RReessppoonnssiibbllee CCaarree®®

PPrroocceessss SSaaffeettyy –– DDeevveellooppiinngg KKeeyy PPeerrffoorrmmaannccee IInnddiiccaattoorrss

EEddiittiioonn 11

DDeecceemmbbeerr 22000088

GGuuiiddaannccee

The Guidance document is a voluntary document to assist all stakeholders in the management of process safety risks. No guarantee is made as to the completeness of the information contained within this guidance and the application thereof to prevent hazards, accidents, incidents or injury to persons or property. This guidance does not attempt to provide an inclusive list of recommended measures. Further, the guidance is not intended as a substitute for requirements under applicable Federal, State or Local legislation.

PACIA Guidance - Process Safety – Developing Key Performance Indicators

Guidance Document

Process Safety – Developing Key Performance Indicators

Edition 1

December 2008

Contents

Section Title Page

1 Introduction 3 2 Purpose of this Guidance 3 3 How to use this Guidance 3 4 What is a process safety incident? 4 5 A framework for process safety

Figure 1 Process Safety Pyramid

5

6 Process Safety Key Performance Indicators

Table 1 Examples of KPIs for process safety management systems

6

7 Useful reading 8

Appendix 1 Resources for developing process safety performance indicators

US Centre for Chemical Process Safety UK Health and Safety Executive

9

Appendix 2 Lag and lead indicators 13

2

PACIA Guidance - Process Safety – Developing Key Performance Indicators

3

Process Safety – Developing Key Performance Indicators

1. Introduction Process safety ensures the prevention of harm to people and the environment arising from the normal or abnormal operations of the “process”.1

Recent incidents in process safety, most notably the BP Texas City (US) refinery incident in 2005, have served to refocus risk management on the prevention of industrial disasters. PACIA, the Plastics and Chemicals Industries Association, recognises the need for chemical companies to develop a formal performance approach to process safety, and has produced Guidance to raise awareness of process safety, and encourage the development of a process safety measurement program throughout industry. 2. Purpose of this Guidance This Guidance provides a framework for developing performance measures for process safety, in order to improve safety and reduce the risk of a process incident. It is applicable to any major hazard facility (MHF) or business operating in a high risk regime, where hazardous materials2 are used, stored, or manufactured. The guidance is aimed at senior managers and safety professionals who wish to develop performance indicators to provide assurance that process safety risks are adequately controlled. 3. How to use this Guidance This Guidance is a resource to assist you to better understand process safety and help you develop meaningful indicators to manage process safety risks on site. As such, it does not attempt to prescribe performance indicators, as the inherent risks and associated control measures for any process can only be determined on site by experienced company personnel. The Guidance draws on established information resources to assist you undertake the process of developing a performance measurement approach, including: • The American Institute for Chemical Engineers, Centre for Chemical Process Safety • The United Kingdom Health and Safety Executive Further information on these resources and how to use them is detailed in Appendix 1.

1 Process safety and personal safety - personal safety describes how an individual interfaces with plant, materials, or the environment of the workplace and is measured by OHS performance indicators. The common KPI for personal safety is the number of Lost Time Injuries (LTI’s) or the Lost Time Injury Frequency Rate (LTIFR). These are lag indicators and are a measure of where we have failed. 2 For the purposes of this Guidance, the term ‘hazardous materials’ is taken to include hazardous substances and dangerous goods.

PACIA Guidance - Process Safety – Developing Key Performance Indicators

4. What is a process safety incident? In general terms3, a process safety incident is an incident involving hazardous materials and /or the conditions under which these materials are used, stored or manufactured. An incident would typically involve failure of a key control measure and may result in a loss of containment, a release of hazardous energy, or operation outside the safe operating window.

Such an incident may produce:

(a) a major consequence outcome; or

(b) a minor consequence outcome.

Major consequence incidents are rare. Minor consequence incidents are more frequent.

Minor incidents are important because they can provide an indication of a potentially larger, or even catastrophic, event. A large number of minor consequence events should be considered as an indicator of a potentially larger event in the future.

A third event is a Near Miss, which is an event where there was a potential for a major consequence incident to occur. As with minor incidents (above), a large number or increasing trend in Near Miss events should be viewed as an indicator of higher potential for a more significant (major consequence) outcome to occur.

Examples of incidents with a major consequence outcome Flixborough chemical plant, United Kingdom, 1974 Seveso herbicide plant, Italy, 1976 Bhopal pesticide plant, India, 1984 Coode Island chemical storage facility, Melbourne, Victoria 1991 Longford gas plant, Victoria, 1998

Texas City refinery, Texas, United States, 2005 Buncefield oil storage depot, Hertfordshire, United Kingdom, 2005

Examples of incidents with a minor consequence outcome Loss of containment causing a spill; this could be a minor or a major spill but it does not lead to any major consequence outcome.

A minor injury arising from a process safety incident – for example, a skin burn from a minor leak of caustic in a tank, or accidental exposure to a gas during a tank filling operation.

Events with a potential major consequence outcome – ‘Near Misses’ Opening of a rupture disc Opening a pressure safety valve (PSV) to flare or atmospheric release Trip system failure on test Temperature, pressure, or flow excursions outside the safe operating window Excursion of process parameters beyond established critical control points or where emergency shutdown or intervention is indicated Operation outside equipment design limits

4

3 Metrics to calculate a threshold for defining a process safety incident are contained in Process Safety Leading and Lagging Metrics ...You don’t improve what you don’t measure, Centre for Chemical Process Safety, 2007 (see Resources, Appendix 1). This quantitative definition is based on threshold quantities for United Nations Dangerous Goods material hazard classifications.

PACIA Guidance - Process Safety – Developing Key Performance Indicators

5. A framework for process safety A framework for process safety, and the development of key performance indicators, is illustrated in the Process Safety Pyramid in Figure 1

(adapted from the Centre for Chemical Process Safety – CCPS - ‘Safety Metric Pyramid’).

5

Process Safety elements of the Safety Management System:

o Procedures for critical operation and maintenance

o Hazard Identification o Management of

Change o Permit to Work o Plant Integrity o Critical Controls o Risk Reduction

Action Plan o Incident

Investigation o Process Safety

Training o Emergency

Preparedness

Figure 1

Process Safety Pyramid

A major consequence incident o Fire / explosion o Toxic release o Fatality / serious injuries o Significant plant damage

Process Meets CCPS metric threshold for a reportable process safety incident

Safety Incident

A minor consequence incident

Other Incidents

All other loss of containment or fires

An event with the potential for a major consequence incident to occur

Near Miss System failures which could have led to

a Process Safety incident

Unsafe Behaviours or insufficient operating discipline

Measurements to ensure that safety layers are operating and operating discipline are being

maintained

PACIA Guidance - Process Safety – Developing Key Performance Indicators

6

6. Process Safety – Key Performance Indicators

All four levels of the Process Safety Pyramid can yield a range of measures for process safety. It is important, however, to select relevant KPIs that measure the integrity of risk control measures and provide early warning of degrading systems or systemic failures. It is necessary to measure and learn from incidents that have occurred; these are performance outcomes or lag indicators. However, it is also important to develop indicators that can provide an early warning of a possible incident occurring. These are performance drivers or lead indicators. They measure the effectiveness of the controls upon which the risk control system relies and provide assurance that the systems designed to control risks are operating as they are intended to.

The terminology attached to the KPI (ie. lag or lead)4 is secondary to the value of the measure itself – the measure must be meaningful. Learning is provided through a combination of incident data and measuring the effectiveness of the control system.

Performance indicators will change over time as standards change and should be regularly reviewed to ensure they remain relevant. Process safety control measures – KPIs for the safety management system

The safety management system is underpinned by performance indicators that demonstrate its effectiveness. Measures should be considered for the following drivers of process safety performance:

Procedures for critical operation and maintenance Hazard Identification Risk reduction Action Plan Management of change Permit to work Plant integrity Critical controls Incident investigation Process safety training Emergency preparedness

Examples of KPIs for process safety management systems

Some examples of common KPIs for process safety management systems are provided in the following Table. This is not intended to be an exhaustive list. It should be considered as the starting point to consider when developing your own KPIs, appropriate to the on site processes and assessed risks.

As with any system, thorough compliance auditing is essential to confirm the integrity of the particular system and ensure any corrective actions are implemented to schedule.

4 See Appendix 2 for further discussion of lag and lead indicators.

PACIA Guidance - Process Safety – Developing Key Performance Indicators

7

Table 1 Examples of KPIs for process safety management systems

Procedures for critical operation and maintenance % of critical operational and maintenance procedure reviews completed to schedule % compliance with critical procedures Hazard Identification % of risk assessments reviewed to schedule Risk reduction Action Plan % of risk assessment corrective actions completed to schedule Management of Change (MOC) % of MOC documents compliant with procedure % of temporary changes overdue % of MOC physically installed but awaiting completion of documentation Permit To Work % of PTW compliant with procedure Plant Integrity % of inspections or tests completed to schedule Critical controls All critical controls for process safety identified % of controls inspected to schedule % of controls outside tolerance (ie. failure on test or demand) Incident Investigation % of overdue incident investigations No. of repeat incidents occurring % of follow up corrective actions completed to schedule Process safety training Mandatory training completed to schedule eg. fire fighting training, PTW authorities, Hazard Id/Risk Assessment training, etc Emergency preparedness No of emergency exercises/desktop exercises completed to schedule Emergency plan reviewed to schedule

PACIA Guidance - Process Safety – Developing Key Performance Indicators

7. Useful reading The American Institute for Chemical Engineers, Centre for Chemical Process Safety Process Safety Leading and Lagging Metrics ...You don’t improve what you don’t measure, Centre for Chemical Process Safety, 2007 (see Appendix 1 or Click here)

HSE (UK Health and Safety Executive) (2006) Developing process safety indicators: a step-by-step guide for chemical and major hazard industries (see Appendix 1 or Click here)

Baker, J (2007) The Report of the BP U.S. Refineries Independent Safety Review Click here

Hopkins, A (2007) Thinking About Process Safety Indicators, Working Paper 53, National Research Centre for OHS regulation, Australian National University, Canberra Click here

Hopkins, A (2008) Failure to Learn: The BP Texas City Refinery Disaster, CCH Publishing Click here

Trevor A. Kletz – various, including:

o Learning from Accidents o What Went Wrong : Case Studies of Process Plant Disasters o Still Going Wrong :Case Histories of Process Plant Disasters and How They Could

Have Been Avoided o Process Plants : A Handbook for Inherently Safer Design

Available through www.amazon.com

OECD Guiding Principles for Chemical Accident Prevention, Preparedness and Response for Industry, including Management and Labour, Public Authorities, Communities and other stakeholders OECD Guidance on Developing Safety Performance Indicators for Industrya tool to assist industrial enterprises, public authorities, and communities near hazardous installations develop and implement a means to assess the success of their chemical safety activities. This Guidance is NOT prescriptive; rather, it provides suggestions related to the elements that might be included in a voluntary Safety Performance Indicator (SPI) Programme and provides general guidance on the process of establishing and implementing such a Programme.

8

PACIA Guidance - Process Safety – Developing Key Performance Indicators

9

PACIA Guidance - Process Safety – Developing Key Performance Indicators

Appendix 1 Resources for developing process safety performance indicators

Centre for Chemical Process Safety

CCPC Process Safety Beacon

The CCPS Process Safety Beacon is a resource aimed at delivering process safety messages to plant operators and other manufacturing personnel. The monthly one-page Process Safety Beacon covers the breadth of process safety issues. Each issue presents a real-life accident, and describes the lessons learned and practical means to prevent a similar accident in your plant.

Register for the Beacon here Registration is quick and easy. After you register, the Beacon will be sent to you FREE each month via email.

GUIDE - Process Safety - Leading and Lagging Metrics (2008) You don't improve what you don't measure

The lagging metrics are based on incidents that have already occurred. These incidents, says the CCPS document, meet a threshold of severity that should be reported as part of the industry-wide process safety metric. Leading metrics look toward the future. They indicate the performance of work processes, operating discipline or layers of protection designed to prevent incidents. The less robust these preventative processes, the more likely a threshold incident will occur. Both lagging and leading indicators are seen as critical to driving continuous improvement in process safety.

10

PACIA Guidance - Process Safety – Developing Key Performance Indicators CCPS Process Safety Metrics Contents Introduction I. Lagging Metrics 1.0 Process Safety Incident (PSI):

Chemical or Chemical Process Involvement Reporting Thresholds Lost Time Injuries and Fatality Incidents Criteria Location Acute Release

2.0 Process Safety Incident Severity 3.0 Definitions 4.0 Rate Adjusted Metrics 5.0 Industry Process Safety Metrics 6.0 Applicability 7.0 Interpretations and Examples II. Leading Metrics 1.0 Mechanical Integrity 2.0 Action Items Follow-up 3.0 Management of Change 4.0 Process Safety Training and Competency 5.0 Safety Culture

III. Near Miss Reporting and other Lagging Metrics Definition of a Process Safety Near Miss Examples of Process Safety Near Miss Maximizing Value of Near Miss Reporting Guidelines for the Management of Change for Process Safety (April 2008)Guidelines for the Management of Change for Process Safety provides guidance on the implementation of effective and efficient Management of Change (MOC) procedures, which can be applied to improve process safety. Process Safety Incident Evaluation Tool Based on the metrics in the above Guide, CCPA has developed a spreadsheet tool to determine whether any incident (past) meets the CCPS criteria for a process safety incident, and the severity index of the incident.

11

PACIA Guidance - Process Safety – Developing Key Performance Indicators

United Kingdom Health and Safety Executive GUIDE - Developing process safety indicators: a step-by-step guide for

chemical and major hazard industries, 2006

Developing process safety indicators This guide is intended for senior managers and safety professionals within organisations that wish to develop performance indicators to provide assurance that major hazard risks are under control. A small number of carefully chosen indicators can monitor the status of key systems and provide an early warning should controls deteriorate dangerously. Although primarily aimed at major hazard organisations, the generic model for establishing a performance measurement system described in this guide can equally be applied to other enterprises requiring a high level of assurance that systems and procedures continue to operate as intended. It is presumed that companies using this guide already have appropriate safety management systems in place; the emphasis of this guide is therefore to check whether the controls in place are effective and operating as intended. Too many organisations rely heavily on failure data to monitor performance. The consequence of this approach is that improvements or changes are only determined after something has gone wrong. Often the difference between whether a system failure results in a minor or a catastrophic outcome is purely down to chance. Effective management of major hazards requires a proactive approach to risk management, so information to confirm critical systems are operating as intended is essential. Switching the emphasis in favour of leading indicators to confirm that risk controls continue to operate is an important step forward in the management of major hazard risks. The main reason for measuring process safety performance is to provide ongoing assurance that risks are being adequately controlled. Directors and senior managers need to monitor the effectiveness of internal controls against business risks. For major hazard installations and chemical manufacturers, process safety risks will be a significant aspect of business risk, asset integrity and reputation. Many organisations do not have good information to show how well they

12

PACIA Guidance - Process Safety – Developing Key Performance Indicators

are managing major hazard risks. This is because the information gathered tends to be limited to measuring failures, such as incidents or near misses. Discovering weaknesses in control systems by having a major incident is too late and too costly. Early warning of dangerous deterioration within critical systems provides an opportunity to avoid major incidents. Knowing that process risks are effectively controlled has a clear link with business efficiency, as several indicators can be used to show plant availability and optimised operating conditions. The method of setting indicators outlined in this guide requires those involved in managing process safety risks to ask some fundamental questions about their systems, such as: • What can go wrong? • What controls are in place to prevent major incidents? • What does each control deliver in terms of a `safety outcome'? • How do we know they continue to operate as intended? Contents Foreword Part 1: Introduction Structure and content Measuring performance - early warning before catastrophic failure What's different about this guide? Part 2: Six steps to performance measurement Step 1: Establish the organisational arrangements to implement indicators Step 2: Decide on the scope of the indicators Step 3: Identify the risk control systems and decide on the outcomes Step 4: Identify critical elements of each risk control system Step 5: Establish data collection and reporting system Step 6: Review Part 3: Worked example Risk control systems References and further information

Developing process safety indicators

Published: October 2006 HSE 254, ISBN 0717661806

• Available from HSE Books Order here

13

PACIA Guidance - Process Safety – Developing Key Performance Indicators

Appendix 2 Lead and lag indicators

A lead indicator is a proactive measure of the performance of a key work process or system against an internal standard. It aims at finding problems before incidents or near misses occur. It provides assurance that the process is operating within specified performance standards. Lead indicators are considered the "drivers" of lagging indicators. Improved performance in a leading indicator will drive better performance in a lagging indicator.

When measured and monitored effectively, lead indicators provide data to enable effective intervention to address or reverse a negative trend before it results in injury, damage or loss.

A lag indicator is a reactive measure of some aspect of a process that has failed. These failures can have little or no consequences, such as a near miss, or can have large consequences such as a loss of containment or a fire. The common aspect of these events is that a layer of protection of a process safety system has actually failed. This group of events includes activation of relief valves, critical alarms and minor spills as this means that the at least one layer of protection has failed for this to occur. For lagging indicators the level of investigation into the causes of the event will vary. The investigation into a fire could be different to a minor spill. The minor spill is still important to be investigated and recorded. Trends for near misses should be recorded. An example could be several minor spills from one operating area. This may be an indication of a larger systemic failure in a maintenance system, which could in turn lead to a major process safety event. If these minor issues are not recorded and trends considered then an emerging systemic failure pattern may not be recognised. A lead indicator is a performance DRIVER. A lag indicator is an OUTCOME measure.

14