About
Every production practice has its positive or negative consequences. Cost Benefit Analysis (CBA) is a systematic approach of assessing the life-cycle costs and benefits of public or private projects. A proper cost and benefit analysis during the initial phase of the chemical processes is of the utmost importance for its successful realization. However, the methods available for evaluating a chemical plant are mostly based on an economic balance. In reality, every chemical process may involve job opportunity, environmental consequences, and other social effects. It is necessary to establish a framework for considering these costs and benefits so that decisions may be consistent with economical and social objectives.
Apart from realization of risk at the initial phases of a chemical process development, it should be understood that cost-benefit analysis from a process safety perspective also arises during the operation of a facility. To achieve excellence in process safety management is a continuous journey and requires understanding of the decision making process whereby the benefit of implementation of a proper PSM program will outweigh the costs.
Value-at-Risk (VAR)
CCPS identifies the criteria that separate the top performing companies from the rest by studying its member companies. The essential feature is the rigorous adoption of process safety philosophy. The summary of the industry wide study suggests that industry can be benefitted in four ways 1) Corporate Responsibility 2) Business Flexibility 3) Risk Reduction and 4) Sustained Value. Thus, process safety is essential in achieving excellence and increasing the profitability no matter the size of the company.
However, business decisions in the early phase of the projects are solely based on the economic analysis. For example, Cost Benefit Analysis (CBA) is a systematic approach of assessing the lifecycle costs and benefits of public or private projects. In reality, every chemical process may also involve factors such as creating job opportunity, damaging environment due to accidental events and various other technical and social effects. For the benefits of adopting rigorous process safety program, it is necessary to establish a framework for considering these benefits during the early economic analysis so that decisions may be consistent with economical and process safety objectives. However, proper tool to convert the benefits of process safety to equivalent monetary value is non-existent. The purpose of this research has been to conceptualize the value of process safety to evaluate technical and social advantages and disadvantages of a chemical plant.
