Achieving Safety through risk based Asset Performance Management

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1 The role of independent inspection companies providing industrial safety Subtitle: Achieving Safety through risk based Asset Performance Management to Seminar on Safe Consumer Products & Industrial Installations 1st CEOC International Safety Conference D.J. Schuld Lloyd s Register Energy RBMI manager Operations Europe, Middle- East & Africa

2 The Lloyd s Register Group today Values We are a non-profit distributing organisation; impartial with complete financial, political and technical independence Origins dating back to 1760 Our offer is distinct, transparent and results orientated We have 7,000 dedicated and highly competent employees worldwide, drawn from over 90 nationalities 240 offices > 100 countries recognised un-biased trusted

3 The Lloyd s Register Group today A leading international authority Our mission is to help you achieve high technical standards for enhancing the safety of life and property Our services focus on compliance, safety, integrity and risk management we advise on best practice for the design, management and operation of assets and systems over the life cycle performance life integrity safety matters We support clients in meeting their legislative and corporate responsibilities

4 The markets we serve The principal markets in which the group is active are Energy and Transportation (including Marine) These are markets characterised by high risk capital intensive assets where independent assurance is valued These services can be offered both from an independent perspective as well from a consultancy perspective

5 Discussion focus The world today; our customers The question of today Integrity Asset System / Process Organisational Linkage with Rimap The ingredients for success Questions and Answers performance life integrity safety matters

6 The world today; What is the situation to our customers..? Turbulent times.!

7 NY SP 500 / 5YTD AEX / 5YTD NY- Nasdaq / 5YTD China-Shangai - B/ 5YTD

8 Why are Risks Increasing in the Energy Sector? Aging Infrastructure Loss of Experience Technical standards and procedures are missing or inappropriate Lack of Competency Shifts in Expectations of Employees Lack of Management Control / Accountability This all enhanced by the financial crunch

9 Operating Companies in High Risk Business Sectors Under increasing market pressure OPCO s are obliged to improve business performance while becoming more socially responsible (SAFETY???) These requirements are in conflict at times Failure of a critical asset in a high risk business sectors normally has a significant impact on the safety, health, environment or the reputation and profitability of the business Short term focus on reducing asset management costs will often result in higher risk and long term loss of value to the organization

10 The question of today; are we achieving Safety through risk based Asset Performance Management Or achieving Value through risk based Asset Performance Management

11 Asset Performance overtime Aging Equipment Changes in process Turnover of Skilled Staff Sustained Asset Performance Complacency Performance Natural tendency for performance to deteriorate Asset Performance Improvement Hardware Fixes Risk Based APM Deep Learning cultural changes Asset Performance Improvement system Fixes Time

12 Lloyd s Registers believe: Assets are socio technical systems The Sociotechnical Approach A system comprises assets, processes and people, and the interactions between these three components. The interactions between: People and assets, People and processes & systems, and People and people (plant) Are crucial to the success of the asset.

13 Weak total Integrity management multiplies risk Between 70% and 90% of failures are attributable to human and organisational failure (driven by organisational drift) Human & Organisational failures System Process failures Technical failures

14 Organisational drift - consequences Technical standards and procedures are missing or inappropriate Competence and understanding are insufficient Commitment to technical integrity is lost Safety management processes degrade Inability to detect and recognise symptoms of potential failure.

15 Integrity management Integrity = adherence to moral and ethical principles or firm adherence to a code Asset Integrity System / Process Integrity Organisational Integrity

16 Lloyd s Register focus on APM / Integrity control of risk To start with: Asset integrity System / Process integrity Operational (human) Integrity

17 Organisational Integrity Integrity = adherence to moral and ethical principles or firm adherence to a code Organisational = the simultaneous processes of change undergone by organisations or organisational networks, and by the individuals working in them within the framework of technical cooperation projects Organisational integrity = the ability of a corporation to handle changes and transformations that is held in a firm adherence to mission, vision and basic corporation values

18 The focus on asset integrity -> asset life cycle could be the foundation on which to build Risk based APM Commissioning Operations Management Construction Design Integrity Safety Maintenance & Inspection Plan Development Maintenance & Inspections Management Life-extension extension / Re-use / De-commissioning Performance Spare Parts Management Shut-down & Project Management Compliance Management

19 The focus on asset integrity Commissioning Operations Management Construction Integrity Maintenance & Inspection Plan Development Design Safety Maintenance & Inspections Management Life-extension extension / Re-use / De-commissioning Performance Spare Parts Management Shut-down & Project Management Compliance Management

20 The focus on asset integrity Integrity Safety Performance

21 The focus on asset integrity Policy Strategy Governance Strategic HRM / HSE / QMS Operational Excellence Tactical Risk Based APM Operational Asset Management Best Practices

22 Risk based TECHNOLOGY Delivering the APM risk models RBI / Rimap: As found Risk Distribution Piping and pipelines Risk Distribution Fixed Equipment FPSO E D C B A Control systems and Electrical Equipment Drilling systems Instruments & Valves Process Equipment Mechanical Equipment

23 The ingredients for a safety culture System Process Integrity Organisational Integrity + = Asset integrity Enhanced / risk based Asset Performance

24 The linkage.is Rimap securing safety, integrity and adding value to our customers? RIMAP: Risk-Based Inspection and Maintenance Procedures for European industries Developed according to the European R&D project RIMAP (from 2001 u/t 2005) Validation process in place RIMAP principles published as CEN Workshop Agreement CWA 15740: 2008

25 Scope of RIMAP Essential scope of the RIMAP project GIRD-CT and CWA 15740: To contribute for harmonization of European national regulations regarding to: Improvement of performance with respect to safety, health and environment Risk based Inspection- and maintenance programs for the European industries Improvement of cost efficiency with respect to inspection and maintenance

26 Rimap vs Lloyd s Register perspective on Risk based APM RIMAP LRs view Level General requirements (used methodology etc.) Personnel requirements General requirements on PoF analyses General requirements on CoF analyses RIMAP within an overall management system Compatible with most other risk-based approaches (API 580/581, ASME CRTD), but while principles are largely similar, the results will not be identical Asset Integrity Organisational Integrity Asset / system Integrity Asset / system Integrity Organisational / system Integrity Asset Integrity

27 How important is it to an accredited Independent Inspection body to collaborate with an certified Operating Company? If applicable: Accredited Inspection Body Certified Inspection Department OPCO Inspection methodology / WSE per asset Approved RBI methodology

28 Lloyd s Register Conclusion: Rimap contributes to a safety culture in a controlled manner accredited / certified systems Organisational Integrity + = RBI

29 Examples within Europe A Risk-Based approach, using API 580 Belgium, Italy (restricting on maximum interval) A Time-Based approach, based on time based strategy rules Germany, WSE in UK Factored Remaining Life (adjustment of the correction factor regarding half remaining life ) The Netherlands, France

30 RBI and local legislation within Europe

31 Enhanced Risk based APM Maturity Fragile/Fatigued Reactive Managed Proactive Optimising Improving Risk Based APM SAFETY Culture = Improving Performance

32 Summary PERFORMANCE Accredited Inspection Body Certified Inspection Department OPCO SAFETY Accredited Inspection Body Accredited Inspection Body VALUE

33 Global reach Head office: London Regions: EMEA, Americas, Asia Local company offices A global network of offices covering > 100 countries Client profile Asset owners, manufacturers, operators, fabricators, regulators and legislative authorities, government and engineering procurement construction contractors

34 Broad Capability Asset Performance Management Risk Based Asset Management Software and Development Change Management Consulting Domain (Energy) Expertise Management Systems Knowledge Human Factors Capability Maintenance Management Management Consulting Strategic Communications

35 Lloyd s Register Energy Dirk-Jan Schuld RBMI Manager Operations EMEA T dirkjan.schuld@lr.org Services are provided by members of the Lloyd s Register Group. Registered office: 71 Fenchurch Street, London, EC3M 4BS, UK. Registered No