Introduction to Process Safety - KL, Dec 3 -7

Exercise 4: Cost Benefits Analysis

1. UK HSE CBA Method

Consider a chemical plant with a process that if it were to explode could lead to:

 20 fatalities
 40 permanently injured
 100 seriously injured
 200 slightly injured
The rate of this explosion happening has been analyzed to be about 1 x 10-5 per year, which is 1 in
100,000 per year. The plant has an estimated lifetime of 25 years.

How much could the company reasonably spend to eliminate (reduce to zero) the risk from the explosion?

 The cash valuations of preventing health and safety effects on people are presented in the table below;
    Values (2003 Q3)[1]

£1,336,800 (times 2 for

FATALITY   cancer)

INJURY    

Permanently Moderate to severe pain for 1-4 weeks. Thereafter some pain gradually
incapacitating reducing but may recur when taking part in some activities. Some
injury permanent restrictions to leisure and possibly some work activities. £207,2000

Slight to moderate pain for 2-7 days. Thereafter some pain/discomfort for
several weeks. Some restrictions to work and/or leisure activities for
several weeks/months. After 3-4 monthsreturn to normal health with no
Serious permanent disability. £20,500

Injury involving minor cuts and bruises with a quick and complete
Slight recovery. £300

ILLNESS    

Permanently
incapacitating
illness Same as for injury. £193,100
 Introduction to Process Safety - KL, Dec 3 -7

Other cases of ill £2,300 + £180 per day

health Over one week absence. No permanent health consequences. of absence

Minor Up to one-week absence. No permanent health consequences. £530

ANSWER:

If the risk of explosion were to be eliminated the benefits can be assessed to be:

Fatalities: 20 x 1,336,800 x 1 x 10-5 x 25 yrs =6684

Permanent
injuries: 40 x 207,200 x 1 x 10-5 x 25 yrs = 2072

Serious injuries: 100 x 20,500 x 1 x 10-5 x 25 yrs = 512

Slight Injuries: 200 x 300 x 1 x 10-5 x 25 yrs = 15

Total benefits         = £9,283

The sum of £9,283 is the estimated benefit of eliminating the major accident explosion at the plant on the
basis of avoidance of casualties. (This method does not include discounting or take account of inflation.)

For a measure to be deemed not reasonably practicable, the cost has to be grossly disproportionate to
the benefits. This is taken into account by the disproportion factor (DF). In this case, the DF will reflect
that the consequences of such explosions are high. A DF of more than 10 is unlikely.

Therefore it might be reasonably practicable to spend up to somewhere in the region of £93,000 (£9300 x
10) to eliminate the risk of an explosion. The duty holder would have to justify use of a smaller DF.

This type of simple analysis can be used to eliminate or include some measures by costing various
alternative methods of eliminating or reducing risks.
 Introduction to Process Safety - KL, Dec 3 -7

2. ICAF
The integrity of the central control building of an onshore gas processing facility is at high risk of
external fires. Two options have been proposed to reduce the risk:
1. Active Fire Protection (AFP)

 1600 man-hours to install at $20/manhour

 Labour costs = $32,000
 Capital cost = $1 million
 Reduce PLL by 2.5 x 10-2/year
 Design life = 25 years
1. Passive Fire Protection (PFP)

 400 man-hours to install at $15 / manhour

 Labour costs = $6,000
 Capital cost = $250,000
 Reduce PLL by 1.75x10-2/year
 Design life = 5 years

What is the ICAF and proportion factor?

Which option should be selected (if any)?
Introduction to Process Safety - KL, Dec 3 -7