Change Management Tools to Mitigate Operational Risk FINAL

Change Management Tools to Mitigate Operational Risk Offshore Power and Rotating Equipment Conference – 18 April 2013

© 2013 Optimized Systems and Solutions Inc. All rights reserved.

About Change…

“It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.” Charles Darwin

2 © 2013 Optimized Systems and Solutions Inc. All rights reserved.

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Agenda •

Disclaimer

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Presenter – Who Is this cat?

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About OSyS

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Definitions

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Risk, Risk Management & Change Management (MOC) Introduction

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Risk Management & MOC Drivers – API-691 – SEMS rule

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Risk Management Automation/Software Tools

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The Payback


Disclaimer •

All opinions expressed herein are those of the speaker and not necessarily of OSyS, Rolls-Royce plc or any living thing.


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Who is this cat? •

Mike Bearrow is a professional engineer, & Accidental Safety Professional, with a BS in Mechanical Engineering from Texas A&M University (class of 1982). Whoop!!!

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I am a Sr. Project Manager and Risk Management SME.

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I have 30 years of experience providing Process Safety Management automation and consulting services.

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Safety and design experience with Boeing Aerospace, McDonnell Douglas, Halliburton, Boeing Helicopters, SAIC, DS&S and OSyS.


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Who We Are & What We Do •

Optimized Systems & Solutions (OSyS) is A Rolls-Royce company – Strong financials & no debt. – 2012 Revenue = $150M, Employees = 400 – Rolls-Royce Annual Revenue = $13 Billion, Employees = 38,000

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Offices in UK, Middle East, Europe, Asia & Texas.

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OSyS Solutions – PEHM – Leading provider of predictive equipment health management (PEHM) solutions to the oil and gas, power generation, aviation, marine and defense markets. We can model high value assets, predict problems and shape the future with that insight. – KMS – Knowledge Management System is a mature suite of continuous improvement software tools designed to help companies automate HSE and Process Safety Management.


Group Locations

Under consideration


Safety Moment


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Definitions •

Risk is Frequency X Probability

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Risk Management is the identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks.

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Risk is usually defined in terms of financial loss as well as safety, health, environment, reputation, opportunity losses.

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A risk ranking matrix is often used identify risk qualitatively.

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Quantitative methods also exist such as Fault Tree Analysis. These are used heavily in the design of Nuclear and Military equipment.


Risk Management is Necessary because… •

Mistakes & mishaps can be expensive

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Loss can be crippling

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The environment can be harmed

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People can get hurt; or worse

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Companies can be ruined.


Risk Management Regulation Precursors •

1988: Piper Alpha – North Sea oil production platform operated by Occidental Petroleum (Caledonia) Ltd. The platform began production in 1976. An explosion and the resulting oil and gas fires destroyed it on 6 July 1988, killing 167 men, with only 61 survivors. Total insured loss was about $3.4 billion. At the time of the disaster, the platform accounted for approximately ten percent of North Sea oil and gas production, and was the worst offshore oil disaster in terms of lives lost and industry impact.[5]

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2010: Deepwater Horizon – Deepwater Horizon was an ultra-deepwater, oil drilling rig owned by Transocean. On 20 April 2010, while drilling at the Macondo Prospect, an explosion on the rig caused by a blowout killed 11 crewmen and ignited a fireball visible from 35 miles away. The resulting fire could not be extinguished and, on 22 April 2010, Deepwater Horizon sank, leaving the well gushing at the seabed and causing the largest offshore oil spill in U.S. history. The resultant oil spill continued until 15 July when it was temporarily closed by a cap. BP have agreed to pay $2.4 billion but faces additional penalties that could range from $5 billion to $20 billion.


Piper Alpha (1988) •

Start of modern formal Risk Management Systems

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Two approaches – Safety Cases – SEMP / SEMS

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But there is considerable overlap and increasing convergence


Response to Piper Alpha


Piper Alpha: UK Impact • 1990: The Cullen Report • Major improvements to UK Safety Cases for Risk Management • Other areas such as Norway, Australia, SE Asia • Not always called “Safety Cases”


United States (Federal OCS) • Equally vigorous response to Piper Alpha – Many more platforms (>6000) – Many are small – Standard design

• API Recommended Practice 75 - Safety and Environmental Management Program (SEMP) was the result


And then came Deepwater Horizon

24 hour coverage by Wolf Blitzer and Anderson Cooper…Yuk!


Consequences of Deepwater Horizon • • • • • • •

11 fatalities Worst spill in U.S history Very bad public perception Loss of confidence within the industry Regulations reinforced (including SEMS) “Moratorium” on drilling Where were you when you heard of this event?


Risk Management is a Law or Highly Suggested •

For refineries and chemical plants – OSHA Process Safety Management and EPA RMP

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DOT – Integrity Management Programs

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Offshore – SEMS; more on that in a minute

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Everywhere in the US and many parts of the world – API is the de facto, REGAGEP.

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Not the Law, but it might as well be – API is constantly improving on and creating new guidance and recommended practices. – API – 691 Risk Based Machinery Management will be out at the end of this year and require MOC as part of the “Operate and Maintain” lifecycle process.


Risk Management Process


About Risk and Change Management… •

Most risk management systems including SEMS, PSM & RMP assume that systems are designed, operated and maintained by competent people…

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Risk is introduced when intended or unintended change occurs. Whether that risk manifests itself into an accident, mishap or poor result is dependent on the quality of change management or MOC.

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MOC exists as a risk management process to ensure that we do not deviate from the design intent of the system/process that is under going change and

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If we do deviate from the design intent, we do it with fore thought, deliberation and care….you might even say with skepticism or the jaundiced eye.


And later this year… API-691 Risk Based Management of Machinery (RBMM) – RBMM is a risk based RP that will cover the life cycle of the API machinery – A mixing of reliability and Risk Management tools are recommended to manage the life cycle of machineries – Management of Change, Corrective Action Tracking plays a key role on assuring the efficient and reliable operation of machineries – The RBMM lifecycle process will aligning to the generic project lifecycle process stating the Minimum industry requirements to deliver Risk Based Machinery Management API machinery to ensure safe, efficient operations for Brown & Greenfields through their lifecycle.


Risk Based Machinery Management Lifecycle Process • Focus on the following phases of the asset’s life cycle: 1. Define;

Identification of high risk items

2. Execute; Operation and maintenance readiness 3. Operate; Operate, Monitor and Improve


RBMM Process - Details


API-691 RBMM Competencies and Tools FMEA

RAM • Reliability, Availability & Maintainability • Reliability Block Diagram • Monte Carlo Simulation • Sys (FEED) & Eq. (D. Eng)

•Failure Mode & Effect Analysis •By Vendor during FEED •By Owner in Detailed Design

• Layer of Protection Analysis • Technical Safety • Based on IEC60511 • Used to define barriers to Failure Modes (Theads)

• Technology Readiness Level • By Vendor • Validated by Owner • Technology Qualification • Risk Factor

Condition Based Monitoring

LOPA

METRICS

• Normality Models used to detect and diagnose incipient failure • Validated by Owner during commissioning

MOC • Management of Change • Component of process safety • Ensure that any change is documented, evaluated and analyzed against hazards

• Key Performance Indicators • Drive process improvement • Used to identify design changes

RCA • Root Cause Analysis • Find causes at the System level (Latent) • Used as a proactive tool to improve process and design


TRL

Back to SEMS for OCS •

Bhopal is to OSHA’s Process Safety Management standard, what Deepwater Horizon is to DOI’s SEMS rule…a precursor or forcing function.

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Most companies could not withstand a Bhopal or Deepwater Horizon event.

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SEMS is focused on reducing the likelihood of the big bang, not slips trips & falls.

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SEMS is comprised of 13 Risk Management elements & is enforced by Bureau of Safety and Environmental Enforcement (BSEE).


The Thirteen Elements of SEMS 1. General Management Program Principles 2. Safety and Environmental Information 3. Hazards Analysis 4. Management of Change 5. Operating Procedures 6. Safe Work Practices 7. Training 8. Quality Assurance/Mechanical Integrity 9. Pre-Startup Review 10. Emergency Response and Control 11. Incident Investigation 12. SEMS Element Audit 13. Documentation and Recordkeeping


Leveraging the Risk Management Requirement •

Many major upstream companies believe they are in virtual compliance with API RP 75; and therefore SEMS. – That is the same conclusion many refiners and chemical manufacturers came to after the PSM standard was promulgated in 1992. Nearly 20 years later, we know that was not true.

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All companies are looking for a cost effective way to comply with this rule.

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The challenge is to use these 13 elements to increase operational efficiency, effectiveness and comply with SEMS requirements at the same time.

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These are not mutually exclusive goals, but being successful requires SEMS automation or information systems.


How do Automation Tools help? •

Data Collection at the source of the risk …on the platform – This is where the risk is and where continuous improvement gets done. This is where they need Decision Support, FROI, PSSR, MOC idea collection…

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Collecting, Analyzing (RCA) & Sharing Lessons – Nearly impossible without software

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Automatic alerts when Incidents & Near Misses occur – Spreading the word quickly to those who can understand and create a plan of action.

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Corrective & Preventive Action tracking to ensure that identified issues are dealt with in a timely manner – Making sure what needs to be done gets done

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Change Management (MOC) – Once you have it right, make sure change is appropriately identified, evaluated, approved and executed.

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There is no one answer exists, but some systems do more than others.

28 © 2011 Optimized Systems and Solutions Inc. All rights reserved. © 2013 Optimized Systems and Solutions Inc. All rights reserved.

Before You Run to The Store Risk Automation Tool Ground Rules •

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Well run, efficient operations are much more likely to have optimal safety, health & environmental performance. Designed to enable optimal operation and then exemplary SEMS performance will result. Designed, configured and implemented principally for the offshore customer; no one else, not corporate, not finance... Roughnecks, roustabouts & engineers live and work where the hazards are and should always be the focus. Said Another Way…SEMS compliance and reporting (KPIs) should be a byproduct of SEMS information systems that are useful to the businesses.


SEMS Automation Ground Rules •

Automation Tools should: – Enable Lessons Learned identification and sharing – Enable continuous improvement by automating corrective action tracking. – Enable measurement (audit) and corrective action tracking

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MOC/PSSR Automation should be used to standardize best practices and help ensure adherence to the “Right Way” to get things done. Software systems should be reduced to the fewest possible to reduce the cost of ownership and decrease complexity for end-users. But, never use a hammer as a screwdriver – Word has tables but it is not Excel – Excel stores data, but it is not Access – SAP, Maximo, EDMS… 30

© 2011 Optimized Systems and Solutions Inc. All rights reserved. © 2013 Optimized Systems and Solutions Inc. All rights reserved.

MOC Tools Have Significant Financial Benefits • •

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Continuous improvement is impossible without change. Change must be managed in an efficient (speed) and effective (quality) way or unintended consequences will occur. Most change is aimed at making more money. This kind of change must be done in an efficient manner or the benefits of the change will be delayed and opportunity costs will rise. In some cases the window of opportunity will vanish. If the change concerns Safety, Health, Environment, Security or other regulatory driver, the effectiveness of the change and the efficiency of that change are paramount so that the window of vulnerability is decreased. Having a world class MOC process, enforced by the MOC Automation tool, will improve a companies odds of success on all of these fronts.


SEMS Automation Tools…No one has it all, but… SEMS Element

Software Type

Brand/Co Name

General Management Program Principles

NA

NA

Safety & Environmental Information

Document Management System

MS SharePoint

Hazards Analysis

Risk Assessment

KMS, PHA Pro, PHA Works, ABS Leader

Management of Change

Built for Purpose MOC

KMS

Operating Procedures


MS SharePoint

Safe Work Practices

Integrated Safe System of Work (ISSOW)

Engica, Petrotechnics,

Training

Learning Management System

ATR, FrontLine, LMS

Quality Assurance /Mechanical Integrity

Computerized Maintenance Management System

Maximo, SAP

Pre-Startup Review

Built for Purpose PSSR

KMS

Emergency Response & Control

Built for Purpose

Numerous

Incident Investigation

Incident Management

KMS

SEMS Element Audit

Audit Management 32

KMS


Multiple Systems

© 2013 Optimized Systems and Solutions Inc. All rights reserved.

Documentation and Recordkeeping

The KMS Suite


The MOC Proposal…One Click To Anywhere


Know Your “As Is” and “To Be” Risk All Change including in-kind


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Resolution Tracker Metrics


Value from Risk Management •

Companies who executed a Risk Management Systems similar to SEMS (PSM) reported significant direct cost benefits of up to: – 5% increases in productivity – 3% reduction in production costs – 5% reduction in maintenance costs – 1% reduction in capital budget – 20% reduction in insurance costs

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Executing a Risk Management strategy with tools fit for the purpose, promises even more efficiency and effectiveness.


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Questions & Answers


Change Management Tools to Mitigate Operational Risk FINAL

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