---
title: Assuring Operational Excellence from Contractors and Their Subcontractors
description: This article comes with a free download of the first chapter of Scott M. Shemwells groundbreaking OpEx book, 'Implementing a Culture of Safety' - BTOES Insights
---

[Business Transformation & Operational Excellence Insights](https://insights.btoes.com)

# [Assuring Operational Excellence from Contractors and Their Subcontractors](https://insights.btoes.com/assuring-operational-excellence-from-contractors-and-their-subcontractors)

 Written by [Scott M. Shemwell](https://insights.btoes.com/author/scott-m-shemwell) | Oct 20, 2017, 2:00:00 PM

***This piece accompanies our latest BTOES Insights premium content, a free chapter of Operational Excellence Book, '[Implementing a Culture of Safety: A Roadmap for Performance-Based Compliance](https://insights.btoes.com/business-transformation-operational-excellence/contributor-content/implementing-a-culture-of-safety-free-chapter)'.***

# How Can You Assure Operational Excellence from Contractors and Their Subcontractors?

**Most organizations depend heavily on contractors and subcontractors** to perform the actual work process tasks/subtasks in the field. Often, this fact is **overlooked by those challenged with assuring that the organization attains and sustains Operational Excellence.**

Another long held myth is **that the legal contract governs performance and in the worst case an injured party can file a lawsuit.**  For those organizations, public, private or government working in sectors that can be consider ones with **Critical Infrastructure, failure at the work process level is not an option.**

**Some industrial incidents can now impact not just the locale but society in general at a level previously only seen during warfare**.  Certainly, the reputation of the company and its executives can be mortally damaged.  A few incidents come to mind including, **Bhopal, Three Mile Island, Deepwater Horizon and most recently Equifax.**

[***Get a free Chapter of Scott's book, 'Implementing a Culture of Safety: A Roadmap for Performance-Based Compliance'.***](https://insights.btoes.com/business-transformation-operational-excellence/contributor-content/implementing-a-culture-of-safety-free-chapter)

## Strong Bond Governance

Readers may wonder how the Equifax incident compares with the listed industrial accidents.  **All are case studies of the failure of management to assure Strong Bond Governance.**  This governance model was developed by this author and his late colleague “Dutch” Holland.  With a focus beginning from the Board of Directors, **this model helps assure that poor field practices are not followed whether it is oil well constructio**n or updating software in the systems that the company depends on for its revenue stream and reputation.

Moreover**, strong operational excellence practices across the organization’s ecosystem have a Safety Dividend**.  For example, not having accidents reduces Unplanned Downtime, possible increased Regulatory Oversight, can Enhance Reputations and even reduces exposure to Litigation and subsequent awarded damages.

**Therefore, a systemic approach to OE and its associated Safety Culture is a Best Practice.**  This business model is available to all and does not have a high cost of implementation.  We will discuss this practice in more detail in our next blog.

[***Keep updated with Scott's blog series: Subscribe to BTOES Insights Now***](https://insights.btoes.com/subscribe)

Another common misunderstanding is that **any dramatic organizational transformation requires significant IT systems spend as well as associated Change Management lengthy processes**.  In this author’s experience, most organizations can implement this paradigm shift without major disruption.

## Systemic Models for Operational Excellence

In systems composed of many elements such as typical critical infrastructure operations, **complex behavior can emerge from the simple interactions among a set of N elements.**  These pairwise interactions can include the discussions between the operator and the drilling contractor or the drilling contractor with a service provider.[\[i\]](https://insights.btoes.com/assuring-operational-excellence-from-contractors-and-their-subcontractors?hs_amp=true#_edn1)  **A similar set of interactions may take place during heart surgery as well.**

Since each pair will have its own Pay-Off Matrix, **this process can be modeled using Game Theory.**  Wikipedia defines game theory as, “**the study of mathematical models of conflict and cooperation between intelligent rational decision-makers**.”

Game theory is a powerful tool that is not limited to academic research.  For example, this writer uses it **as a tool to teach cross cultural interactions to global clients.**

Another school of thought suggests that the human behavior associated with team dynamics cannot be adequately modeled by simple pairwise interactions. **With such Group Interactions, game payoff matrices cannot be theoretically derived from pairwise interactions**.[\[ii\]](https://insights.btoes.com/assuring-operational-excellence-from-contractors-and-their-subcontractors?hs_amp=true#_edn2)

Simply put, **in our complex real world the behavior of each member of a team and his or her interactions with members of other collaborative teams will generate very complex human activities driven by individual biases and priorities.**  Strong Bond Governance is necessary to exert authority over the behavioral economics of multi-team performance.[\[iii\]](https://insights.btoes.com/assuring-operational-excellence-from-contractors-and-their-subcontractors?hs_amp=true#_edn3)

[***Download the first Chapter of 'Implementing a Culture of Safety: A Roadmap for Performance-Based Compliance'.***](https://insights.btoes.com/business-transformation-operational-excellence/contributor-content/implementing-a-culture-of-safety-free-chapter)

## Going Forward

Large complex programs in Critical Infrastructure sectors can create significant stakeholder (including society) value.  **However, they can destroy years of value “overnight.”**

**Strong Bond Governance is a Best Practice to assure** the organizational ecosystem adds promised value and assures sustained Operational Excellence.  **This Best Practice is available to all.**

Additional information on Strong Bond Governance and other terms and information discussed herein are available from the **Chapter One Excerpt, [Implementing a Culture of Safety: A Roadmap for Performance Based Compliance](Implementing%20a%20Culture%20of%20Safety:%20A%20Roadmap%20for%20Performance%20Based%20Compliance.).**

 

**<https://insights.btoes.com/business-transformation-operational-excellence/contributor-content/implementing-a-culture-of-safety-free-chapter>**

 

### **FREE DOWNLOAD: GET THE FIRST CHAPTER OF SCOTT SHEMWELL AND DUTCH HOLLAND'S GROUNDBREAKING BOOK, '[IMPLEMENTING A CULTURE OF SAFETY](https://insights.btoes.com/business-transformation-operational-excellence/contributor-content/implementing-a-culture-of-safety-free-chapter)' ON BTOES INSIGHTS NOW.**

 

 

 

 

 

 

### **About the Author**

**Scott M. Shemwell, D.B.A.**

**Dr. Shemwell, Managing Director of [The Rapid Response Institute](http://www.theRRInstitute.com) is an authority and thought leader in field operations and risk management with over 30 years** in the energy sector leading turnaround and transformation processes for global S&P 500 organizations as well as start-up and professional service firms.  He had been directly involved in over $5 billion acquisition and divestitures as well as the management of significant projects and business units.

For more than a decade he has been directly involved with **Fortune 100 firms, Government Agencies, and a large number of mid-size as well as start-up firms** addressing a number of business and technology implementation problems.  For example, his [Economic Value Proposition Matrix®](http://therrinstitute.com/economic-value-proposition-matrix/) model was developed with and for the energy sector and has been used extensively in CAPEX and Risk assessments.

[\[i\]](https://insights.btoes.com/assuring-operational-excellence-from-contractors-and-their-subcontractors?hs_amp=true#_ednref1)  [https://www.projectmanager.com/?utm\_source=google&utm\_medium=cpc&utm\_campaign=pm-brand-us&utm\_term=projectmanager.com-exact&gclid=EAIaIQobChMIocGJhJzc1gIVVJ7ACh33jghsEAAYAiAAEgJK-vD\_BwE](https://www.projectmanager.com/?utm_source=google&utm_medium=cpc&utm_campaign=pm-brand-us&utm_term=projectmanager.com-exact&gclid=EAIaIQobChMIocGJhJzc1gIVVJ7ACh33jghsEAAYAiAAEgJK-vD_BwE)

[\[ii\]](https://insights.btoes.com/assuring-operational-excellence-from-contractors-and-their-subcontractors?hs_amp=true#_ednref2)  [https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3565747/](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3565747/)

[\[iii\]](https://insights.btoes.com/assuring-operational-excellence-from-contractors-and-their-subcontractors?hs_amp=true#_ednref3)  [http://www.pennenergy.com/articles/pennenergy/2014/11/high-reliability-management-in-process-industries-sustained-by-human-factors.html](http://www.pennenergy.com/articles/pennenergy/2014/11/high-reliability-management-in-process-industries-sustained-by-human-factors.html) 

[View full post](https://insights.btoes.com/assuring-operational-excellence-from-contractors-and-their-subcontractors)

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