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Offshore Charging Review Group (OCRG)

Minutes of the Fifth Meeting Tuesday 18 September, held at the Novotel London Waterloo

Present:

Ms A Sharp, HSE SPDC, Chair;
Mr I Whewell, HSE, HID, OSD;
Mr B Tomkins, HSE, PEFD;
Mr M Reyland, HSE, PEFD;
Mr C Ransome, HSE, HID, CD;
Mr K McFadyen, HSE, HID, CD, Secretary.
Ms J Bugler, IMCA;
Mr P Holman, BROA;
Mr D Taylor, Kerr-McGee;
Mr N Savage, Shell.
Mr D Cowley, Deloitte & Touche (Item 7).

Introduction and apologies

The Chair welcomed everyone to the meeting and introductions were made around the table.

Apologies had been received from B Kyle (UKOOA) and I Bell (OCA). M Reyland was attending for V Isenwater. Later apologies were received from Ms S Channon (CBI) and Mr Dennis Krahn (IADC).

Minutes of the meeting held on 3 April 2001

The minutes had been circulated. Mr Taylor said that he was not at the last meeting and that Mr D Tweddle had attended in his place. With this amendment the minutes were accepted.

Matters arising (not covered by the agenda)

(Previous minutes para 6 refers) A replacement for Mr Winkworth on the Disputes Panel was still being sought.
Action: HSE, Mr Tomkins, and Industry

(Previous minutes para 8 refers) The industry guide had been republished. The Secretary had written to all duty holders at their invoice address on 14 August informing them of the revised charge out rate and enclosing a copy of the guide. Subsequently errors had been found in the new edition. It was not intended to print an errata for these. The errors would be corrected on the Internet version. The Secretary would check that the Internet version was accurate and write again to duty holders advising that this was where the correct version should be found.
Action: Secretary

(Previous minutes para 14 refers) It was thought that small charges could be aggregated with the new IT system being tested for invoicing. Industry were asked what limit constituted a small charge. Industry suggested a minimum of £1000 for both a single invoice and individual installations within a composite invoice. Mr Reyland said that he would need to check the acceptability of this from HSE's accounting rules, but provisionally agreed that small charges could be carried forward to later invoices, but no further than the year end. The Secretary would look at the practicalities of meeting this request.
Action: Mr Reyland and Secretary

[Post meeting note: Investigating this request has shown some problems that need to be addressed. An explanatory note is attached to these minutes.]

(Previous minutes para 16 refers) Information on the charge out rate calculations was covered by paper OCRG/6/2001.

(Previous minutes para 18 refers) Members had been advised of the reason why a paper on evaluation had not been prepared. Deloitte & Touche were giving a presentation to the meeting. It as agreed that industry could decide whether they still wanted a paper after hearing the presentation.

Chairman's Report (OCRG/4/2001)

This paper giving statistical data on chargeable hours, income and disputes, plus general information on new invoicing software had been circulated prior to the meeting. It was explained that a small efficiency gain would arise from the introduction of new software for invoicing and the transfer of COMAH and Gas Transportation invoicing to the current offshore team in Aberdeen. At present four staff in Bootle were dealing with COMAH and gas invoicing. Two of those posts would transfer to Aberdeen and two would be retrenched. This would effectively reduce the ratio of staff time administering all three regimes.

Memorandum Trading Account 2000/01 (OCRG/6/2001)

Mr Reyland presented the report explaining that the MTA showed the rate HSE should have charged to break even in 2000/01. The account was broken down into five generic headings based on actual costs, not projected ones. He added that there would always be a variation between the actual charge and what should have been charged. If HSE under recovered its costs, it had to bear the loss. If it over recovered this was taken into account when setting the new rate.

Mr Holman queried why the gross salaries for operational management and strategy were up, but those for staff actually carrying out offshore work were down. Mr Reyland agreed to check the rationale for this and write to members.
Action: HSE, Mr Reyland

Mr Reyland went on to say that the new rate of £133 ph had come in to force from 20 August. It should have been introduced from 1 April but had been delayed by several factors, including the calling of a general election. The next rate should be effective from 1 April 2002 and the timetable for the new fees regulations had already been set. Work on calculating the next rate would start shortly and HSE would aim to give members an indication of what this would be before it went to the Commission in early December.
Action: HSE, Mr Reyland

Industry asked whether staffing numbers made a difference to the rate. Mr Whewell replied that OSD was eight inspectors short for front line work and that a recruitment exercise was underway. If staff were recruited they would carry out chargeable work.

Industry asked whether HSE initiatives such as Revitalising Health and Safety would make a difference. Mr Whewell said not, as these initiatives were factored in to normal inspection activities.

Industry asked whether the indicative times for safety case assessment were being revised. The Secretary responded that he had done some work on this a while ago. This involved selecting accepted cases for a variety of installations and cross checking the amount of chargeable time spent on them. That exercise had only proven that there was no such thing as a typical case or an average time. He cited the instance of sister installations presenting the same type of safety case at the same time. The recollection was that one had taken around 160 hours to assess, whilst the other had taken about 16 hours. In this instance, with the same type of case for 'identical' installations, one had been used as an exemplar for the other. Mr Whewell added that, following a Civil Service Commission review of safety case assessment, OSD had taken legal advice on what HSE should be doing on assessment. As a result, OSD would be spending more time on assessment, with a corresponding reduction in inspection time. OSD was reviewing the assessment process and guidance to inspectors so that clearer audit trails were available.

COMAH component charging scheme

Mr Ransome said that the CCRG had asked HSE to investigate the feasibility of alternatives to actuals charging. Any alternative needed to be referable to the actual cost of work done. Other existing schemes that could be adapted had been sought, but none found. An inspector/agency workshop was held that looked at selected sites, estimated the effort required and the factors that affected the effort. This produced an outline model that could be applied elsewhere. Following this, a seminar was held to present the findings to industry. The industry supported the model, but said it needed greater calibration. The CCRG had endorsed the model, and given the go-ahead for more work to calibrate it. Resources to proceed with this were now being sought. There were still other questions to be looked at, such as when a charge would be raised under this scheme. Mr Ransome had papers on this project, and would send them to members if requested.

Industry asked about the transferability of the scheme to offshore if it did materialise. HSE responded that the development of any alternative scheme would depend on the result of the evaluation exercise to some extent. The work on the COMAH scheme would carry on, and if offshore wanted to go along the same route, a lot of the groundwork would already have been done.

Evaluation

The Chair introduced Mr Denbigh Cowley from Deloitte & Touche who was the project manager for evaluation. Mr Cowley produced a set of handouts from his presentation giving the terms of reference for the project and the plans for how the review was to be conducted. It was agreed that there were a number of group meetings, including the safety representatives and OIMs fora, that the offshore survey could 'piggy back' on. It was also agreed that contractors should be included in the survey.

The next step was for Deloitte & Touche to draft a project initiation document for the HSE project board. This would set out what was going to be done, when and at what cost. Industry association members said that they were content to report back to their members on the basis of the handouts. Mr Cowley agreed to make the handouts available electronically to the Secretary to send out to members. The Secretary would also provide Mr Cowley with his electronic mailing list.
Action: Mr Cowley and Secretary

[Post meeting note: Both actions completed.]

Industry-wide charging review group (ICRG)

A draft report to the ICRG (OCRG/5/2001) had been circulated before the meeting. It was agreed that the report could go forward with two amendments. Item 3 of the report should state that the charge out rate for 2002/03 would be submitted to the HSC as part of the revised fees and charges regulations due to be effective from 1 April 2002. Item 5 regarding the aggregation of small value charges should be updated to reflect the discussion at this meeting.
Action: Secretary

Date of next meeting

The next meeting needed to be timed to coincide with the completion of the Deloitte & Touche report on evaluation. The meeting was set for Tuesday 16 April 2002 in Aberdeen.


Updated 2008-12-05