The Offshore Audit, Monitoring and Review Inspection Guide

The Offshore Audit, Monitoring and Review Inspection Guide Open Government Status: Fully Open Publication Date: 28 January 2021 Review Date: 28 January 2024

Review History Date Changes Approved

Target Audience: ED Offshore Inspectors

Contents  Summary  Introduction  Terminology (Audit, Monitoring, Review)  Glossary  Relevant Legislation and Guidance  Action  Other relevant Inspection Guides  Specialist Advice  Organisation Targeting Timing Resources Recording & Reporting  Appendices

Appendix 1: Audit, Monitoring and Review Processes: Duty Holder Audit Systems and Initial Inspection Appendix 2: Audit, Monitoring and Review Processes: Inspecting Outputs Appendix 3: Application of EMM and Duty Holder Performance assessment

Summary This inspection guide (IG) outlines an approach to the inspection of a duty holder’s arrangements with respect to audit, monitoring and review and the key areas that inspectors should consider when inspecting this topic. It is aimed specifically at major accident hazards. It sets out the criteria for satisfactory and unsatisfactory performance against which duty holder performance will be rated. References are made to technical standards and guidance that inspectors will use to form an opinion of legal compliance.

Audit and monitoring, together with the associated review processes, are key activities in the Managing for health and safety (HSG65) Plan, Do, Check, Act cycle, ensuring the cycle of activities are effective in controlling risks. Consequently, they are important components of any safety and environmental management systems (SEMS) inspection strategy. This IG is therefore part of HSE’s strategy for inspecting, assessing and investigating aspects of SEMS. It sets out a framework for inspecting and investigating aspects of audit, monitoring and review arrangements. This draws on the arrangements for auditing and monitoring as described in safety cases.

The guidance highlights key areas for inspection and provides a framework against which inspectors can determine compliance, assign performance ratings and decide what enforcement action should be taken with respect to legislative breaches that may be found. It is not exhaustive but covers a range of issues and circumstances. In doing so, it is consistent with HSE’s Enforcement Policy Statement (EPS) and Enforcement Management Model (EMM).

It is unlikely inspectors will be able explore every aspect covered in this IG during one inspection. It is recommended that they plan and direct interventions and gather evidence which, over time, will enable them to build a view of the adequacy and effectiveness of a duty holder’s audit, monitoring and review arrangements. The underlying causes of many deficiencies found during inspections raise questions about the effectiveness of audit and monitoring arrangements.

Scores can be allocated on a partial inspection of a system since they are based on identified risk gaps, not some notion of the overall state of (in this case) the audit, monitoring and review arrangements. For example, if a duty holder’s audit plan is found not to have been implemented to a significant degree, this may well attract a score of 40 with the potential for an improvement notice (IN).

Introduction

The IG is for use by all operational staff within ED Offshore. It is particularly aimed at inspection management team (IMT) inspectors because they have the responsibility for the SEMS topic specialism, but it is also for use by other topic specialists. The aim is to provide common, transparent procedures for inspectors to regulate a duty holder’s undertakings consistently and efficiently. These procedures draw on best practice that has been developed over time.

Terminology

Audit and Monitoring

The activities covered by the terms ‘audit’ and ‘monitoring’ vary across duty holders and across guidance documents. For example, most duty holders will have a formal audit programme agreed by senior management which will meet the definition of audit as defined’ for example’ in The Offshore Installations (Offshore Safety Directive) (Safety Case etc) Regulations 2015 (SCR 2015) Regulation 16(3): “…“audit” means systematic assessment of the adequacy of the management system to achieve the purpose referred to in paragraph (1)(a) carried out by a person who is sufficiently independent of the system (but who may be employed by the duty holder) to ensure that such assessment is objective.”

They will also have arrangements in place for reviewing aspects of their systems locally which they may refer to as audits, for example, daily/weekly audits of their permit to work system or monthly audits of selected procedures. However, these are usually carried out by site personnel who may not be regarded as sufficiently independent of the system to meet the regulatory definition of audit above. Therefore, these activities might better be referred to as monitoring activities since the term ‘monitoring’ is usually associated with these routine higher frequency (daily, weekly, monthly) activities.

‘Monitoring’ as used for example in The Management of Health and Safety at Work Regulations1999 (MHSW) Regulation 5, and Developing process safety indicators (HSG 254) is an all-encompassing term used to describe all the activities which provide information on SEMS performance – for example audits, key performance indicators (KPIs), workplace monitoring, investigations. To differentiate between this legislative use and its use to describe regular monitoring of activities on installations, the term ‘workplace monitoring’ is used throughout this IG for this latter activity.

Both audit and workplace monitoring activities should also be supplemented by other information gained from, for example, structured management visits, incident investigations employing root cause analysis and KPIs.

These terms and the associated activities are discussed in more detail in the appendices. Here, the important point to note is that there is a continuum of activities from regular and systematic worksite observations and checks by site personnel through to formal high-level company audits typically carried out at periods of several years. Duty holders are expected to collate the information from this spectrum of sources, reviewing and analysing it with the purpose of providing a clear understanding of the adequacy and effectiveness of their SEMS and identifying opportunities for learning and improvement.

Review

HSG65 sets out under ‘Act’ (of Plan, Do, Check, Act) the purpose and processes of reviews. The review process allows an organisation to establish whether the essential health and safety principles – effective leadership and management, competence, risk management, worker consultation and involvement – have been embedded in the organisation. The outputs from audit and monitoring activities are one of a number of sources of information which need to be taken into account to understand how well the organisation is managing risk and protecting people; incidents, errors, near misses, organisational experience and general industry experience and learnings all contribute to an effective review.

It is important not only to learn lessons but to take action to address the lessons. The results from audit and monitoring and other activities will lead to the formation of views on both the effectiveness of organisational learning and the effectiveness of implementation of the learning through actions which give rise to sustainable organisational change.

Glossary

ALARP As Low as Reasonably Practical Bowtie Usually a diagram shaped like a bow tie showing the measures (or barriers) which prevent a major accident on the left hand side and the measures (barriers) that help control a major accident, if it occurs, on the right hand side. CMAPP Corporate Major Accident Prevention Policy ED Energy Division (HSE) EMM Enforcement Management Model EPS Enforcement Policy Statement HSE Health and Safety Executive IG Inspection Guide IMT Inspection Management Team (HSE, Energy Division) IN Improvement Notice KPI Key Performance Indicator MAH Major Accident Hazard OGUK Oil and Gas UK SEMS Safety and Environmental Management System

Relevant Legislation and Guidance

Health and Safety at Work Act 1974 (HSWA) Sections 2(1) and 3(1). It shall be the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all their employees. This establishes the general duty of which audit, monitoring and review are reasonably practicable activities in the discharge of that duty.

The Offshore Installations (Offshore Safety Directive) (Safety Case etc) Regulations 2015

Regulation 7(6)(b). Regarding the corporate major accident prevention policy (CMAPP), a duty holder must set up appropriate monitoring arrangements to ensure effectiveness of the policy.

Regulation 16 (1)(b) and (3). Audit arrangements are specifically required to assess the adequacy of a duty holder’s management system to ensure compliance with relevant statutory provisions and that the management of arrangements with contractors and subcontractors is satisfactory.

Regulation 27 (d), (e). This regulation requires a written statement covering key aspects of audit reports to be kept (available) on the installation. The statement should cover specifically, the main findings of the audit report, recommendations, proposed actions and timescales and actions taken.

Schedule 1(7). This schedule, together with the associated guidance L154 paragraph 364, require periodic audits undertaken by competent personnel, the establishing of arrangements to capture audit findings and the implementation of measures to feed back to relevant parties and adopt means to ensure outstanding actions are closed out. The arrangements should ensure significant matters will be raised to management board level, including where appropriate audit close-out backlogs, which may impact on the organisation’s ability to manage and control major accident hazards.

Schedule 2(4). This schedule requires a suitable framework for monitoring compliance with all relevant statutory provisions by incorporating statutory duties in respect of major hazards control and environmental protection into standard operating procedures.

Schedule 3(8). This schedule, and the associated guidance L154 in paragraph 386, require a duty holder’s SEMS to include adequate arrangements for both active and reactive monitoring of health, safety and environmental performance, particularly in relation to major accidents. Such arrangements should also include reviews of the findings from such activities to ensure appropriate changes are made.

Schedule 3(9). This schedule, together with the associated guidance L154 paragraphs 388 and 389, require the description of a duty holder’s SEMS to include details of their audit and review arrangements.

Schedule 6(5). This schedule, together with the associated guidance L154 in paragraph 436, require an adequate description of the operator’s safety and environmental management system, including a summary of the policies, procedures, organisational arrangements, monitoring arrangements and audit practices in place to ensure the SEMS is and remains suitable.

This schedule, together with Regulation 32(4), requires duty holders to establish priorities for the development of standards and guidance and give practical effect to the prevention of major accidents and the limitation of their consequences. Audit, monitoring and review activities are primary means of generating information from which such priorities, standards and guidance can be derived.

The Management of Health and Safety at Work Regulations 1999 (MHSW) Regulation 5. This requires appropriate arrangements for the effective …monitoring and review of preventive and protective measures.

Managing for health and safety (HSG65, 3rd edition 2013). This guidance focuses on monitoring in the context of checking and measuring performance.

Developing process safety indicators (HSG254). Under the term ‘monitoring’ this guidance brings together formal audits, process safety performance indicators and what are described in this IG as workplace monitoring activities. This covers the gathering of data over the spectrum from low frequency, in depth information to high frequency, lower depth information.

Guidance on meeting expectations of EI Process safety management framework – Element 20: Audit, assurance, management review and intervention. This provides comprehensive ‘how to’ guidance covering setting performance measures for workplace monitoring through to establishing a range of audits which integrate the various levels of activity and information. It covers good practice processes for audit, assurance, management review and intervention.

Assurance Guidelines, Issue 1, November 2020, OGUK. These guidelines describe good practices in the implementation of an assurance framework for the prevention of major accidents, including hydrocarbon releases. The guidelines aim to assist industry and help address regulator concern by describing effective assurance activities, providing examples of effective systems, and to promoting and sharing good practice.

Action

o Inspection Activity

Inspection activities can be focussed on each of the three components of the auditing, monitoring and review processes.

The audit arrangements can mostly be inspected onshore since a duty holder’s audit programme and all its outputs are available onshore. In general this a low frequency activity, most likely carried out in the early stages of a new duty holder taking over, and then repeated to a lesser degree on an annual basis to check the focus of a duty holder yearly audit programme (e.g. has it focussed on the primary MAH risks), its quality and the degree to which the audit plan has been implemented. This latter activity will also be a feature of specialist inspection activity.

Worksite monitoring arrangements are best inspected offshore (although key outputs and analysis should be available onshore) since they are part of the everyday activities carried out on the installation by installation personnel. Monitoring activities can be a major theme for an IMT inspection agenda when, for example, an inspector is new to an installation. Subsequently, individual elements can be specifically inspected by the IMT as part of a larger agenda. Information on monitoring performance will also emerge from inspecting against other SEMS topics and the inspection activities of other specialists.

The review processes need to be inspected both onshore and offshore, where the reviews take place. The offshore workforce is best placed to review the findings of offshore monitoring activities and take appropriate corrective actions. However, onshore managers and others should be aware of the findings and actions ensuring these contribute to the bigger picture of SEMS effectiveness and supporting and encouraging the worksite monitoring activities. This is also a fertile environment for workforce engagement since they can participate in worksite monitoring, reviewing findings and integrating these into findings and learnings from investigations, near-misses, etc.

A view should be formed on how well the spectrum of activities from installation workplace monitoring to high level audits inform the duty holder senior leadership and managers on the effectiveness of their SEMS, and how effectively they respond and implement improvements.

Major hazard management reviews are opportunities to explore the commitment of senior managers to the review processes, what information they review in order to gain an understanding of the effectiveness of their SEMS, and what changes they have and are putting in place to improve the SEMS.

These activities are discussed in detail in the appendices.

Other Relevant Inspection Guides

Most other IGs discuss audit, monitoring and review as a means for gauging the effectiveness of the elements of the SEMS system covered by the IG. However, the guidance will not be as comprehensive as this IG, although other IGs will often provide guidance at a finer level of detail than this IG. For example, the discussion of process safety performance indicators in the Monitoring and Review Arrangements section of the Loss of Containment IG. All relevant guidance in other IGs will be sub-sets of the guidance contained in

this IG. Consequently, inspecting audit, monitoring and review arrangements in the context of other IGs is supportive to inspections carried out under this IG.

Specialist Advice

Specialist advice and experience in audit, monitoring and review is primarily held in the IMT discipline and secondees into the ED Operational Policy Unit (ED7.2). The IG owner has a responsibility to oversee and coordinate the effective and consistent implementation of this IG and should be the first point of call for advice. Advice should be sought when enforcement is being considered and when there is debate over the level of demonstration made by the duty holder.

Organisation

o Targeting

All focal point inspectors should be familiar with the duty holder’s audit, monitoring and review arrangements. Depending on the levels of previous interventions and the knowledge of the focal point inspector on this topic, inspectors should plan to carry out an onshore inspection of the formal audit arrangements to assess the focus and quality of the audits and the degree of implementation of the audit plan. It should also be possible as part of this inspection to clarify the monitoring arrangements for each installation and review sample outputs to help form a view of their focus, quality and implementation. These activities, together with audit, monitoring and reviewing information from previous interventions will contribute to forming the duty holder strategy, and provide a baseline from which specific interventions can be planned and incorporated into the duty holder intervention plan.

o Timing

A duty holder’s audit, monitoring and review procedures should be reviewed at least once every 5 years (following, for example, Template 1 in this guide), or more frequently if significant changes to the procedures are made or evidence emerges of significant systemic shortcomings. This is to ensure there is a current understanding of the procedures in place, that primary procedural deficiencies are addressed, and to provide a degree of confidence that if implemented correctly the procedures will be effective. Yearly reviews of the focus and implementation of a duty holder’s formal audit plan supplemented by inspection of specific audit reports and the outputs of a sample of monitoring activities from across the duty holder’s installations should be undertaken. This should be directed by the IMT and supplemented by specialist input.

o Resources

Primarily IMT inspectors working together with specialist colleagues.

o Recording and reporting

The duty holder performance ratings should be entered on the Inspection Rating Tab of the relevant installation Intervention Plan Service Order. Findings and performance ratings should be recorded in the post inspection report and letter.

Appendix 1 Audit, Monitoring and Review Processes: Duty Holder Audit Systems and Initial Inspection

 Introduction  Duty Holder Audit Systems  Initial Inspection

Introduction

Senior leaders and managers rely on an organisation’s audit, monitoring and review arrangements to provide evidence on the adequacy and effectiveness of their SEMS, to learn lessons, to identify improvements and ensure improvements and changes are implemented and embedded. Consequently, inspecting these systems is a key activity within the IMT inspection strategy.

Inspecting is a combination of targeted inspections – e.g. formal reviews of the system and system elements and their outputs – and the collection of data from routine inspection activity. For example, issues found during the range of HSE interventions can often be linked to the failure of a duty holder’s audit, monitoring and review arrangements. That is, their audit, monitoring and review