Management Systems: Where Process, Implementation Come Together

December 2013, Vol. 240 No. 12

Gary White, President and CEO, PI Confluence, Inc.

Management systems are created to detail activities that an organization or its business units must implement to manage safety through the mitigation of business risk. Business risks are specific to each business unit and may include:

• Safety

• Regulatory compliance

• Management system governance

• Communications

• Business unit integration

• Knowledge continuity

• Program sustainability/adaptability

• Implementation consistency

• Documentation management

• Recognition of “weak” signals

The failure to address business risk could be the precursor to a larger, more serious consequence. The development and subsequent execution of a management system is critical to the collection and analysis of performance measures to determine program effectiveness.

Management systems document the objectives, the associated performance requirements, the change management approach and the processes to be managed, scheduled, tracked, documented, communicated and reported. A management system has three key components:

• Policy – The objectives of the management system and the means by which the effectiveness of its implementation in meeting these objectives will be measured.

• Process – A collection of related, structured activities or tasks, which serve a particular goal/objective and can be visualized with a decision-based workflow as a result of the data collected or information generated during implementation.

• Procedure/practice – A detailed “work instruction.”

Processes will manage the overarching objectives while managing quality control of the activities, quality assurance of the data, execution of risk modeling, and the verification of the results. The procedures will detail step-by-step how activities are executed, how quality assurance is managed, how the risk model is to be executed and the steps required to verify the results.

Management systems have traditionally been composed of higher level objectives as opposed to documenting the details of what needs to be done to meet the objectives. An effective management system may be better developed through a reverse engineering approach that begins with the detailing of the objectives to be met, defining the aspects of performance, development of the required processes and referencing or creating procedure. This culminates in the creation of the management system documentation. Development of process is the “core” of the management system.

Management System Objectives

The primary objective of the management system is safety, accomplished through the mitigation of business risk. Areas that the management system needs to address include:

• Information – the review of business unit on a scheduled basis to ensure quality prior to use in decision making.

• Document review – the business unit documentation, including policy, processes and procedures.

• Threat identification – this is based on analysis of the function, including communications, as part of business unit integration.

• Risk evaluation and assessment – the execution of a risk management approach, whereby higher risk areas within the business unit are identified and prioritized for analysis and assessment.

• Quality control – the verification of the implementation of business unit function, documentation and recordkeeping; quality control drives corrective action.

• Performance – measuring the effectiveness of business unit function and activities designed to mitigate high-risk areas

• Quality assurance – the determination that the objectives of the business unit function are being met; quality assurance drives change management.

• Management of change – the requirement to 1) use quality assurance methods in the analysis of performance to recognize when objectives are not being met, 2) initiate improvement, 3) analyze the implications of improvement, 4) secure management approval, 5) document the implementation of these improvements, 6) communicate any changes made to personnel both within the business unit or to other business units as appropriate.

Pursuant to pipeline safety, the requirement for integrity plans have been in place for a number of years with current regulatory requirements, including many of the components of a management system. However, audit results and recent incidents have suggested that operators may have gaps that require improvement in the areas of communications, change management, quality control, quality assurance and recordkeeping.

Considering the fact that both the infrastructure and workforce are aging, the management and documented implementation of these areas will be critical in enabling organizations to effectively measure performance, act upon the resulting analysis to mitigate the business risk and to benefit from program sustainability.

Pipeline safety business units that have responsibility for the full life cycle of an asset design, procurement, operations, maintenance and integrity may benefit from a management system approach. These include, transmission and distribution integrity, control room management and public awareness.

Simply put, the management system objective is “Plan, do, check, act.” Operators have been planning and doing for years. However, they have not demonstrated proficiency at checking and acting. Transitioning the current integrity plans into complete management systems will require additional definition of the processes and the provisioning of a mechanism to manage implementation including scheduling, tracking, documentation management, communications and reporting of the activities required to meet the corporate objective of risk mitigation.

Performance Measurements
API RP 754 was developed for process safety management, in part, to identify “leading and lagging process safety indicators useful for driving performance improvement.” Its methodologies can be applied to oil and gas pipelines to provide a basis for additional performance measurement in managing business risk. Following the Marshall, MI, incident and based on NTSB recommendations, API is developing API RP 1173, which will serve as guidance for the development of Pipeline Safety Management Systems.

Performance must be managed per each business unit/business risk, as well as for any required business unit integration. The following steps outline the requirements for performance management:

• Area – define the areas requiring measurement to demonstrate that objectives have been met

• Measurement – define the measures to be collected

• Define which measures are leading and lagging

• Define the processes to capture/document the measures

• Analysis – formalize the means by which the performance measures will be analyzed

• Define/implement processes to formally analyze the measures

• Leading and lagging

• Establish how the successful implementation (objectives met) will be gauged

• Change management – formalize how improvements will be implemented

Performance metrics can be measured in the following areas, which may be applied to both process safety as well as pipelines (in API 1173):

1) Loss of primary containment (LOPC) with high-consequence ruptures/ spills

2) LOPC with low consequence (leaks),

3) System condition (anomalies, materials, manufacturing)

4) Activities (execution of the management system).

Each of these areas may be considered as both leading and lagging indicators if they are the result of poor performance at a lower level (lagging) or have the potential to affect a higher level (leading).

Performance on Tier 4 requires determining whether the activities are being properly implemented. Tier 4 performances are the primary leading indicator to the mitigation of business risk. To address the performance on Tier 3, the processes to be implemented will revolve around data analysis, driving corrective actions (quality control) or process/procedure improvements (quality assurance). Procedures are generally referenced in the management system while processes are defined to manage the analysis of performance measures on each level and should result in the determination of:

• Whether the activities and processes have been implemented according to the management system, including oversight, approvals and communication

• Whether the results of the management system execution meets expectations

• How the performance compares/trends to historical data

• If the operator’s performance measures are comparable with industry data

Following performance measure analysis, it is incumbent upon the operator to implement actions necessary to achieve planned results and continued improvement of the processes (ASME B31.8S-2004 Section 12.2(a)(6)). These improvements must be documented and the effectiveness of the implementations monitored (ASME B31.8S-2004 Section 12.2(b)(7)).

Process Management
In the development of the management system, one of the most challenging requirements is business process engineering. Among the several program elements of US regulation 49 CFR §192.911 is a “quality assurance process” that meets the requirements of ASME B31.8S – 2004 Section 12, that states quality control is “documented proof that the operator meets all the requirements of their integrity management program (or management system).”

The section addresses basic quality management requirements, which include aspects of both quality control and quality assurance. These components play a critical role in ensuring the management system meets the objectives for which it was developed. Quality components may be imbedded in in the policy and/or procedures. However, the requirements will primarily be managed through processes.

Specifically, quality control and quality assurance processes support continual improvement through the determination of 1) whether or not the processes defined in the management system were executed, 2) whether or not the results meet the objectives of the management system, 3) if not, were management of change principles applied to any improvements.

In accordance with ASME B31.8S-2004s Section 12.2, the following process management activities are required for quality management and should be the foundation of the management system:

1) Identify the processes that will be included in the management system.

2) Determine the sequence and interaction of these processes.

3) Detail the resources and information necessary to support the implementation of these processes.

4) Monitor, measure, and analyze these processes.

5) Determine the criteria and methods needed to ensure that both the operation and control of the processes are effective.

6) Define and implement the mechanism to recognize when the objectives of the management system are not being met and to take actions necessary to improve.

Aspects of each process defined within the management system at a minimum need to include:

Process management – The sequence and interaction of these processes must be defined in the management system. The order in which processes are implemented, the order in which tasks associated with a process and the exceptions in which the results of an activity or process negate the need to continue should be established to ensure that the activities are completed in sequence with the approvals required by the management system. The following diagram illustrates the sequencing of process with decision based workflow.

Responsibility, accountability, authority – Roles and responsibilities, including any required approvals prior to the continuation of any sequencing, must be defined. Accountable and authority roles must have the ability to reject or push back processes that have not been completed per the requirements of the management system (performance measure).

Responsibility role may be assigned internally or externally providing for management of contract work according to the requirements of the management systems’ procedures.

Timelines – Each process must have an expected timeline for completion and appropriate notifications in the event these timelines are exceeded (performance measure). The nature of sequential process management (workflow) includes dependencies that need to be managed relative to the criticality of the process.

Communications – When the results of any process need to be provided to another person or business unit to ensure the continuity in meeting the objectives of the management system, the implementation platform must facilitate and record this transfer.

Those processes that require communication of their results or completion status must be identified and configured accordingly. Additionally, the notifications associated with any workflow must be considered and documented in the management system, associated with the appropriate process (performance measure).

Documentation – The documentation associated with each process is determined as necessary to meet the following requirements: 1) are they required for presentation to other parties in the workflow, 2) do they support any analysis performed, 3) do they support decisions made, 4) will they have historical value to support program sustainability and knowledge continuity.

Decisions – What decisions need to be made and what information (documentation) supports these decisions (performance measure).

Implementing Management Systems
Process management – Although the key challenge in the development of a management system is the application of business process engineering to create, define and configure the processes, the management of process execution is the place where the rubber meets the road.

If the processes in the management system have been properly defined, the documentation requirements will be limited to those records provided through the implementation platform, including the “Who, What, When, Where, and Why.” The implementation records need to support governance with the management system and the documentation of all supporting analysis and decisions made.

Leadership and cultural change – Having components of a management system required by regulation and subject to audit will not ensure a culture change. Leadership can support the creation of the management system through the provision of resources and statements of commitment. However, unless this commitment includes addressing and supporting cultural change, the implementation will not be successful. Leadership must take responsibility and be ultimately accountable for any changes necessary to the culture to allow for the timely implementation and recording of the management system. Management systems without senior management support, a culture that buys into the approach and an implementation platform, will not meet its objectives.

Gary White
is president and CEO of PI Confluence, Inc., which has provided the ICAM Management System Platform under a DOT grant since 2004 He may be reached at