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Assessing Construction Compliance

Gas utilities can make better use of their inspection budgets.

Fortnightly Magazine - August 2009

in civil litigation. For comparison, moving to a 96-percent confidence level would require inspecting a much greater sample, increasing from 505 installations to several thousand. Expanding the sample in this way isn’t reasonable, because it doesn’t balance risk, precision and cost. A 95-percent standard allows the company to know the level of risk it faces, and allows it to act reasonably on this information if it’s found to be unacceptably high.

Benefits of Change

The benefits of this new way of measuring compliance are major and many, and begin with greater assurances to all industry stakeholders, partners and participants that the level of risk and compliance is understood with a high level of confidence, and that all is being done that can reasonably be expected to understand the risk the company faces.

Specifically, the new way permits continuous improvement in attaining very high levels of compliance. Measurement and comparisons of compliance by area or subdivision, together with compliance performance comparisons of company and contractor crews, provide a basis for best-practice gains. Additionally, it allows inspection resources to be optimized. In all five engagements, fewer, not more, full-time field inspectors were required after system implementation, auditor training, and IT integration were accomplished.

Moreover, this approach vastly improves compliance documentation for regulatory authorities, as evidenced by the testimonials of all five regulatory commissions involved. It reduces liability and risk associated with punitive jury awards in civil cases, and potentially can reduce insurance premiums as a result of reduced risks to the utility and its constituents.

Finally, this approach provides a greatly improved platform for managing overall enterprise risk, with a solid basis for certificates of executive management under Sarbanes-Oxley, and a prudent-man defense for stockholder lawsuits against directors and management.

This way of measuring compliance is, of course, not limited to field construction activities or gas, electric or water utilities. In fact, it has direct applicability to measuring compliance among any set of procedures, field or office, with actual practice in carrying them out.