In the wake of hurricane Katrina, many critics will cite the failure of the cost-benefit analysis, used to engineer the levies surrounding New Orleans, as the major contributing factor to the disaster. It's easy to play armchair quarterback after an incident has occurred, but this is when we learn the most about the miscalculations and limitations of the algorithms and models used to make cost/benefit estimates.
When the cost-benefit variables are self-evident and explicit, such as determining equipment upgrades in relation to the benefits of increased product quality and output, the process is rather simplistic-even obvious. The challenge arises when the variables are less explicit. For example, how does one put a numerical value on beauty, peace of mind, or a sense of safety and security? We know these things have value; however, the question is how much value?
Recent national disaster examples have sparked awareness regarding the need to improve cost-benefit analysis by assessing the cost of human life and environmental endangerment as a monetary expression of their social value. This social value is often discussed and even deliberated during rule-making processes; yet, it remains difficult to adequately achieve consensus among people having differing value systems.
Rules based on cost-benefit analysis and risk determination not only impact national policy issues, but also are prevalent throughout the industrial sector. For example, a risk-based rule currently impacting industrial heating is NFPA 86, which provides guidance for ovens, dryers and furnace safety. The rule was initially developed to address several furnace explosions responsible for property damage and fatalities. The standard is broad based, but focuses on Class A, B, C and D ovens, dryers and/or furnaces.
Many articles have addressed the standard, and some companies have instituted changes and upgrades. However, industry experts are expressing concerns over the slow progress. The following is a short list of some significant features of the rule that company leaders should consider:
- Enforcement of the new NFPA 86 code occurs in 18 states, focusing on furnace upgrades and changes. It is important to note, that "grandfathering" of systems is no longer permitted. Therefore, any alterations or upgrades of the system require that the new standard be met.
- Many companies are unaware of the fact that their current furnace-control systems are not approved for control of safety devices (safety valves, pressure, switches, high limits). Per NFPA, a dedicated stand-alone safety system is required.
Maintenance and safety checks, along with record retention, are requirements of the standard, including the installation and upkeep of safety devices.
A May 2005 seminar, organized by the Industrial Heating Equipment Association (IHEA), focused on NFPA 86 and provided numerous examples of exploded furnaces, property damage and unfortunate fatalities that have occurred. Industry representatives in attendance showed concern regarding the excessive number of companies that were either misinformed about NFPA 86, or frankly ambivalent to change.
In an interview for this article, Jake Kacsik, president of Conrad Kacsik Instrument Systems Inc. (a service provider with over 30 years experience), said his field service force has seen many examples of flame safety/combustion control system bypassing, from simple inadequate maintenance and calibration processes, to overt disregard for NFPA guidelines, including systems lacking flame safety devices, "jumpered" out safety switches, wood stuck in safety shut off valves, cardboard stuck in flame safety relays, hot-wired solenoid valves, and many other creative "accidents-waiting-to-happen." "We have a responsibility to inform plant management of unsafe conditions and NFPA violations and we cannot service equipment that is not in compliance with the standard," said Kacsik. The cost of compliance is minimal relative to the possible loss of life and associated liability, and upgrading heating systems to the new NFPA standard often dramatically increases efficiency and reduces fuel costs.
So, for those who have been holding back on upgrading systems to the new NFPA 86 standard because the cost-benefit analysis does not show an immediate return, consider the cost-benefit analysis variables you are using. Think about Katrina, in which some experts are claiming a $2.5 billion investment in levee maintenance and upgrades could have saved 10 to 100 times that amount, including many lives. Now, recalculate your cost-benefit analysis considering a broader set of variables that will provide a more accurate representation of the true costs and benefits, and the answer will soon become crystal clear. IH