THE E&P FORUM

LOSS COSTING GUIDELINES

Report No. 6.54/246
October 1996
 E&P Forum
Loss Costing Guidelines
Report No. 6.54/246
October 1996

E&P Forum, 25–28 Old Burlington Street, London W1X 1LB

Telephone: 44-(0)171-437 6291 Fax: 44-(0)171-434 3721

This report has been prepared for the E&P Forum by their Safety, Health
Authors
and Personnel Competence Committee through their Loss Cost
Methodology Task Force.

Loss Cost Methodology Task Force

Mr E. Brandie Chevron, Chairman
Mr C. Bowitz OLF
Mr M. Carouso Western Geophysical
Mr M. Covil IAGC
Mr D. Cracknell British Gas
Mr T. J. Dujmovich Conoco
Mr R. Finch Shell
Mr S. R. Gundersen Statoil
Mr J. Kerrigan BP Exploration
Ms K. Somerville Texaco
Mrs I. Thomas E&P Forum, Secretary

The Oil Industry International Exploration & Production Forum (E&P Forum)
The E&P Forum
is an international association of oil companies and petroleum industry
organisations formed in 1974. It was established to represent its mem-
bers’ interests at the International Maritime Organisation and other special-
ist agencies of the United Nations, and to governmental and other interna-
tional bodies concerned with regulating the exploration and production of
oil and gas. While maintaining this activity, the Forum now concerns itself
with all aspects of exploration and production operations, with particular
emphasis on safety of personnel and protection of the environment, and
seeks to establish industry positions with regard to such matters.

At present, the Forum has almost 60 members worldwide, the majority

being oil and gas companies operating in 60 different countries, but with
a number of national oil industry associations/institutes.

The work of the Forum covers:

● monitoring the activities of relevant global and regional international
organisations;
● developing industry positions on issues;
● advancing the positions on issues under consideration, drawing on the
collective expertise of its members; and
● disseminating information on good practice through the development
of industry guidelines, codes of practice, check lists etc.

Whilst every effort has been made to ensure the accuracy of the infor-
Disclaimer
mation contained in this publication, neither E&P Forum nor any of its
members will assume liability for any use made thereof.

Acknowledgments Design and layout: Words and Publications, Oxford

 LOSS COSTING GUIDELINES

CONTENTS

INTRODUCTION 2

BACKGROUND 4

BENEFITS OF AN EFFECTIVE LOSS-COSTING

METHODOLOGY 5

LOSS COST CATEGORIES 7

LOSS COSTING DEFINITIONS 9

LOSS COSTING METHODOLOGY 11

CATEGORISATION, ANALYSIS AND PRIORITISATION 14

Categorisation 14
Analysis And Prioritisation 15

CONCLUSION 16

GLOSSARY OF DEFINITIONS 17

REFERENCES 20

APPENDIX 1 21

APPENDIX 2 22

APPENDIX 3 23

APPENDIX 4 25

APPENDIX 5 28
 LOSS COSTING GUIDELINES

INTRODUCTION
Work-related incidents and illnesses cause considerable suffering and, on
occasion, financial hardship to the worker and his/her immediate family.
While companies implement safeguards that are reasonably practicable, it
is critical to a company’s financial success and the well-being of its
employees and their families that such safeguards are prudently applied.

There are three fundamental approaches to defining strategies for gener-

ating and maintaining management activity in incident prevention: legal,
humanitarian, and economic. An optimum incident prevention strategy for
a particular company would most likely involve a combination of all three,
because they are interrelated and reinforce one another.

The economic argument is founded on the premise that incidents cost

the company money. In order to press the economic case, knowledge is
required of the costs to the company of incidents. Once this knowledge
has been established—and the relevant data have been collected—inci-
dent prevention may be viewed by senior company management to be
good business practice, as it strives to attain optimisation of profit.

The Health, Safety and Environment (HSE) manager is then able to use
the economic argument to demonstrate that incident prevention may be
cost-effective. In addition to saving money, the company is also reducing
pain and suffering by having an effective system of incident prevention.
The economic argument therefore lends support to both the legal—by the
use of economic sanctions—and the humanitarian arguments. The eco-
nomic case centres on knowledge of the cost of incidents occurring
within a company’s sphere of operations. The next step in the process is
to consider how to establish the costs of incidents.

For many E&P companies this development process has involved a transi-
tion from the more traditional reactive approach to HSE work to the adop-
tion of a loss prevention/control strategy. Loss control is anything done to
reduce loss from the risks of business. This is viewed as a response to a
changing situation and need, and the process has certain characteristics
and emphases. Loss prevention focuses on concerns with depth of tech-
nology and associated major hazards; it places a strong emphasis on man-
agement and management controls; it is a systems rather than a trial-and-
error approach; and it is particularly concerned to avoid loss of containment.

Some other features of loss prevention methodology include: the devel-

opment of techniques for the identification of hazards; the principle of risk
criteria, quantification of hazards, and application of risk management
techniques; the application of reliability engineering; the principle of inde-
pendence in critical assessments and inspections; planning for emergen-
cies; and critique of traditional practices or existing codes, standards, or
regulations, where these appear outdated by technological change.

Large scale losses such as those arising from major fires, explosions, or
pollution of the environment, are very visible and some have been costed
on an individual basis, e.g. the Piper Alpha disaster is estimated to have
cost in excess of $3 billion, including $1.2 million in direct insurance pay-
outs, and a 1987 refinery fire in the UK in which one person died, cost
$80 million in property damage, and a further $80 million due to business
interruption. Less well understood however, is the nature and extent of
losses from incidents of a more ‘routine’ nature: incidents which injure

2
 INTRODUCTION

but do not cause fatalities; which damage plant and assets and interrupt
the business processes. Loss costing study results published to date
clearly illustrate the magnitude of financial losses being incurred as a result
of ineffective loss control.

For example, the overall cost to the British economy of all work-related
incidents and worker ill-health is estimated to be between $9 billion and
$18 billion. This is equivalent to between 1 per cent and 2 per cent of
Gross Domestic Product (GDP)(1). The socio-economic costs of the most
common work incidents and illness in Denmark have been calculated at
$3375 million, or 2.5 per cent of Denmark’s GDP. The data for Finland,
Sweden and Norway is similar or slightly higher(2). Pilot studies undertaken
between October 1990 and February 1991 on an offshore production facil-
ity on the UK Continental Shelf identified total incident-related losses
equating to $6 million on an annual basis, or to shutting down the plat-
form’s production for one day a week(3).

Many companies do not have a loss costing methodology process in

place, primarily because they:
● do not know the size of losses they are incurring and the subsequent
negative impact on the bottom line of their business;
● do not believe the information can be obtained relatively easily; or
● mistakenly believe that incident loss costs are small expense items
which are carried as general overheads on the business.

These guidelines have been produced to help companies develop such a

methodology for their operations.

“What gets measured gets done”

Peter Drucker

3
 LOSS COSTING GUIDELINES

BACKGROUND
The health, safety and environmental policies and strategic business
objectives of E&P companies invariably state that they wish to conduct
activities in such a manner as to take foremost account of the health and
safety of employees and other persons who may be affected by such
activities, and to give proper regard to conservation of the environment.

Companies seek to achieve these objectives by means of continuous pro-

cess improvements, by taking measures to control hazards and reduce
risks, and implement the practices to protect the health, safety and envi-
ronment (HSE) of those affected by their operations. This is achieved by
establishing effective HSE policies, processes, programmes, and prac-
tices, and seeking to integrate them in a commercially sound manner
(Refer to E&P Forum Report No 6.36/210, Guidelines for the
Development and Application of Health, Safety and Environmental
Management Systems).

Loss prevention differs somewhat from traditional re-active HSE manage-

ment: the essential difference is the much greater engineering content
and concentration on risk management principles within an integrated
business environment. A key element of any effective loss
prevention/control process is loss costing, i.e. measuring the cost of inef-
fective HSE/loss control management. It is generally recognised that a
company’s performance and profitability can be significantly reduced as a
result of a major incident or loss of production.

It is also clear that an E&P company’s performance and profitability can

be significantly adversely affected by the cumulative impact of ‘routine’
incident related losses. It is important to be able to evaluate the financial
consequences of such events to ensure that proper management con-
trols are in place to minimise such losses and increase the overall effi-
ciency of the business.

Losses occur from incident and work-related ill health, from property and
equipment damage, rework, failure to meet quality standards, and
lost/missed opportunities. Losses are seldom caused by a single factor or
event. They are almost always result in loss in human, process, quality,
environment, property, and always financial terms.

“The first duty of business is to survive and the guiding principle of

business economics is not the maximisation of profit—it is the
minimisation of loss”.
Peter Drucker

The objective of this document is to provide guidance on how to imple-

ment a loss costing methodology which is consistent with Sections 4 and
6 of the E&P Forum Guidelines for the Development and Application of
Health, Safety and Environmental Management Systems.

4
 BENEFITS OF AN EFFECTIVE LOSS-COSTING METHODOLOGY

BENEFITS OF AN EFFECTIVE
LOSS-COSTING METHODOLOGY
As profit margins are reduced in the business world due to intense com-
petition, tight markets, and use of expensive new technologies, the identi-
fication and reduction of losses becomes an ever more essential aspect of
business survival.

To be effective, loss costing needs to be developed as an integral part of

the business strategy. For it to be successful, the following aspects need
to be considered:
● Effective loss control is necessary for a company to be competitive in
business.
● Categories of loss should be established, identified, measured, and
reduction targets set.
● Loss costing should be applied to both primary operations and support
activities, e.g., production/drilling/maintenance logistics/administrative
support.
● Loss costing should have equal status to other core business processes.
● Loss costing should be a line responsibility.

Loss costing can help focus the attention of key members of an organisation
on the real business priorities. It can then influence attitudes and thinking on
how tasks or processes can be changed and improved to reduce future
potential losses and also improve the Health, Safety and Environmental
Management Systems (HSE-MS) within the organisation.

The methodology provides a key start point to enable companies to iden-

tify those areas of their operations where programmes can be imple-
mented to make a positive impact on the organisation, and which can ulti-
mately help ensure continuing survival in an intensely competitive busi-
ness environment.

The loss costing methodology as an inherent loss control process may

also be utilised as an aid to decision-making, particularly in the area of risk
transfer arrangements, and to help influence insurance premium alloca-
tion. From an economic viewpoint, certain forms of employer’s liability pre-
miums paid to insurers should be viewed as controllable costs, and not
merely an irrecoverable overhead. Companies should therefore plan their
risk control strategies and consider methods for obtaining risk/claims
reductions. It is in this area that the risk assessment approach, allied with
loss costing methodology, is a vital factor.

Zero losses may be an unrealistic target, as is a totally risk-free business envi-

ronment, but current losses due to incidents can be significantly reduced
once they are identified, costed, and analysed, with subsequent remedial
measures and preventative programmes and processes implemented.

Some of the prime drivers for adoption of an incident loss costing process
are therefore:
● Incident loss cost control. This process should be considered a integral
component of the business value chain. It can maximise the value
created by the organisation.
● Incident loss costing should also be recognised as a key element of
the loss prevention process.

5
 LOSS COSTING GUIDELINES

● Any organisation which can effectively control the costs of incident-

related losses and waste will improve its competitive position.
● Incident loss cost control is in itself a ‘value driver’ by allowing for
increased HSE performance. It links the work-site activities to
corporate needs, business performance enhancement, and is aligned
with HSE policy objectives. It facilitates improved consistency in the
performance of people and assets, reflected by increased production,
lower operating costs, enhanced reputation, and a more satisfied
workforce.

“Safety is, without doubt, the most crucial investment we can make. And
the question is not what it costs us, but what it saves”.
(Robert E. McKee, Conoco)

6
 LOSS COST CATEGORIES

LOSS COST CATEGORIES

The 1972 Robens Report on Safety and Health at Work suggested that
better knowledge of incident costs could contribute towards more
informed decision making. The report advocated the displaying of incident
costs on the balance sheet, so encouraging management to apply the
same effort and technique to incident reduction as is customarily applied
to other aspects of the business. The premise was that incident preven-
tion would then become a part of the standard economic activity of the
company. Some E&P companies have adopted this approach.

In many instances when an incident does occur, the costs of the incident are
usually absorbed into the running costs of the company, and will not routinely
be itemised on an individual asset/operating unit budget. Neither will many of
the indirect costs be specifically allocated. The direct costs, e.g. insurance
premiums, certain forms of employer’s liability, etc, will generally be adminis-
tered from a parent company fund. Thus, under many accounting systems
currently employed in the E&P industry, incident costs are not charged to
individual budgets, whereas incident preventative measures invariably are.

Under this strategy, the asset/line manager has no real need to determine
the financial costs of incidents. Consequently, the process of demonstrat-
ing positive cost benefit analysis to justify investment in risk reducing/inci-
dent prevention measures is somewhat undermined. The majority of
remedial measures will tend to continue to be implemented on legal or
humanitarian grounds.

On their own, legal and humanitarian arguments for incident prevention

may not be sufficient to bring about a meaningful reduction of incidents
and other losses. The addition of economic accountability—via incident
loss costing—should focus efforts towards the minimisation of the losses
resulting from incidents.

In order to implement an effective loss costing methodology, categories of

loss need to be considered and defined within the process.

Unplanned expenditure resulting from an incident tends to be associated

with the following:

People
● personal injuries, illness or fatalities
● occupational illness

Assets
● physical damage to assets
● loss of production
● opportunity costs

Environment
● environmental damage

Reputation
● loss of reputation

Others
● incident investigation costs, and implementation of recommendations
● legal costs and fines

7
 LOSS COSTING GUIDELINES

When loss cost data is collated and compared with the capital and/or
operational costs or the net profit, it is then seen to be a very significant
cost factor which needs to be managed. Its reduction can make a very
significant contribution to the bottom line. For instance, it can represent
40 per cent of maintenance costs due to abuse, misuse, under use, and
accidental damage to plant and machinery in some organisations.

Additional information and guidance on categorisation of loss costs is pro-

vided at Appendix 3 (examples of loss cost subcategories).

“The chapter of knowledge is a very short one, but the chapter of

incidents is a very long one”
Lord Chesterfield

8
 LOSS COSTING DEFINITIONS

LOSS COSTING DEFINITIONS

Loss cost is when:
● direct expenditure occurs due to an incident, and the expenditure is
covered by an insurance policy;
● indirect expenditure occurs due to an incident or damage to reputation
and the costs are not covered by insurance policies; or
● revenue is lost and/or additional expenditure has to be made due to
production interruption losses, or unavailability of critical
plant/equipment;

A potential loss cost can be:

● that estimated cost which would have been sustained had a ‘near
miss’ been translated into an actual incident. The estimated costs can
be either direct or indirect. (It should be recognised that as a result of a
‘near miss’ report, actual expenditure can be incurred in taking
remedial action to avoid potential future recurrence.).

Using these definitions as the basis for incident loss cost categorisations,
comparisons can be made of the ratios of direct to indirect costs.

Based on recent incident loss costing studies within the E&P industry, this
ratio can be illustrated by an iceberg containing the total costs of incidents,
including those indirect costs hidden below the waterline.

20 per cent Visible direct costs of accidents

80 per cent Invisible direct costs of accidents

Many organisations mistakenly believe they are covered by insurance for

most of the costs arising from incidents. As illustrated, however, study
results to date clearly determine that the indirect costs far exceed the
direct (insured) costs. Recent studies with individual companies have
shown that the actual costs of incidents range up to twenty-seven times
the insured costs.

The UK Department of Employment stressed in 1992 that the annual toll

of some 600 fatal injuries, 30,000 major injuries, and 265,000 lost time
injuries meant that employers were paying £900 million per annum in pre-
miums for insuring against civil claims. The additional (uninsured) costs to
employers to cope with such circumstances is estimated at some £600
million, with the additional cost of loss of production following such inci-
dents estimated to be in the region of £4.5 billion per annum.

9
 LOSS COSTING GUIDELINES

The data currently available on the magnitude of such incident costs in

general terms would appear to be sufficient to get management attention
and to encourage them to implement a strategy designed to control and
reduce them. Company data accrued from the development and applica-
tion of the loss costing methodology should be viewed as a pro-active
measure to address and control incident-related costs within this industry.

Most companies know how much, and what types of insurance cover
they hold. By applying loss costing methodology, the subsequent
improvement of loss prevention and control of performance enhances the
potential for adjustment of insurance premium loading.

Loss cost expenditure can continue to occur many years after an incident
or production loss. Some loss costs are very easy to define and estimate.
Others are very hard to specify. Total accuracy is not essential, but it is
important to gain a general picture of the probable losses being sustained
to assist management to reduce these by subsequent, cost-benefit justi-
fied remedial measures.

Summarised example of the application of loss costing

methodology

The introduction of a deck cargo securing system—

offshore vessels
Following the fatality of a seaman involved in deck cargo working
on an offshore supply vessel, analysis revealed that 20 such
incidents had occurred in the previous 12 years. A special Quality
Improvement Project Team was set up to review the root causes
and advise on remedial action. The team members included the
offshore supply vessel operators. They concentrated on
managing the planning of cargo positioning on a vessel with a
predetermined schedule so that block stowage of cargo could be
achieved which allowed for safe escape routes and access to
safe havens to be used by deck crews when working on the
deck. A special deck planning software programme was set up
which also checked that the juxtaposition of different categories
of cargo did not infringe any stowage regulations. The result was
that cargo stowage has become a safer operation. The cost
benefit has been that due to better scheduling and stowage,
savings equivalent to one year’s offshore supply vessel charter,
and a reduction in the amount of round trip cargo from 6 per cent
to 1 per cent of the deck cargo space. (Round trip cargo is where
an offshore installation has ordered cargo but has not been able
to take it onboard, resulting in the vessel’s return to port without
unloading.) The reduction in round trip cargo represents savings
of 1 supply vessel trip out of every 20.

10
 LOSS COSTING METHODOLOGY

LOSS COSTING METHODOLOGY

Although loss costs are primarily incident driven, the input data can be
derived and subsequently analysed in a pro-active mode (e.g., projecting
consequences and potential costs for ‘near-misses’, ascertaining the costs
of missed business/production opportunities, costing the impact of sub-
optimal performance of process/utility plant or systems, etc.).

The prime objective is to monitor and minimise the impact on business,

and prevent recurrence of such contributory incidents. All the quantifiable
costs (direct and indirect), including missed opportunity costs, should be
considered.

The stand-alone data gathered at this stage of the process is of little value
from a loss control perspective (other than the immediate, bottom-line
financial significance), as no risk analysis will have been applied to gauge
the significance to and effect on the business.

Property damage incidents in particular need to be costed in order to

obtain an indication of their severity. Such an indication will assist in the
ordering of priorities in connection with the planning of control action and
the overall allocation of resources.

The real value in gathering incident cost data derives from analysis of the
contributing incidents and their costs, consideration of a range of remedial
measures, and application of cost benefit analysis as the basis for incident
reduction and risk aversion measures. Using these definitions, compar-
isons can be made of the ratio of insured costs to uninsured costs at indi-
vidual company level. Indirect costs (as previously illustrated on the ice-
berg diagram) are a very important factor in the loss costing equation.

The criteria for deciding whether a particular type of cost should be

included in the standard indirect cost list must be left to individual compa-
nies, but some of the main considerations are that costs should be:
● readily associated with an incident
● tangible and realistic
● acceptable to company management.

The cost categories need to be acceptable to the management who are to

analyse and approve decisions on proposed remedial measures. The cost
benefit analysis segment of the methodology will be based to a great
extent on upfront total incident cost data.

In addition to the three main considerations given above, incident costs

should, ideally, be:
● easy to compute
● available from existing reporting systems, processes and accounts.

However, if a company’s existing processes are such that a wide range of

costs cannot be specifically quantified, then accurate cost estimates
should be made, rather than ignoring possible important costs.

11
 LOSS COSTING GUIDELINES

Summarised example of high cost associated with a

minor personal injury

An Offshore Process Operator hit his hand with a 7lb hammer—the

cost was £2,200. This high figure resulted from the high costs of
obtaining medical treatment and underlines the variations in costs
that can occur depending on circumstances of particular cases.

As stated in the Introduction, companies increasingly utilise the principles

of loss control to minimise losses from a wide range of incidents. In
recent years, this loss control approach has been supplemented by the
introduction of a ‘total quality management’ philosophy. Total quality man-
agement is defined as ‘a way of managing to improve the effectiveness,
flexibility and competitiveness of an organisation as a whole’.

The loss costing methodology outlined in this document relates to the

identification of costs associated with a wide range of incident losses that
would generally be considered to be preventable and that a company
committed to loss control would aim to eliminate.

The overview of the detailed methodology provided within this guidance

should assist companies to cost their own incidents and subsequently
identify targets for improvements.

Development and application of the methodology based on the Incident

Loss Control Model illustrated on page 13 should provide a relatively high
level of accuracy about the costs of incidents.

Smaller organisations, and those with less complex management struc-

tures and processes, may be able to modify the methodology to suit their
own particular needs.

The methodology can also be applied to cost incident losses at represen-

tative sites within an organisation; the resultant data can then be extrapo-
lated to give an estimate of the total costs to the organisation as a whole.

Results from costing surveys can be utilised to identify particular types of

loss, and where and when they are sustained. This data can then be used
to target improved management control.

The Incident Loss Control Model is outlined in Figure 1 and Appendix 1.

The actual loss costing process (see Appendix 1) commences with the
definition of the classification of incidents to be costed. Some specific
loss cost categories are included in the illustrative loss costing process
model outlined overleaf.

It is recommended that data are derived from existing company report-

ing systems, some of which are shown on the process model. It is
important that the various data streams should be funnelled into a cen-
tral data gathering process. Many companies use PC based software
systems for this purpose.

Under the Categorisation and Quantification of costs element of the pro-

cess model, both direct and indirect costs are considered and initially all

12
 LOSS COSTING METHODOLOGY

FIGURE 1: Incident Loss Control Model

People: fatality, injury, illness

Environment: destruction, damage
INCIDENT
Assets: destruction, damage
Production: disruption, loss

DATA COLLECTION
What might have
What happened
Reporting and investigation system happened

CATEGORISATION AND QUANTIFICATION

Direct costs Identify and quantify all actual and possible cost Indirect costs
penalties against each category

ANALYSIS AND PRIORITISATION

Significant Significant
actual costs Identify the categories of unacceptably high actual loss possible costs
or possible loss judged against established criteria

Planned action taken against possible

similar future incidents to eliminate or
CORRECTIVE ACTION
reduce to acceptable levels the resultant
loss. Such correction must be cost-efficient.

MANAGEMENT SYSTEM REVIEW Taking into account any changes introduced

contributory incidents should be ranked utilising a suitable risk matrix.

(Example matrices are shown in Appendices 2 and 5). All incidents should
be analysed, but initial focus and emphasis is put on those incidents at the
‘high potential/high cost’ end of the risk matrix.

Summarised example of application of the incident loss

costing process model

The process established that an offshore operation was subject to

some extremely costly production losses due to spurious
activation of manual fire alarm points. These alarms were linked
into Emergency Shutdown Systems and automatically triggered
wellhead closure on activation. The costs associated with these
shutdowns were very significant. Under the data analysis part of
the process model, risk assessment methodology was applied,
with arrival at the decision to decouple the logic which caused
auto closure of the wellheads. This was demonstrated to be
acceptable under company risk acceptance criteria. The alarms still
of course give audible and visual indication of a potential problem,
but apart from auto start of fire pumps, no other auto shutdowns
of production system are initiated. The work required to change
the logic on the ESD systems was minuscule in comparison to the
sequence of production shutdown losses being sustained,
therefore cost benefit was patently obvious in this particular case.

13
 LOSS COSTING GUIDELINES

CATEGORISATION, ANALYSIS
AND PRIORITISATION
The prime objective of a loss cost analysis is to identify significant loss.
Categorisation
Categorisation of the losses makes it easier to tackle the inherent prob-
lems/failures so that the loss is reduced, if not eliminated by improved
management. Also by using a series of recognisable categories the
effects of cumulative loss can be measured. It may identify an area of
continual loss of apparently little significance on an incident-by-incident
count, but for which the total loss may be significant.

The loss cost analysis is not an accurate financial record but a tool to indi-
cate areas of significant loss. Each incident that has been accepted into
the loss cost analysis (by complying with the selection criteria) needs to
have all loss costs recorded against each subcategory. Direct and indirect
costs need to be identified. The collection of costs may take many
months, and some indirect costs could still be accumulating after one or
more years.

The Incident Loss Recording Matrix (Appendix 3) has been generated to

give guidance on the various subcategories within the main categories
identified at the beginning of this document. The examples of loss cost
subcategories, given in Appendix 4, provide more detail to help identify
these subcategories.

Each company will have decided on the criteria it will use to conduct a
loss cost analysis. Appendices 2 and 5 (‘Risk Matrix’ and ‘Definition of
Consequence—Severity Rating for Risk’) provide further reference and
guidance. This will set limits of loss and perhaps specify these respec-
tively for the main categories of people, environment, assets and reputa-
tion. Each incident should be given a main type label identifying one of
these categories i.e., the incident might be a people incident, because the
effect of the incident is mainly concerned with people.

There will obviously be incidents which have effects across more than
one major category. Companies may wish to introduce a mix of cate-
gories in the incident type, in order to collect all associated loss costs
into the appropriate main categories. Hence even if the incident is
labelled an environment incident, people, asset and reputation loss costs
can be collected.

Companies may wish to include people loss costs which relate only to
their employees, their employees’ dependants and their contractors’ per-
sonnel. The criteria might also be set that only fatalities and major injuries
or industrial illness are analysed. Third-party loss costs are difficult to col-
lect and the company should decide whether these are significant enough
to be included.

Environmental loss cost is a complex category. It is possibly the most sig-

nificant exposure in respect of potential loss. The two major subcate-
gories are likely to be clean-up and compensation loss costs.

Asset loss is primarily associated with the company’s property, plant and
equipment. An incident may also effect third party assets. In the criteria
decided by the company, the condition for including third party assets
should be clearly stated.

14
 CATEGORISATION, ANALYSIS AND PRIORITISATION

Production loss cost is a sub-set of the company’s assets. Production loss

can also be an insidious drain over time. Production loss is not always pos-
sible to recover. Another aspect of production loss is due to failed quality
where the product cannot be used because it is not to specification.

Reputation loss cost is perhaps the most difficult to record. The effects of
lost reputation can result in short term or long term loss, and are difficult
to rectify.

The process starts with individual companies defining the incident classifi-
Analysis and Prioritisation
cations to be costed. Some suggested loss costing categories are outlined
in Appendix 4 to this guideline.

The actual classification of incidents can be fairly general, or very specific

dependent upon the level of process to be adopted by individual compa-
nies. It should be noted, however, that the cumulative costs of fairly ‘rou-
tine’ incidents can be very significant indeed, and an accurate account of
the total magnitude of incident costs will not be obtained by restricting the
loss costing process to major incidents only.

Data collection should be focused on maximising input from existing

company reporting systems. The important point being that relevant data
from different report mechanisms are funnelled into a central incident
loss costing mechanism. A number of companies have developed or
installed commercially available PC based software programmes in order
to facilitate central collection of data and supplementary tools for analy-
sis of the stored data. At this stage of the process, data is analysed by
categorisation and a quantification of the actual costs being incurred. The
incident data are routinely ranked on a risk matrix format, which may
incorporate predetermined financial cost bandings in addition to the tradi-
tional potential severity type rankings. Direct and indirect cost data
should be incorporated.

Summarised examples of application of the incident loss

costing process model

When a control room operator cleared an ‘inhibit’ imposed as part

of a permit-to-work system, without realising that the ‘inhibit’ was
required for a second hot work permit, the cost was £3496. In
consequence, 8 tonnes of fire foam were automatically released,
the platform workers assembled at emergency muster stations,
and the standby vessel steamed closer to the platform.

The introduction of VDRs (Vehicle Data Recorders) into vehicles has

been shown to be able to assist drivers to become more aware of
their behaviour and modify it to enable them to drive their vehicles
more carefully and defensively. Indications are that the fuel
consumption per kilometre can be reduced by 5 per cent to 8 per
cent and lower insurance costs obtained. In one large road transport
fleet the accident rate reduction was more than 13 per cent and the
reduction in damage cost was in the order of 35 per cent. The cost
to install VCRs tends to be recovered within one year.

15
 LOSS COSTING GUIDELINES

Incidents under these categories should then be subject to risk assess-

ment, inclusive of cost benefit analysis, in order to arrive at an acceptable
risk reduction or hazard elimination solution. It is essential that changes
introduced as a result of loss costing should be subject to the same
change control process, as other changes, within the HSE-MS. Approved
changes emanating from the application of the process might well impact
aspects of existing procedures, documentation, practices and other pro-
cesses within the HSE-MS and all must be officially actioned and recorded.

CONCLUSION
The financial costs of industrial incidents are quite staggering, with knock-
on negative impact on both the business and national GDP. At the per-
sonal level, industrial incidents can cause considerable suffering, trauma
and on occasion, severe financial hardship.

Loss costs of the magnitude referenced within these Guidelines demand,

and will undoubtedly receive, management attention to identify why such
costs are not being controlled better, and to implement strategies
designed to control and reduce them.

The first stage in such a strategy is to implement a process designed to

measure the extent of the problem. There is a need for losses to be
costed, and the adoption of a system along the lines proposed within
these Guidelines will achieve this, providing added value to the existing
reporting procedures and mechanisms within a company.

The incident loss costing processes developed from these Guidelines will
supplement existing company Health, Safety and Environmental
Management Systems in terms of monitoring performance, whilst improv-
ing bottom-line financial results, and could ultimately be used in setting
realistic targets and for E&P industry benchmarking purposes.

16
 GLOSSARY OF DEFINITIONS

GLOSSARY OF DEFINITIONS

Agent An agent may be chemical (including all chemical sub-

stances, mixtures and preparations), physical (e.g.
noise, ionising/on-ionising radiation, falling objects, hot
or cold surfaces, sharp objects), biological (e.g. bacte-
ria, viruses, insects) or psychological (e.g. work over-
load/underload).

Agents may have hazardous properties with the poten-

tial to harm health, safety and/or the environment. For
example, the chemical agent gasoline can present a haz-
ard to health by inhalation (causes narcosis at high con-
centrations) and skin contact (defeats the skin leading to
dermatitis), to safety (it is extremely flammable) and to
the environment (it is slightly toxic to aquatic organisms).

Company An organisation engaged, as principal or contractor,

directly or indirectly, in the exploration for and produc-
tion of oil and gas for bodies or establishments with
more than one site, a single site may be defined as a
company.

Direct Costs Those costs resulting from an incident which are cov-
ered by insurance policies by the organisation.

The types of insurance cover a company may expect

to have in effect are:
● Employers liability
● Personal accident cover
● Third-party liability
● Corporate liability
● Property insurance
● Private health insurance

Environment The surroundings and conditions in which a company

operates, or which it may affect, including living sys-
tems (human and other) therein.

The environment is considered to be the whole complex

of living organisms and non living components and their
inter-relationships, both inside and outside the bound-
aries of sites where company activities take place.

Ergonomics Ergonomics is the collective term applied to those

physical and psychological agents affecting the interac-
tion between man and his working environment and
includes:
● body posture and movement (sitting, standing,
lifting, pulling and pushing);
● environmental factors (noise, vibration, lighting,
climate);
● information and operation (information gained
visually or through other senses, controls, relation
between displays and control); and
● tasks and jobs (appropriate tasks, interesting jobs).

17
 LOSS COSTING GUIDELINES

Hazard The potential to cause harm, including ill health or

injury, damage to property, plant, products or the envi-
ronment, production losses or increased liabilities.

Incident An incident is defined as event or chain of events

which has caused or could have caused injury, illness
and or damage (loss) to assets, the environment or
third parties. An incident involves the release or near
release of a hazard.

(The word ‘accident’ is used by some writers and

organisations to denote an incident which has
caused injury, illness and/or damage, but the term
also has connotations of ‘bad luck’ in common
speech, and is therefore avoided by others. In these
guidelines, the term ‘incident’ will be used through-
out—in the above sense, which embraces the con-
cept of ‘accident’).

An incident can happen very quickly, i.e. a vehicle

crash with subsequent fire or it may be of a long term
nature, i.e. a leak from a pipe or tank over several
years before being detected.

Indirect Costs Potentially uninsured costs (product and material

damage, plant and equipment damage, tool and
equipment damage, legal costs, expenditure on
emergency supplies/critical component replace-
ments, site clearing work, production deferrals,
overtime working and temporary labour costs, inci-
dent investigation costs, supervisory time diverted
to remedial actions, administration/clerical effort,
fines, loss of expertise/experience, loss of com-
pany reputation, loss of business, lowering of
employee morale).

Loss cost is a expense which had not been antici-

pated or budgeted at the time of the incident. If the
incident results in a protracted affair over several
years, then all expenditure attributed to the incident
will continue to be loss.

Loss cost expenditure can continue to occur many

years after an incident or production loss. Some loss
costs are very easy to define and estimate. Others
are very hard to specify. Total accuracy is not essen-
tial, but it is more important to gain a general picture
of the probable expenditure occurring, to assist man-
agement to reduce this by subsequent action.

In order to avoid undue administrative activity it is

advised that loss cost analysis per event should be
determined only when the perceived cost is antici-
pated to exceed say Risk Matrix Level 2.

Lost Workday LWC are all non-fatal cases that involve days unfit
Cases (LWC) for work on any day after the day of the occupa-
tional injury.

18
 GLOSSARY OF DEFINITIONS

Lost Workdays The total number of calendar days after the day of the
occupational injury on which the employees involved
in cases were unfit and did not work.

Potential Loss Potential loss cost can be that estimated cost which
Cost would have occurred as a result of a ‘near miss’. The
estimated cost can be either direct or indirect. It must
be recognised that as a result of a ‘near miss’ actual
expenditure can occur in taking remedial action to avoid
future reoccurrence.

Production Production revenue is loss and/or additional expendi-

Revenue ture has to be made due to production losses.

Near Miss A near miss is an incident which did not result in injury
or illness, and/or damage (loss) to assets, the environ-
ment or third party (ies).

Occupational Any work-related disorder, abnormal condition or disor-

Illness der, other than one resulting from a work injury,
caused by or mainly caused by, exposure at work.

Examples of occupational illness: food poisoning, deaf-

ness from non instantaneous exposure to noise, back
disorder from repeated continuous, or other non-
instantaneous event. (See Appendix 3)

19
 LOSS COSTING GUIDELINES

REFERENCES
(1) The costs to the British economy of work accidents and work-related
ill health. HSE. Books, 1995. (ISBN 0 7176 0666 X)

(2) The Costs of Occupational Accidents and Work-related Sickness in the

Nordic Countries. Nordic Council of Ministers Report. Project Director
Per Lunde-Jensen, Danish Labour Inspectorate, 1993. (NORD
1993:556)

(3) The Costs of Accidents at Work. HSE. Health and Safety Series book-
let, HS(G)96. (ISBN 0 11 886374 6)

20
 APPENDIX 1

APPENDIX 1
Loss Costing Process Model

Loss Costing Process Model (company version of Figure 1 on page 13)

Loss cost categories

INCIDENT People: fatality; injury; illness; welfare
Assets: physical damage; loss of production; opportunity costs
Company: reputation; financial returns
Others: investigation and remedial costs; legal costs

Incident reports; near-miss reports; downtime reports;

What happened DATA COLLECTION maintenance records. (Develop existing systems—
don’t reinvent the wheel!)

Direct/indirect costs:
CATEGORISATION AND Application of risk matrix
‘what might have
QUANTIFICATION OF COSTS (see Appendix 2)
happened’

Application of QRA and cost-benefit analysis

DATA ANALYSIS AND to eliminate, or reduce to acceptable levels,
CORRECTIVE ACTION the resultant loss. (The corrective action
must be cost-efficient.)

MANAGEMENT SYSTEM REVIEW Take full account of any changes introduced

21
 LOSS COSTING GUIDELINES

APPENDIX 2
Risk Matrix Example

RISK MATRIX

Increasing Probability

Consequence A B C D E
Incident Incident
Incident occurs happens
Incident Incident has several several
never heard of occured times per time per
heard of in EP in our year in our year at
Rating People Assets Environment Image in world industry company company location

0 No No No No
injury damage effect impact

Improve through procedures

1 Slight Slight Slight Slight
injury damage effect impact Manage for continuous improvement

2 Minor Minor Minor Limited

injury damage effect impact

3 Major Local Localised Considerable

injury damage effect impact

4 Single Major Major Major

fatality damage effect national
Incorporate risk Intolerable
reduction measures
5 Multiple Extensive Massive Major
fatalities damage effect international

22
 APPENDIX 3

APPENDIX 3
Incident Loss Recording Matrix

Incident Identifier Date Location Country Code

Type of Incident Time Currency
Severity Rating Cost Allocation Code

Cost category Direct costs Indirect costs Potential near miss

Total
Short-term Long-term Short-term Long-term Short Long costs

People
Fatality costs
Medical treatment
Medivac
Chronic occupational health
Unproductive payroll
Increased payroll—more overtime/staff
Worker compensation
Recruitment
Training
Loss of morale in workforce
Production loss—breakdown as below
Remedial actions
Investigation
Legal
Insurance
Fines, penalties
TOTALS

Environment
Product loss
Business disruption
Improvement—plant/facilities
Evacuation
Waste management
Media response
Remedial actions, clean up
Personnel—breakdown as above
Studies, assessments—EIAs audits
Investigation
Legal
Insurance

continued …

23
 LOSS COSTING GUIDELINES

Incident loss recording matrix (continued)

Cost category Direct costs Indirect costs Potential near miss

Total
Short-term Long-term Short-term Long-term Short Long costs

Environment (continued)
Fines, penalties
Increased regulation, legislation
Improvement—emergency response
TOTALS

Assets
Asset loss
Equipment loss
Production loss—breakdown as below
Business disruption
Replacement—rebuild
Remedial actions
Personnel—breakdown as above
Environment—breakdown as above
Investigation
Studies, assessments—audits
Legal
Insurance
TOTALS

Production loss
Barrels deferred
Production losses
Lost sales
Personnel—breakdown as above
Remedial action
Legal
Fines, penalties
TOTALS

Reputation
Public relations liaison
Emergency response facilities
Share value loss
Business licences revoked
Increased regulations, legislation
Response to pressure groups
Customer support loss
TOTALS
GRAND TOTALS

24
 APPENDIX 4

APPENDIX 4
Examples of Loss Cost Subcategories

People
● Fatality Costs: Costs associated with returning the victim to home
base. Burial costs. Family compensation. Company death benefits.
(Note: pension payments to next-of-kin should not be included.)
● Medical Treatment: Costs of hospitalisation, surgery, therapy, after-care.
● Medivac: Cost of transporting the injured or sick to a doctor or hospital;
transport may be required to repatriate the victim home.
● Chronic Occupational Health: Treatment costs, reduced output from
victim, pension payments enhanced, compensation.
● Unproductive Payroll: Injured, sick employees who cannot work or are
under-employed, but are paid as though fully employed. Company may
decide on a fixed figure to reduce administrative overhead in
calculating actual costs per incident.
● Increased Payroll: More overtime/staff: additional payroll costs to
employ personnel to replace injured/sick employees, additional
overtime to cover low productivity of injured/sick, or to make up
production shortfall due to incident.
● Worker Compensation: Payments made to victims to compensate
injuries/sickness, resettlement payments if employee is no longer fit to
work.
● Recruitment: Cost incurred to recruit new employees to replace those
involved in the incident. They may be temporary recruits or long-term.
● Training: Costs to train new employees taken on to replace those
involved in the incident—retraining of employees shown necessary by
the incident.
● Loss of Morale in Workforce: Some incidence may cause the
workforce concern and stress, and the overall morale of the workforce
can be reduced; this in turn may effect production or require morale-
boosting initiatives. These costs will be difficult to quantify.
● Production Loss: Breakdown as below.
● Remedial Actions: All those costs necessary to rectify the failures
identified as causing the incident, possible redesign costs of
equipment, commissions studies to overcome identified weaknesses.
● Investigation: The costs incurred investigating the incident, i.e. the
payroll component of personnel taken away from their usual work to
conduct the investigation, their travel expenses and accommodation
costs; and time lost by witnesses being questioned about the incident.
● Legal: Cost of employing legal advice required as a result of the
incident; possible court actions.
● Insurance: Additional premiums as a result of assessed liability due to
the incident.
● Fines, penalties: Any payments resulting from the incident—usually
these costs would be paid to authorities.

Environment
● Product Loss: This is broken down under Production Loss.
● Business Disruption: Those losses caused by the incident, e.g.
additional cost to company of supplying customers from another site;
unproductive equipment and plant.
● Improvements to plant/facilities: Costs to make improvements in
equipment, plant or site deemed necessary as a result of investigating
the incident.

25
 LOSS COSTING GUIDELINES

● Evacuation: Costs incurred in evacuating the incident site—may also

include general public, accommodation of evacuees, transportation
costs.
● Waste Management: The additional/actual costs necessary to improve
the management of waste identified by the incident investigation.
Could also include the cost of removing waste generated by the
incident—but this would more likely be included under Remedial
Action.
● Media Response: The cost of setting up a media response team or
issuing press releases specific to the incident, e.g. hiring of radio or
television studios; paying for newspaper articles.
● Remedial Actions, Clean-up: The costs incurred to undertake all the
recovery actions necessary, e.g. hiring cleanup facilities; redesigning
and modifying equipment, plant and storage.
● Personnel—breakdown as above.
● Studies, Assessments—EIA’s, Audits: Costs of special studies and
assessments necessary as a result of the incident; specialist
assessment of the short-term and long-term impact of the incident.
● Investigation: The costs incurred investigating the incident, i.e. the
payroll component of personnel taken away from their usual work to
conduct the investigation, their travel expenses and accommodation
costs; and time lost by witnesses being questioned about the incident.
● Legal: Cost of employing legal advice required as a result of the
incident; possible court actions.
● Insurance: Additional premiums as a result of assessed liability due to
the incident.
● Fines, Penalties: Any payments resulting from the incident—usually
these costs would be paid to authorities.
● Increased Regulation, Legislation: Because of the incident, regulations
maybe tightened which result in additional costs to the company to
ensure they comply.
● Improvement of Emergency Response: The incident investigation may
identify that emergency response systems need to be improved—the
costs to action such changes should be recorded. However, there
needs to be some judgement made whether such costs are directly
attributable to the incident or whether they are part of normal
management improvements.

Assets
● Asset Loss: The true cost of assets destroyed by the incident.
● Equipment Loss: The cost of equipment damaged or destroyed—
companies may have a standard figure or may use depreciated book
values.
● Production Loss—Breakdown as below.
● Business Disruption: Those losses caused by the incident, e.g.
additional cost to company of supplying customers from another site;
unproductive equipment and plant.
● Replacement/Rebuild: The total cost of purchase and positioning
replacement assets for those destroyed by the incident; rebuild costs
may include redesign, specialist advice. The costs of labour to repairs
on site should be recorded under the appropriate People category. It
may be necessary to charter special transport to get replacements on
site in timely manner. There may be temporary hire costs of
replacement equipment.
● Remedial Actions: The costs incurred by undertaking all the recovery
actions necessary, e.g. hiring cleanup facilities, redesigning/modifying
equipment, plant, storage.
● Personnel: Breakdown as above.

26
 APPENDIX 4

● Environment: Breakdown as above.

● Investigation: The costs incurred investigating the incident, i.e. the
payroll component of personnel taken away from their usual work to
conduct the investigation, their travel expenses and accommodation
costs; and time lost by witnesses being questioned about the incident.
● Studies, Assessments—Audits: Costs of special studies and
assessments necessary as a result of the incident; specialist
assessment of the short-term and long-term impact of the incident.
● Legal: Cost of employing legal advice required as a result of the
incident; possible court actions.
● Insurance: Additional premiums as a result of assessed liability due to
the incident.

Production Loss
● Barrels Deferred: The differential in cost of lost production at date of
incident compared to cost of replacement production at time of supply.
● Production Losses
● Lost Sales: Losses due to clients cancelling orders because the
incident has disrupted supply. Could also be long-term where client
loses faith in company’s ability because of incident.
● Personnel: Breakdown as above.
● Remedial Actions: The costs incurred by undertaking all the recovery
actions necessary, e.g. hiring cleanup facilities, redesigning/modifying
equipment, plant, storage.
● Legal: Cost of employing legal advice required as a result of the
incident; possible court actions.
● Fines, Penalties: Any payments resulting from the incident—usually
these costs would be paid to authorities.

Reputation
● Public Relations Liaison: The costs of setting up a liaison with the
media or clients to rectify or overcome the negative effects to the
company’s reputation as a result of the incident.
● Emergency Response Facilities: Costs of carrying out improvements in
emergency responses directly attributable to company’s reputation.
Note that these may not be considered necessary from the point of
view of mitigating future incidents but may be necessary to allay public
or client fears.
● Share Value Loss: The reduction in market value of the company as a
direct result of the incident.
● Business Licences Revoked: The total cost implications to the
company of having its business suspended or permanently revoked.
● Increased Regulations, Legislation: Because of the incident,
regulations maybe tightened which result in additional costs to the
company to ensure they comply.
● Response to Pressure Groups: As a result of the incident Pressure
Groups might start campaigns to cause adverse public reaction
towards the company. The company may incur cost in combating such
campaigns, e.g. setting up special reaction teams; conducting public
demonstrations; lobbying members of government.
● Customer Support Loss: Loss of reputation can cause customers to
withdraw their support—reduce or stop orders, withdraw privileges—
these will have a cost impact which should be recorded.

27
 LOSS COSTING GUIDELINES

APPENDIX 5
Definition of Consequence—Severity Rating for Risk

Severity People (Fatalities, Injuries, Occupational Health) Assets*, Equipment

Rating Potential Impact Definition Potential Impact Definition

0 No injury/illness No injury or damage to health zero No damage to equipment.

1 Slight injury/illness Not detrimental to individual employability Slight damage No disruption to the
or to the performance of present work. process, minimum cost
Agents which are not hazardous to health. of repair (below $10,000)

2 Minor injury/illness Detrimental to the performance of Minor damage Possible brief disruption
present work, such as curtailment of of the process; isolation
activities or some days’ absence to of equipment for repair
recover fully, maximum 1 week. (estimated cost below
Agents which have limited health effects $100,000)
which are reversible, e.g. irritants, many
food poisoning bacteria.

3 Major injury/illness Leading to permanent partial disablement Local damage Plant partly down;
or unfitness for work, or detrimental to process can (possibly)
performance of work over extended be restarted.
period, e.g. long-term absence. (Estimated cost of
Agents which are capable of irreversible repair below
damage without serious disability, $1,000,000)
e.g. noise, poorly-designed manual
handling tasks.

4 Single fatality/ Also includes the possibility of multiple Major damage Partial loss of plant; plant
permanent total fatalities (maximum 3) in close succession shutdown (for at most 2
disability or due to the incident, e.g. explosion. weeks and/or estimated
unfitness for work Agents which are capable of irreversible repair costs below
(small exposed damage with serious disability or death, e.g. $10,000,000)
population) corrosives, known human carcinogens.

5 Multiple fatalities May include 4 fatalities in close Extensive damage Total loss of the plant;
succession due to the incident, or multiple extensive damage
fatalities (4 or more) each at different (estimated cost of repair
points and/or with different activities. exceeds $10,000,000)
Agents with potential to cause multiple
fatalities, e.g. chemicals with acute toxic
effects (e.g., hydrogen sulphide, carbon
monoxide, known human carcinogens).

* Assets are understood as referring to: the oil and gas reservoirs, production facilities, pipelines, money, capital, and other company, contractor
and third party property.

28
 APPENDIX 6

Definition of consequence—severity rating for risk (continued)

Severity Environment* Reputation

Rating Potential Definition Contamination (litres) Potential Definition
Impact Sensitive Offshore Impact
areas

0 Zero No financial consequences; Zero No public awareness.

effect no environmental risk. impact

1 Slight Negligible financial <10 0–100 Slight Public awareness of the

effect consequences; local impact incident may exist; there is
environmental risk; within the no public concern.
fence and within systems.

2 Minor Contamination; damage <100 100–1000 Limited Some local public concern;
effect sufficiently large to attack impact slight local media and/or
the environment; single local political attention with
exceedence of statutory or potentially negative aspects
prescribed criteria; single for Opco operations.
complaint; no permanent effect
on the environment.

3 Local Limited loss of discharges of 100– 1000– Consider- Regional public concern.
effect known toxicity; repeated 1000 10,000 able Extensive negative attention
exceedence of statutory or impact in local media; slight national
prescribed limit and beyond media and/or local/regional
fence/neighbourhood. political attention with
possibly negative stance of
local government and/or
action groups.

4 Major Severe environmental damage; 1000– 10,000– Major National public concern.
effect the Opco is required to take 10,000 100,000 national Extensive negative attention
extensive measures to restore impact in national media and/or
the contaminated environment to regional/national policies with
ts original state. Extended potentially restrictive
exceedence of statutory or measures and/or impact on
prescribed limit. grant of licences, mobilisation
of action groups.

5 Massive Persistent severe environmental >10,000 >100,000 Major International public attention.
effect damage or severe nuisance inter- Extensive negative attention
extending over a large area. national in international media and
In terms of commercial or impact national/ international policies
recreational use or nature with potentially sever impact
conservancy, a major economic on access to new areas,
loss for the Opco. Constant high grants of licences and/or tax
exceedence of statutory or legislation.
prescribed limit.

* Incidents relating to air, noise, light and soil vibrations should be addressed on the basis of export judgement and, in the case of uncertainty,
local expertise may be called in.

29