ECONOMIC MODEL. Operating Expenditure

(1)

(2)

ECONOMIC MODEL

Contract

Profit

=

-

OpEx

-

CapEx

-

Accident

Contract

Value Expenditure Operating Expenditure Capital

Accidents are neither priced, nor planned (scheduled) in any agreement nor contract. Losses arising from accidents are thus never accounted for in any organisation.

Accidents Are Not Planned Nor Priced

If an accident is allowed to happen, you cannot control its outcome - from a near miss (with minor consequences) to severe consequences which may interrupt the business permanently.

Cannot Control the Outcome of Road Accidents

Plan and price safety considerations in all contracts to avoid/minimise potential accidents and hence potential unnecessary losses.

Plan to Minimise Uncertainty

(3)

ECONOMIC MODEL

Contract

Profit

=

-

OpEx

-

CapEx

-

Accident

Real Cost of Accidents

Repairs Loss of goods Hospitalisation Fines/Compounds

DIRECT COSTS

Legal expenses Investigation cost Business interruption Increase insurance premium

Loss in reputation (business opportunities) Management time (police, court-house, insurance,

customers, etc)

(4)

ECONOMIC MODEL

Contract

Profit

=

-

OpEx

-

CapEx

-

Accident

Real Cost of Accidents

A construction company (Wimpy’s Ltd., UK) total cost of incidents amounts to 28 % of its annual profits

A study on the “total” cost of incidents in three industries

(over a period of one year) by the the Safety & Health

Executives (UK), revealed the followings :

Accidents cost a hospital (Cambridge County Hospital, UK), an amount which is equivalent to 8 % of its annual operating cost (this is inclusive of compensations).

Operational interruption from incidents at a refinery (Avery Chemical Depot, Cambridgeshire, UK), is equivalent to 5 days plant

shutdown. This is without any major mishaps nor fire.

(5)

LEGAL OBLIGATIONS

Provision of OSHA : Employers Obligations

•

All known and perceived hazard/risk identified ? • Documentation & Procedures comprehensive ? • Controls established and in-place ?

• Supervision and surveillance adequate ? • Equipment safe ?

• Operator trained ?

• Compliance & assurance Audit ?

Responsibility-of-Care & Vicarious Liability

Under the provision of OSHA, even if the obligation of duty is contracted out, the ownership of accountability cannot be delegated. If the haulage contractor and/or sub-contractor fall short of their HSSE obligations under the act, then the contract holder can also be held, jointly and severally (vicariously) liable.

Industrial vs Civil Courts

Civil Court : Innocent until Proven Guilty

Industrial Court : Guilty until Proven Innocent

…. whereby if employees or a members of the public is harmed in the course of any work related activity, the employer has breached and failed its obligations under the Act and is therefore ‘guilty until proven otherwise’. The onus of demonstrating to the courts that employer have discharged his/her obligations under the Act, to the satisfaction of the courts, is now that of the employer.

Bottom Line

(6)

CHANGING PUBLIC PERCEPTION

Until 1950 : PROSPERITY • Economic wealth • Employment • Progress 1950 to 1970 : AWARENESS • Pollution • Smog After 1970 : CONCERN • Acid rain • Global Warming

• Contaminated Water Table • Major HSE Disaster

Chernobyl, Exxon Valdez, 3-mile Island, Bhopal, Piper-A

The Industry may not change, BUT Public’s demand &

expectations continuously shift.

We need to be abreast & sensitive of this ……..

It determines our Future Survival !!

Good HSE Performance Today is Not Sufficient Tomorrow Have to be Better

(7)

PETROCHEMICALS

WHY THE CONCERNS ?

(8)

(9)

ROAD

TRANSPORT

INCIDENT

EMERGENCY

RESPONSE

The Contractor

CRISIS

The Client

Was the vehicle following the

right route ?

Was the vehicle well

maintained ?

Was the vehicle designed to

specification ?

Was the driver trained ?

Whose product is it ?

(10)

(11)

Chernobyl

(Russia)

THE EMERGING WORLD

High

Trust

Assurances

High

Low

Trust Me

Bhopal

_(India)

Longford

(Australia)

Exxon-Valdez

(United States)

Piper-A

(United Kingdom)

Tell Me

Show Me

Prove-to-Me

As Trust Diminishes, it’s Replaced by

Demonstrable Capability and Assurance Mechanism

(12)

GLOBAL TRENDS & ANALYSIS

1800

2000

F

AT

AL

IND

US

TR

IAL

ACCI

D

E

NTS

YEAR

Source of information WHO, United Nations

Equipment

& Machinery

Operators

Organisation

& Structure

(13)

ORGANISATION

The

TYPICAL

Organisation

MAINTENANCE MANAGER PRODUCTION MANAGER SAFETY OFFICER SAFETY SUPRV. MANAGING DIRECTOR HR

MANAGER MANAGER FINANCE OPERATIONS

(14)

ORGANISATION

The

EMERGING

Organisation

PRODUCTION

(15)

ORGANISATION

The

MATURED

Organisation

SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY SAFETY

SAFETY SAFETY SAFETY SAFETY

(16)

THE DUPONT'S LESSON IN SAFETY

DuPont was founded in 1802 by Éleuthère

Irénée du Pont, who migrated to the US

from Paris, to escape the French

Revolution.

He brought in gunpowder technology from

France and perfected it as an effective

weapon for the North American and was

used successfully in the American Civil War.

The company was started at the

Eleutherian Mills, on the Brandywine Creek,

near Wilmington, Delaware.

The company grew quickly, and by the mid-19th

century had become the largest supplier of gunpowder

to the United States military, supplying half the

powder used by the Union Army during the American

Civil War.

(17)