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Offshore Charging Review Group
Minutes of the Meeting Held on 18th April 2002

Present

Industry Members

Mr Paul Holman, BROA
Mr Dennis Krahn, IADC
Mr Ian Bell, OCA
Mr Nigel Savage, Shell UK
Mr Bob Kyle, UKOOA
Mr Mark Sapsford, Deloitte & Touche [Item 9

HSE Members

Mr Ian Whewell, Chair
Mr Bill Tomkins, PEFD
Mr Kelvin McFadyen, HID - Secretary
Mr Mark Reyland, PEFD
Mrs Jill Cooper, HID - Observer


WELCOME AND INTRODUCTIONS

The new Chairman, Ian Whewell welcomed everyone to the meeting. Introductions were made and apologies given for Roger Jeary (Amicus), Rab Wilson (Amicus) and Jane Bugler (IMCA).

MINUTES OF THE MEETING HELD ON 18 SEPTEMBER 2002

The minutes were accepted.

MATTERS ARISING (NOT ON THE AGENDA)

'Min 6' A note explaining the practical difficulties of aggregating small charges was sent out with the minutes. The extent of the problem with small charges was not known and a request was made for information on the number of occasions small charges (less than £1,000) arose. It was agreed that this would be looked at for the next meeting.
Action: Secretary

'Min 11' The Secretary had forwarded a note from Mr Reyland to members on 12 November. Mr Reyland summarised the notes content.

'Min 13' The Secretary had advised members of the proposed rate for 2002/03 on 15 November.

'Min 19' The mailing list for the group had been sent to Deloitte & Touche on 19 September. The handouts used at the presentation were sent to members on 1 October.

'Min 20' The report to the ICRG was amended as requested.

Mr Holman referred to Min 13 and asked if there had been any improvement to OSD's Inspector Recruitment? Mr Whewell said that the last campaign had been successful in recruiting 6 high calibre recruits predominately from the industry, bar one who had substantial chemical industry experience.

UPDATE ON REVIEW OF CHARGING

Mr Tomkins reported that the reports on the Efficiency of the Charging Process, Effectiveness of the Queries & Disputes Procedure and the Impact of Charging on COMAH were submitted to the HSC on 16 April. Also submitted was a draft report on the Reasonableness of the Charge Out Rates. The COMAH report had not produced any major issues. Similarly the issues raised in the Administration report were not major concerns and were being dealt with. One example was the single charging team for HID. The Disputes procedure was viewed as longwinded but equitable. Although it was bureaucratic it worked.

The Reasonableness of Charge Out Rates report was still a draft; HSE had continuing concerns about the methodology. Costs that HSE include in its Charge Out Rate have been taken out to improve comparability because others charged separately (e.g. travel and subsistence costs); whilst other costs (e.g. staff training) that HSE excludes had been included. There was also concern about the treatment of the charges made by the private sector for deep specialists in the private sector. HSE considered that this should be included especially for the railway and offshore industries.

That said, the report produces an HSE cost for offshore of between 20% and 36% when compared with others in the public sector and 15% or 36% in the private (the lower figure takes into account the premium rate sometimes used for specialists in the private sector).

Further discussion with the consultants may change the figures somewhat but not the overall picture. HSE welcomes this report because it underlines the need to continue to develop the number of chargeable hours delivered. It has concerns that its costs appear high, that the ratio of administrative support to inspectors is high by comparison with the private sector. These matters would be addressed as part of HSE's normal efficiency processes. It was not intended to set up a separate efficiency review to address these matters. The degree of comparability of the jobs used in the survey was open to debate - as the report recognised. It was stated that the administrative process was improving, but that this would not make much difference to the rate. Mr Savage thought that HSE probably was 50% dearer, but commended HSE for undertaking the review. Mr Tomkins said that HSE and Deloitte & Touche might eventually have to agree to disagree on some aspects of the report.

Concern was expressed about the lack of clarity on invoices, which was raised in the 'Administration' report. Industry had difficulty in matching up areas of work and tended to query an invoice to get more information in order for it to be processed. The Secretary said that the survey was done before the new invoicing system became operational, and it was felt that the comment related more to COMAH than offshore. The quality of invoices had improved and these improvements may not have filtered down yet.

Mr Krahn spoke of work offshore being 'signed off' and therefore trackable. HSE replied that this was not practicable given the amount of work carried out 'off-site'.

Mr Kyle raised the subject of a flat rate or other type of charge. Mr Tomkins replied that HSE might not have the power to do this, as the charge has to be referable to the cost of the work done. He added that industry appeared split as to what other form of charge they would like to see in place.

Mr Savage questioned the accuracy of Inspector input to the work recording system. Mr Whewell replied that Line Managers routinely checked inputs from their Inspectors. It was also pointed out that some Inspectors were reluctant to charge for certain areas of work, but that this resulted in higher overhead costs across the board. Mr Savage agreed that not charging for work meant that costs would be recovered from the wrong source. HSE is however, confident that only work that has been undertaken is charged for.

It was asked if HSE had an internal target for chargeable work? Mr Whewell said that it did not, but that a Plan of Work was drawn up which estimated chargeable hours that are then monitored during the course of the year.

Mr Kyle pointed out that Deloitte & Touche had used a number of standard 'one-off-lines' that concerned him such as the sample size may be unrepresentative and that the organisations may not be good comparators.

Mr Tomkins said that the first draft of the impact of charging was with him and project board members for comment. No doubt there would be drafting changes but he did not expect that fundamental changes would be made to its substance or conclusions.

Mr Savage asked how HSE intended to progress as it may affect the way HSE operates. Mr Tomkins replied that there was a need to consider the reports carefully and HSE had not gone through that process yet. Mr Whewell said that the reports would be considered at a senior level in HSE and the findings taken seriously as any operational issues could be a cross-HSE matter. Deloitte & Touche will also be producing a 'Strategic Lessons Learned' paper that may provide the springboard for future action. Industry asked how the findings could be taken forward and discussed. OCRG may provide a forum. It was agreed that it was appropriate for OCRG to discuss this. The issue would be considered at future meetings.

DISPUTES PANEL - INDEPENDENT MEMBER

Following Mr Winkworth's resignation as an independent member of the Disputes Panel, industry had nominated Mr Jim Petrie to replace him. Members formally approved Mr Petrie's appointment.

Mr Krahn queried whether the independent members were paid. Mr Tomkins replied that they received a day rate plus travel costs if their services were required.

FREQUENCY OF MEETINGS

Another charging review group had decided that two meetings a year were generally not necessary and this view was being queried with other groups. It was agreed that an autumn meeting would be required in view finalising the evaluation exercise and that the question should be addressed at that meeting. The Secretary was asked to make this an agenda item for the next meeting.
Action: Secretary

ANY OTHER BUSINESS

A question had been raised before the meeting regarding invoice details. One duty holder wanted to be able to identify incidents being investigated where two or more had occurred close to each other. The Secretary said that he was looking into ways of dealing with this request automatically through the invoice software. In the interim, if duty holders had a query of this nature they should make it in the normal way and the charging team would find the detail for them.

DATE OF NEXT MEETING

The next meeting was set for 10 October 2002 in Aberdeen.

DELOITTE & TOUCHE PRESENTATION

Mr Mark Sapsford of Deloitte & Touche gave a presentation on the emerging findings of the impact charging has had on offshore. An overview of all strands will be given to the ICRG. A number of groups had been canvassed for their views, but the ratio of response was low. Industry saw this as positive, stressing that if there had been concerns they would have made those views known. No concerns had come from the Safety Representative network. Industry involvement had not been as good as for COMAH and Rail, but this was felt to be because they had few issues to raise.

On the issue of 'advice', it was pointed out that general advice was not a chargeable category. Inspectors could use some discretion as to when the activity changed from general advice. Further detail could be found in the Charging Guide.

Mr Savage was positive in his view that it was beneficial to hear what inspectors thought of the industry as this had never been sought or given in the past.

The final report was expected by early/mid-May and would not be radically altered from the presentation given. The thrust of what members had seen would be in the final report.

The Chair thanked Mr Sapsford for his presentation and closed the meeting.


Updated 2008-12-05