What Standard to Apply for IST – Cost Estimates

NOTE: This posting originally ran on 03-05-09. Changes are in [ ]. This is the third in a series of re-postings of articles on Inherently Safer Technology and security at high-risk chemical facilities. The earlier postings in the current series were: Writing IST Legislation IST Reader Comment - Scheduling What Standard to Apply for IST - Limits Gates A typical process introduction [at chemical manufacturing facilities] goes through a number of formal evaluations typically called gates. At each gate there has been more work done on developing the process and the cost estimates get more accurate. The first estimates are based on general ideas of the time, raw materials, and capital equipment required and always include a significant fudge factor that varies with the organization involved (I have heard factors as low as 20% and as high as 50%). As more information about the process is obtained those estimates are refined and the fudge factor is reduced. Even the final budgeted figure is an estimate and includes a contingency factor. The purpose of the gate process is to require periodic re-evaluation of a new process to ensure that an uneconomic project is killed as soon as possible to reduce the amount of money spent on such projects. If the IST process mandated in the new legislation does not take this process into account facilities are going to have to use a larger fudge factor on the evaluation upon which DHS will base its regulatory decision [which will kill even more IST implementations]. Chemical Process Refinement At each stage of chemical process development (I’ve described the process used at companies for which I worked in an earlier blog) new problems and solutions are identified. Process safety and quality issues require the addition of new controls and equipment that were not considered before those issues were identified. EH&S personnel learn more about the health and safety issues involved in the process. Potential chemical reactions with other on-site chemicals [are identified and] may require safety modifications of other on-site processes. I have seen a number of projects killed midway through the development process. We’ve discovered process upsets could lead to the uncontrollable evolution of heat and pressure that would endanger the process equipment; the added equipment to prevent those potential upsets doubled the cost of the project. Other projects could have led to chemical reactions in our waste water streams that would evolve toxic gasses; a complete new water treatment process killed that project. Another project was killed when the supplier of a raw material came in and briefed us on the handling requirements for that chemical; the added safety equipment costs were too high for that project. Escape Clause The earlier in the IST evaluation process that a facility is required to provide DHS with their evaluation data the more likely it is that unsuspected complications will negate those findings as the implementation process proceeds. It is unreasonable to expect that Congress will allow DHS to wait until the IST process is ready to go into full scale operation before they order the facility to implement the project. That would defeat the whole evaluation/implementation requirement. This means that there will have to be provisions for subsequent data submissions on IST evaluations requiring periodic re-evaluations of implementation orders. It might make more sense to require periodic updates of the IST data submission, in effect establishing a DHS gate process. This way DHS could track the progress of the implementation process and the evolution of the cost estimate. Process Research Frequently chemical process introductions are canceled because there is no clear way to proceed while keeping costs within reasonable bounds. In many cases industry is aware of research options that might lead to ways around the restrictions, but just cannot justify the time and money required to proceed with that research. This would seem like an excellent place for the government to step in and assist the development process with grants for process research. In some cases, where multiple facilities from a variety of companies reach the same roadblock, it may be appropriate to form a government and industry research consortium to conduct the necessary research. [These cost estimate issues are another reason that the IST process should be kept separate from the SSP submission process. The earlier in the process development program that DHS requires the assessment to be submitted, the more likely that the IST scheme will be classified as ‘not feasible’ or will be subsequently determined to cost too much. This needs to be carefully addressed in the legislation.]