Gorgon removes $15 billion worth of chairs

In what is perhaps a strategic “leak” for the benefit of shareholders, the AFR is carrying a story on how the Gorgon LNG project is shifting to higher productivity practices:

Staff working on Chevron’s $US52 billion Gorgon liquefied natural gas project have been banned from using chairs and told not to sit down during their shifts in a bid to improve productivity on Australia’s biggest resources development.

Following last week’s 40 per cent cost blowout, one of the lead Gorgon contractors issued a memo on Sunday to its workers titled “Efficient production of work crews”.

Leighton Contractors… laid out a series of instructions to its employees to reduce the amount of time lost on the job:

“Labour is not allowed to sit down during normal working hours, unless their duties require,” said the leaked memo obtained by The Australian Financial Review. “Labour is allowed to sit down during normal working hours in the approved shade huts for short rest breaks and hydration. Full crews are not allowed in the shade hut, only one at a time so work can always continue on the site.”

Good to see they’re finally getting serious.

David Llewellyn-Smith

Comments

  1. Maybe it’s a union-initiated hoax to reduce the supply of (willing) “labour” to the project, thus maintaining inflated wage rates.

    • Peter McDonald, Demographic researcher from ANU had some interesting comments on skill shortages. While supporting better usage of Australian staff, including those not currently engaged in employment, he seemed to advocate foreign workers. This seemed to be for a number of reasons, firstly, the quick fix, secondly, the pressure release valve for pay rises, and thirdly, to try to skill-up our local workforce.

  2. But seriously, when a massive blowout like this happens and a key contractor’s kneejerk response includes such nonsense – hold on because the party has only just started. Yeeeeehaaaaaa, ride em cowboy.

  3. General Disarray

    Smoke screen deployed!

    Well done management, that should keep the focus away from your role in this clustershag for a while.

    • darklydrawlMEMBER

      Totally agree. Whilst most folks agree that productivity is an issue (in most places in Oz, not just mining and construction), this seems to be a real silly way to deal with. but hey, I guess it is not my $15 Billion down the hole, so I cannot really comment…

    • darklydrawlMEMBER

      heh… Cold soup or hot soup…? It makes all the difference you know 😉

      Reminds me of the Birthday Cake GST Fiasco.

  4. This sounds like a hoax, or a low level manager with no much perspective.

    If it is not a hoax or low level it is a sad reflection on Australian management if they think this is how best to improve productivity.

    • darklydrawlMEMBER

      I totally believe it. I have seen this sort of initiative before. Crazy but true.

      There is still the mentality that an employee doing ‘something’, anything, must be productive and therefore efficient, even if that activity is pointless, costly and detrimental to the long term interest of the business.

      Hell, this has been known about for years. Theory of Constraints, “The Goal” et al covered this a long time back, but management just don’t seem to get it.

    • You’ve probably never worked in a BHP office.. the administration Gestapo will get right up your ass if you have any pictures up on your cubicle wall, or if you leave a coffee cup on your desk at the end of the day.

      • darklydrawlMEMBER

        Luckily I have not, but I know all about Klopper’s fanatical clean desk policy – I have even got hold of a copy of the document. Madness – they are trying to cut costs and yet waste a fortune of this sort of nonsense. I bet those cleaners are about as popular as parking and ticket inspectors.

        Would make for a fun xmas party I am sure…

  5. Or this could be another of those brilliant HR initiatives. To the accompaniment of piped Rick Astley music, the Chevron Musical Chair Programme to Boost Employee Morale and foster Improvement in Team Dynamics.

    It might be a cynical move to force people to leave for fear of death by Rick Astley. Cue drop in labour costs….

  6. rob barrattMEMBER

    Seriously though
    Musical chairs aside,(compares well with Queensland Health’s savage ban on office plants) is there any breakdown available that allows us to compare our labour, transport etc costs with our competitor’s?

  7. Sad to say I believe it because of the word LEIGHTONS.

    Perhaps they can pipe opera music thru the shade huts at the end of rest breaks. Seems to work a treat near Brisbane City Hall on the skateboard crowd – at least those not wearing headphones.

  8. A Lesson on the Construction Industry is needed:
    Lump Sum Contracts: This is when the Company has all its documents complete, knows what it is going to build and goes out to Market to get an all inclusive price from a Contractor (like Leightons) Leightons bid on the work at $X million to be complete by a date. If they win then they are then contractually obligated to complete the Project for $x million and not a cent more by the date. It is then up to this contractor to use the $x million to finish the project. They could have one guy, a bucket and spade for all that the Company would care.
    However if they fail to provide the Company with its project by the date they get hit with huge loss of profit from the Company.
    So its up to them to balance it.

    This situation however only works if the Company has all its drawings/documentation in place. Once the Company starts changing the design of what and where its wants things built the Contractor hits them will all kinds of change cost.

    Imagine trying to build a house when all you have is the floor plans at first and when your ready for the walls I’ll give you those plans, but after you’ve put up some walls I want to change the location of them. Your productivity is actually very good I just keep changing the scope.

    Its this lack of scope on the Companies part that drives up the cost. All the companies know what they want (coal, gas, etc) and they want it first to get the best price but they don’t have the detail on how to get there. They are making it up as the Contractor is building it.

    • rob barrattMEMBER

      Yeah, but asking the company to scope it all out before tendering is something that only happens when there are strictly limited unknowns in the project. I live in the IT world, where companies and especially government go out to tender without any real idea of the scope. In an ideal world they would go time & materials on the scope evaluation and fixed price on the build. Commercial and/or political pressures ensure that this doesn’t usually happen, resulting in a “Lie now, litigate later” approach from companies responding to the tender. Cost blowouts are the norm.

      • Big engineering (Civil, Mechanical, Structural, Electrical) is significantly different from IT (I have an engineering degree and an IT degree and have worked in both industries).

        It is possible for these big companies to know exactly what they want and come up with a detailed scope and specification for a designer to come a long to come up with a detailed design. The problem is, before the mining boom these companies laid off the guys that knew how to scope it and their engineering teams (a lot of engineering used to be in-house at the likes of Chevron, BHP and Rio). They let go of their engineers and left behind the bloated middle-management, all in the name of increasing shareholder returns.

        Hell when BHP Engineering was split off, it turned into Hatch Associates, which is now one of the worlds biggest engineering and construction consultants in the resources industry.

    • This happens all the time – primarily because “Resource Company X” have outsourced (ie. fired) their engineering divisions (to improve shareholder returns) and have no idea how to prepare the scope.

      Then you have EPCM companies (with many of their engineers being former employees of Resource Company X by the way) rogering them royally because of it.