Contingency planning

In the aftermath of a serious fire, explosion or similar incident, serious disruption to normal operations is to be expected. After the first shock of direct loss has been appreciated, the more insidious and destructive effects, referred to as consequential loss, become apparent. Then the generally more serious and inevitable effect on productivity, employment, customers and profits has to be reckoned with.

After a disaster

Following any disaster, staff may have to be put on short-time, laid off, or possibly transferred to other work. It may be necessary to move them to other locations, maybe some distance from their area, which increases their transport problems.

These changes will more than likely result in the loss of many key workers who will feel unsettled or dissatisfied by the events and may seek more remunerative, or what they consider to be more secure, employment.

Delivery of products to customers will obviously be affected, possibly considerably delayed and it may be necessary to reduce quantity or frequency of deliveries for some time. Difficulty may also be experienced in maintaining quality.

This will be of concern to company management who will look more closely at this possible unexpected threat to their own activities and they may feel justified in seeking alternative sources of supply for the products they require, possibly even permanently.

These effects are occurring with increasing frequency as the relentless rate of fire destruction continues. Each year, more and more factories are involved as the total estimated direct losses increase.

Good management

An inherent part of good business management is for the executives to prepare effective plans so that the organisations they command are able to meet and overcome the various and many challenges that modern business conditions present.

Surely no greater challenge is possible than a major fire or explosion – yet how many executives in industrial organisations have ever discussed such an eventuality or considered the need for contingency planning?

Vital points

Any discussion about contingency or disaster planning should include the following vital points:

• Which area(s) of their operations could be the scene of a serious loss incident?
• What could reasonably be assessed as the fullest extent that such a foreseeable event could involve; what is the estimate of the probability of such an incident?
• How long would the estimated disruption of production be expected to continue? Would partial production be possible?

During discussions about these and related problems, the following questions, amongst others, should be posed and decisions made regarding the required action. The executives and line management should be designated specific responsibilities.

• Who would need to be informed during the incident, or immediately after it? Who initiates the required action, in what order, and by what methods?
• Who would be in overall charge immediately following a disaster? Who would deputise for him and what other staff would have specific pre-determined responsibilities?
• What authority would the delegated members have when making vital decisions such as placing orders for equipment sub-contractors and dealing with enquiries from the press and other bodies?
• Where could alternative production be continued temporarily and at short notice? How long would it take to transfer or acquire the essential plant or equipment?
• What would be the effect on cost and quality during the interim period and how acceptable would this be to customers or insurers?
• What essential services may be required and how could these be obtained at short notice? Would dual supplies be practicable now or could standby contracts be pre-arranged?

Contingency planning should be considered a normal part of industrial management at all levels. If it is done properly, the organisation concerned can expect the right decisions to be made at the right time and “thinking time” after the event will be reduced to an absolute minimum.

Pre-planning

The most serious consequential effects of fire can, and should, be avoided by pre-planning, and where this is seen to have been done, it can boost the image of the company concerned in the eyes of customers and employees.

A questionnaire follows that covers a number of critical areas at which disruption could occur without notice. The questions are designed to guide those concerned through the various points of potential risk and suggest some of the possible avenues of action where pre-discussion could prove to be of considerable value after the event.

It is suggested that such a format could be used as the basis of contingency planning to cover the effects of any disaster, from whatever source of risk it occurs. It can also help to identify potential problems not fully appreciated before and allow preventative action to be taken.

Production or destruction

Effective forward planning may make the difference between production or destruction – between continuation and liquidation. This is the choice facing industrial management today.

Could your organisation meet the challenge a disaster could bring?

Should you initiate the action required now to have these issues considered? Or do you believe that it couldn’t happen to you or your company?

Questionnaire for management

Suppliers’ despatch points

• Is there more than one supplier for each critical item?
• If one, does he supply from more than one source?
• If no, is an alternative supplier available in an emergency?

Transport raw materials

• Are supplies received or despatched by only one means of transport?
• Is more than one company or depot involved?
• If so, can alternative transport be arranged in an emergency?

Receiving stores

• Is all stock headed to one point?
• Is this point exposed to other fire risks?
• Is the quantity of goods normally available sufficient to cover the estimated delay in the event of loss of the main supplier(s)?

Administration and documentation

• Are vital records, drawings and other documentation safe from loss or damage?
• If not, can they be recreated at an acceptable cost?

Processing operation

• Does the process involve a special-purpose plant or tools?
• If so, is alternative capacity available? Alternative tools?
• Has acquisition or the manufacturer or the duplicate plant or tools been considered for critical operations?
• Do operations depend on fuel supply and if so, is alternative fuel available?

Packing operations

• Is correct packing essential to dispatch the finished products?
• Could alternative arrangements be made in the event of the loss of the packing and crating facilities?
• Could these operations be carried out by pre-selected sub-contractors?

Despatch stores

• Are stocks of finished parts sufficient to provide supplies to main customers during the period of estimated downtime?
• Are other parts/stock held at any other location(s) to cover the eventuality of the loss of main warehouse stock?

Customers receiving points

(finished parts & components)

• Do main customers have only one receiving point?
• Are they prepared to hold buffer stock at their own risk? If not, can they receive at alternative points in the event of inability to receive goods by normal channels?

IMPORTANT

Has full consideration been given to implementing effective salvage operations, rehabilitation of buildings, plant and services and provisions of satisfactory temporary employee amenities?

Have specific responsibilities for management control during and immediately after any incident been delegated with full written authority to commission contractors and to purchase essential material after the fire?

Reference:

F Woodhead, Contingency Planning, Fire Protection, Vol. 2 No.3, September 1976.

Published by
Fire Protection Association of Southern Africa
(Incorporated Association not for Gain)
(Reg. No. 73/00022/08)
P O Box 15467
Impala Park
1472

Contingency Planning.pdf

People in Risk