety Leadership Training for Pipeline Foremen Program. The courses are interactive, innovative, instructor-lead and scenario-based, emphasizing prevention, excellence and sustainability of a safety culture. Caterpillar’s goal is for all foremen in the pipeline industry to complete this training within the next four years.

Stepping Up

Based on the feedback from the pipeline industry, many years in the construction and training industry experiences, and the research conducted, it appears there are additional human interventions, as suggested by the Battelle study, which can dramatically improve inspectors’ performance and reliability.

  • Identification – Advanced testing (behavioral analytics) exists that can consistently predict how someone will perform based on whether their critical values and attributes are consistent with those of a quality inspector. This is significant as it provides information to justify investment in learning the technical knowledge specific to the inspector position and an owner’s requirements.
  • Training – The technology to train remotely now exists. Training must be easy and affordable to be effective. In addition, training in much-needed areas of communication and leadership, as suggested by the Caterpillar training, has been developed.
  • Motivation – Understanding the inspector’s motivations is critical. Inspectors desire support, consistent work, reasonable pay, and development opportunities. They are each small-business men and women. Easy-to-access-and-use digital, customizable and scalable technology that’s also cost-effective exists to create a large-scale, responsive platform to fit the personalized needs of these inspectors.
  • Communications technology – A critical mass of inspectors is now connected via social media and smart phones. Until recent years, inspectors often had been difficult to reach. Now, we can more easily build and communicate with a pool of qualified inspectors.

While many steps are being taken to ensure inspector performance and reliability, now is the time to take advantage of the interventions that exist to produce more predictable results.

Dan LorenzAuthor: Dan Lorenz is president of Joe Knows Energy, which provides quality assurance and construction management solutions to energy companies. Previously, Lorenz led a full service site development contractor that provided earthwork, survey, concrete and utilities installation services. For further information, visit www.joeknowsenergy.com.

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