The ROI of PSMS Leadership: Leadership and Management Commitment

The ROI of PSMS

Element One: The Benefits of Leadership and Management Commitment

INTRODUCTION:

This is the first in a series of articles discussing the value and benefits an organization might expect to receive from implementing each of the ten elements of American Petroleum Institute’s Recommended Practice 1173 (API RP1173) – Pipeline Safety Management Systems (PSMS).

While the title of this series, “The ROI of PSMS,” may be a bit misleading, it does draw attention to the notion that an implementation of PSMS involves certain costs and carries the expectation of certain benefits, both of which will vary from organization to organization. The ROI calculation is made by simply dividing the “quantified” net benefits by the costs of implementation (investment). The resulting ROI percentage can be used for prioritizing competing investment opportunities. For this discussion, the notion of competing investments is not considered. The series intends to identify PSMS-related benefits to inform the decision-making process regarding whether to move forward with PSMS.

Currently, PSMS is not a requirement for pipeline operators. However, most investor-owned local distribution companies (LDCs) and interstate transmission operators have recognized the benefits of PSMS, appreciate the current political and regulatory landscape surrounding the need for PSMS, and have decided to begin their PSMS Journeys.

Private and municipally-owned LDCs, on the other hand, have not pursued implementation of PSMS nearly to the extent that investor-owned LDCs have. This may be due to the possible lack of resources available to small operators to implement a PSMS or because of the lack of understanding of or appreciation for the benefits which could be received from such an implementation. This series of articles focuses on the benefits to be expected from each element of PSMS and is intended to help decision-makers, still on the fence regarding PSMS, to move forward.

It is important to acknowledge that in most cases, investor-owned pipeline operators are significantly larger than their private and municipally-owned counterparts. They tend to have large, diverse workforces, extensive organization structures, occupy a relatively large geographic footprint, oftentimes maintain very complex, interrelated information systems with lots of moving parts, and have significantly more resources available to them to implement PSMS. These are the kinds of operators where PSMSs really shine due to their sheer size, complexity, and the increased “potential/opportunity” for threats to slip through the cracks and allow bad things to happen.

On the other hand, small private and municipally-owned operators generally do not need to design and implement large, sophisticated PSMS programs. Many of these operators already have programs in place that, in my opinion, adequately address risk as well as many (but not all) of the 10 PSMS Elements. In these cases, the “potential/opportunity” for threats to slip through the cracks and allow bad things to happen is not as pronounced, which is why some subscribe to the old saying of “the juice isn’t worth the squeeze!” regarding pursuit of PSMS. My hope is that by the end of this series of articles, I can show why “the juice IS worth the squeeze!”.

LEADERSHIP AND MANAGEMENT COMMITMENT:

One of the, if not “the,” most important elements of PSMS is leadership and management commitment and its impact on the safety culture of an organization. This first article focuses on the PSMS benefits related to leadership and management commitment and ultimately “Safety Culture.”

Leadership and management commitment, the first element in API RP-1173, establishes the “Tone at the Top” and guides the organization regarding pipeline safety. By this, I mean leadership and management must establish and communicate expectations through policies, procedures, and goals and demonstrate genuine commitment to safety by identifying safety responsibilities and holding all personnel accountable for safety performance.

If this is done effectively, the workforce will see leadership “walking the talk,” giving credibility to management and the safety culture they desire. A positive safety culture which supports PSMS starts with leadership. Leadership MUST be intentional about identifying and addressing risk. They must be consistent, diligent, transparent, and follow-through by allocating adequate resources to address risks which are identified. They cannot simply pay lip service to this PSMS element. Management actions must support their words. They must lead their organizations toward development and continuous improvement of a positive safety culture, and in doing so, the benefits will follow!

POSITIVE SAFETY CULTURE ORGANIZATIONAL BEHAVIOR BENEFITS

There are multiple safety culture indicators which can be measured through policy and procedure reviews, as well as audits, perception surveys, and field observations. If effectively addressed by leadership and management, the following workforce and organizational benefits associated with these safety culture indicators can be expected:

Reduced Complacency – Workers will no longer be complacent regarding how they perform their jobs. They no longer perform routine tasks in “autopilot” and are aware, understand, and appreciate the risks associated with the work they complete. They will strive to make improvements and intentionally work to ensure safety.

 Remove Fear of Reprisal – Workers will not feel intimidated or fear reprisal for raising objections or concerns about safety-related situations they observe. They are encouraged to embrace the concept of “see something, say something” and are encouraged to exercise their stop work authority if unsafe conditions arise.

Eliminate Over Confidence – Similar to complacency, workers will recognize the risks associated with the tasks they perform, and even though they feel confident in their ability to complete a task a certain way, they will follow procedures and protocols on tasks they perform because they understand and appreciate the safety aspects of completing a task in a certain way. A positive safety culture will consistently reinforce the importance of awareness regarding changing risks, the importance of following procedures, and provide frequent training on proper equipment usage as well as job task risk and hazard identification.

Counteract Normalization of Deviance – A positive safety culture will prevent normalization of deviance before it becomes an issue to correct. A positive safety culture will foster a team environment where deviating from rules, policies, or procedures would feel like a disappointment and risk to co-workers, therefore discouraging normalization of deviance. As with “Complacency” and “Over Confidence,” workers recognize that just because they may have taken short-cuts in performing a task in the past or have observed others taking short-cuts, it DOES NOT mean it is okay to continue to do so. Workers recognize the risks associated with a covered task and understand why procedures must be followed, and take steps to ensure compliance.

Intolerance of Inadequate Systems and Resources – Employees and management at all levels are intolerant of workarounds due to inadequate systems or resources. With a positive safety culture, the company’s system of checks and balances help to ensure the need for additional safety-related resources is effectively communicated to management, who is responsible for addressing identified deficiencies.

Reduces Production Pressure – Deadlines and imposed pressures to complete tasks on schedule can lead to reduced job safety awareness and incidents or accidents. A positive safety culture will always place safety above the pressure to produce and ensure processes and procedures are in place to ensure risks are being mitigated and job safety is being maintained regardless of deadlines and that safety is never compromised.

 WHY A POSITIVE PIPELINE SAFETY CULTURE IS IMPORTANT

With a positive pipeline safety culture, imagine, if you will, an environment where employees:

·      Diligently and intentionally keep their eye on the ball as it relates to risk and asset (or pipeline) safety, and management makes the necessary resources available to accomplish pipeline safety-related objective.

·      They know “how” to do their jobs, and they follow procedures consistently.

·      They know “why” they perform various steps or tasks on the job, and they understand the importance of each step, especially as it relates to safety.

·      They understand and embrace their safety responsibilities and know “what” they must do to ensure safety.

·      They know they can speak up if they see a safety concern without fear of retribution, and they know management will address that concern.

·      And lastly, they intentionally seek to identify and reduce risk thereby ensuring pipeline safety.

 Such a positive pipeline safety culture is attainable and is critical to moving the industry toward the goal of zero incidents.

 ECONOMIC BENEFITS OF PSMS

The following is a short list of examples of benefits that could be expected from effective leadership and management efforts to develop and continuously improve its pipeline safety culture:

Better Employee Morale

             Improved attendance

             Pride in work product which leads to improved quality

             Improved employee retention             

Improved Risk Identification and Avoidance

Continuous Improvements

                            Fewer incidents

                            Fewer fines and penalties due to non-compliance

                            Improved quality

                            Enhanced efficiencies

Avoided Costs

             Injuries

             Incidents

             Waste and inefficiencies

             Higher insurance costs

Intangible Benefits

Improved reputation with:

Customers

Investors

Employees

Regulators

YOU CAN’T MANAGE WHAT YOU DON’T MEASURE

The following is a quote from the introduction to API RP-1173:

“…although a positive safety culture can exist without a formal PSMS, an effective PSMS cannot exist without a positive safety culture. Therefore, Operators should actively work to assess and improve their safety cultures.”

To ensure the benefits discussed in this article are achieved, it is paramount that organizations, including both operators and contractors, evaluate and assess the health and maturity of their pipeline safety cultures on an ongoing basis. An effective assessment of a pipeline safety culture must consider the impact each of the ten elements of API RP-1173 has on this culture. An assessment such as this will identify gaps and opportunities for improvement. With corrective actions taken to address these gaps, subsequent assessments will help gauge the effectiveness of the actions taken and provide additional insights into the Plan, Do, Check, Act cycle.

FUTURE ARTICLES

Be sure to stay tuned for future articles regarding the ROI of PSMS. Each element of PSMS will be examined and will hopefully help convince those on the fence that the PSMS juice is worth the squeeze.

If you would like to learn more about Pipeline Safety Culture Assessments or see how Energy Worldnet can help you, do not hesitate to contact me at 317-523-7437.

Steve Allen
Executive Director, Pipeline Safety
Energy Worldnet