SH&E Metrics: From Compliance to System Improvement

1. SH&E Metrics: From Compliance to System Improvement Presented by: Holly Elke, CRSP, CSP, CMQ/OE Owner SH&E System Solutions

2. INTRODUCTION The purpose of the SH&E management system is to protect the assets of the company. How do we know if the system is working to achieve this purpose?

3. INTRODUCTION We use performance standards or Metrics to measure the achievements, to identify the deficiencies and to evaluate the effectiveness of the SH&E Management System.

4. INTRODUCTION CATEGORIES OF PERFORMANCE STANDARDS: • Financial – Shareholder perspective and investment in resources • Customer – Customer experience/ perceptions • Business Process – Key processes to meet and/or exceed customer/shareholder requirements. • Learning and Growth – How is change and continuous improvement encouraged

5. The Science of METROLOGY METROLOGY IS THE SCIENCE OF LOGICAL MEASUREMENT, WHICH IS VITAL TO CONTROLLING PROCESSES AND PRODUCTS THAT CAN IMPACT THE SH&E SYSTEM.

6. The Science of METROLOGY DATA COLLECTION IS A CRITICAL PART OF METROLOGY. THERE ARE 3 BASIC TYPES OF DATA THAT CAN BE COLLECTED AND ANALYZED: • ATTRIBUTE DATA • VARIABLE DATA • LOCATIONAL DATA

7. The Science of METROLOGY ATTRIBUTE DATA • Also known as counted data. • Answers questions of “how many” or “ how often”. • For example, how many accidents, how many stop work orders. • Commonly used with Lagging indicators.

8. The Science of METROLOGY VARIABLE DATA • Answers questions like “how long”, “what level or volume” or “ how much time” or “how far”. • Measuring devices are often used to collect this type of data. • This data is higher in quality, more precise and contains more information.

9. The Science of METROLOGY LOCATIONAL DATA • Simply answers the question “where”. • A “measles” chart can be used to plot multiple or repeat locations. • This data can be used to identify factors that are associated with a location. For example, weather conditions with outside environments.

10. The Science of METROLOGY DATA MANAGEMENT • Identify types of data to be collected and media (manual vs. electronic). • Determine how the data can be used to create information. • Determine if the data needs to be “upgraded” to create information. • Identify the customers who will use the information.

11. The Science of METROLOGY DATA MANAGEMENT • Identify methods required to search and access the data after collection or it will be abandoned. • Establish protocols or standards for managing the data: use, maintenance, handling, access, preservation, retention and disposal.

12. The Science of METROLOGY DATA IN THE RAW FORM IS MEANINGLESS AND REQUIRES MANIPULATION. THIS MAY INCLUDE: CALCULATING SORTING CATEGORIZING TESTING SUMMARIZING ANALYZING TO TRANSFORM DATA INTO INFORMATION

13. The Science of METROLOGY

14. The Science of METROLOGY INFORMATION • The result of manipulating data. • Has meaning within the organization • Is based upon the interpretation of the user of the information. • The user may choose to store, share, or ignore the information.

15. The Science of METROLOGY KNOWLEDGE has 2 forms; TACIT and EXPLICIT. • Tacit Knowledge consists of difficult to articulate “know how” or expertise that is part of the individual or organization. This is our “expert” knowledge.

16. The Science of METROLOGY • Explicit knowledge is recorded or codified information that makes up our procedure, standards and other documents. The Knowledge Management effort usually focuses on trying to convert Tacit to Explicit knowledge without losing value or meaning.

17. The Science of METROLOGY WISDOM is developed from the collective database of: • Knowledge and Experience, • Value systems, and • Expert insights of the individual or the organization. Wisdom can provide the capability to use and apply knowledge gained for informed decision making.

18. WHY MEASURE Common metrics focus on traditional loss or accident statistics. These are known as Lagging Indicators. Examples include: Fatalities Loss Time Accidents / Incidents Medical and First Aid cases Return to Work, Frequency and Severity rates, etc.

19. WHY MEASURE Lagging Indicators focus on “after the event” or “end of the pipe” measurements that provide a limited picture of the overall performance of the company. These metrics focus on historical failure.

20. WHY MEASURE Key Performance Indicators (KPI’s) focus on the achievements of the company as well as on the opportunities for improvement. These metrics should measure performance throughout the company PLAN – DO – CHECK - ACT

21. WHY MEASURE PLAN to establish strategic and tactical goals (Financial, Customer). DO establish performance measurement standards to reach these goals (Business Process). CHECK for achievements and opportunities for improvement (KPI’s). ACT upon the analysis or evaluation of the data and information collected (Learning and Growth).

22. WHAT TO MEASURE THE COST OF POOR SAFETY The cost of NOT DOING SAFETY needs to be measured assessed and analyzed. The most common method for measuring “Poor Safety” is the ILCI Iceberg Model. This model focuses on costs associated with losses that have occurred.

23. WHAT TO MEASURE

24. WHAT TO MEASURE THE COST OF SAFETY metrics should include costs for “Doing” and “Not Doing” to determine effectiveness. This costs are categorized by: • Prevention (Doing) • Appraisal (Doing • Failure – Internal (Not Doing) • Failure – External (Not Doing

25. WHAT TO MEASURE PREVENTION COSTS These should include activities that are conducted to prevent poor or sub-standard safety designs, practices or standards. Examples: Planning, Design or Purchasing Reviews, Qualification, Selection & Evaluation, Control Strategies to eliminate, substitute or engineer the hazard.

26. WHAT TO MEASURE APPRAISAL COSTS These should include activities that measure, evaluate or audit products or services required to assure compliance or effectiveness of control strategies. Examples: Inspection & monitoring, equipment calibration, audits, risk assessments, performance reviews, task observations, etc.

27. WHAT TO MEASURE FAILURE COSTS These should be divided into Internal and External costs due to losses that have occurred. The Iceberg model can be used to define these cost activities.

28. WHAT TO MEASURE Internal Costs – Wage, equipment, or product replacement, retraining, downtime, administration. External Costs – Public relations, Corporate reputation, emergency services, fines, lawsuits, uninsured costs.

29. WHAT TO MEASURE

30. WHAT TO MEASURE THE COST OF RESOURCES • People • Time • Money • Equipment/Tools • Facility/Location upgrades • Training

31. WHAT TO MEASURE BUSINESS PROCESSES Benchmark current standards, methods, practices, procedures and corporate requirements with the best practices of the industry or market leaders. Involve other areas of the company in this process to create “buy in”.

32. WHAT TO MEASURE VOICE OF THE CUSTOMER Define who are your customers – employees, contractors, regulators, the public, shareholders, etc. Use independent and structured tools, such as perception surveys, management system audits, 360 feedback, and evaluation processes for contractors .

33. WHEN TO MEASURE PLAN Strategic goals – 1 to 5 yrs Tactical goals – 3 to 12 months. DO Assess Performance standards Quarterly to Annually. CHECK Periodic achievements and opportunities for improvement Daily to Monthly ACT Analyze or evaluate the data and information collected Monthly to Annually.

34. HOW TO MEASURE Follow the principles of METROLOGY: • Establish clear measurement standards; use established reference standards where possible. • Use standardized equipment or terms of reference to collect and verify conformance to established standards or specifications.

35. HOW TO MEASURE • Calibrate measuring equipment or tools to traceable and approved standards. • Perform data integrity evaluations to confirm the quality (bias, usefulness, value, etc.) of the data collected. • Establish rules for interpreting data (trends and system variation).

36. HOW TO MEASURE RULES FOR ANALYSIS • System Variation – Common Causes • 85% of process problems are due to this cause. • Corrective action at the basic or root cause level is needed to eliminate the cause. • Change the system, process, facility/ equipment/ tool design, materials, standards or task requirements to effect permanent change!

37. HOW TO MEASURE RULES FOR ANALYSIS • System Variation – Special Causes • 15% of process problems are special causes. • These causes can affect the process in unpredictable ways and result in unstable outcomes. • Premature reactions to these causes can lead to ineffective changes.

38. HOW TO MEASURE RULES FOR ANALYSIS • System Variation – Special Causes Ex. The use of multiple suppliers for the same service (training) may cause different learning outcomes. A change in training material or presentation will not resolve this situation. • Trend Analysis Use visual aids to chart system variation: Histograms, Pareto & Scatter Diagrams, Control Charts, Check sheets, Measles Charts, Spaghetti maps, etc.

39. HOW TO MEASURE

40. HOW TO MEASURE

41. PRESENTING YOUR METRICS Visualize the outcome of your metrics by asking: • How should we appear to our stakeholders (Financial)? • How should we appear to our customers (Customers)? • What business processes must we excel at (Business Processes)? • How will we sustain our ability to change and improve (Learning & Growth)?

42. PRESENTING YOUR METRICS

43. PRESENTING YOUR METRICS

44. CONCLUSION • Focus on activities & resources that affect profitability but may be hidden. • Encourage participation and timely corrective actions through a regular review process; • Evaluate the consistency of organizational alignment, internally and externally.

45. QUESTIONS ?