(55bz) A Simplified Method for the Economical Evaluation of Safety-Related Modifications for a Running Facility

Most of the time the money spent in safety is considered a cost (money used, no return); but really it is an investment (money used with return). The benefit of the investment is, amongst others, is the longer run-length of the facility, reputation, assuring people’s safety, etc. These may be obvious, but when multiple options to invest money are on the table, those options with no strong economic foundation are likely to be rejected (unless is mandatory by regulation, law, etc.).

Many authors (J.P. Gupta et al (2003); Kahn et al (2005); Abrahamsen et. Al (2020); Tikadar et all (2021)) have written about the use of process safety input for the project’s definition or justification, mainly focussing on justifying an inherent safe approach in the design and construction of new facilities, and the selection of the best technology including the safety risk in their evaluations. However, when the facility is old, already running, and the PHA (HAZOP, LOPA) reveals some deficiencies, the implementation of proposed safeguards may become an economic challenge, especially in small facilities where the implementation of a safety-related modification is not viewed as economically beneficial.

When the safety related modification is given to a manager, which usually do not participate in the HAZOP/LOPA study “the decision-making relies on cost of the change, manager experience & knowledge, and intuition” [Abrahamsen et. Al. (2020)] rather than the potential risk-reduction benefits of the proposed project (economical evaluation).

Another approach to factor the money spent in safety is the use of the ALARP concept (As Low As Reasonably Practicable) which means that risk-reduction measures are desirable, but may not be implemented if their cost is disproportionate to their benefit. HSE UK (2006) defined a parameter called ICAF (Implied Cost of Averting a Fatality) which represents the impact of the safety measures' cost related to asset/production/fatality associated cost; this is an index and depending of the ICAF value the measure may or may not be implemented.

In this paper, a more direct and simplified method is proposed for the economic justification of safety projects when the residual risk after PHA/LOPA evaluation is ALARP or unacceptable. The proposed method relies on input from LOPA and can be used to justify any additional measure for any of the risk categories (i.e., people, environment, assets, production, etc.), and also can be used to justify additional investments to improve safeguards’ reliability. The method calculates the Risk’s economic impact as a factor of the Potential Loss’ financial value (PL, based on Risk Matrix & company guidelines); exposure factor (if applicable), the probability of failure on-demand of the existing safeguards and the modifiers/enabling factors. This economic risk calculation is then compared with the installation cost of the proposed modification: If the implementation cost is less than 10% of the economic risk evaluation, then the proposed modification can be evenly ranked with other modifications based on productivity and reliability. With this information, management decision is based on the economic evaluation of all options, including safety. Several examples are given on how to use the method for safety-related economic evaluations.