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Almost all compliance initiatives depend on management systems to ensure obligations are met. This applies to safety, quality, environmental and regulatory objectives. When it comes to improving the effectiveness of these systems you need to start at the program level. This is where outcomes are evaluated that in turn drives changes at the system level. #ComplianceInsights #ComplianceImprovement #ComplianceEffectiveness

Meeting compliance is critical to those that work in highly regulated industries and specifically to those that are responsible for safety. Today, compliance demands come from many sources and include both mandatory along with voluntary commitments to industry standards, guidelines, and stakeholders. The intention of all compliance programs is to implement how these commitments will be met so that the desired outcomes are achieved. This requires that outcomes are documented, measured and periodically evaluated. Unfortunately, for many companies, their compliance systems are not able to carry the weight of their current obligations, let alone handle increased demand. Here are five reasons why compliance is falling behind. 1. Unsustainable Programs Management programs often do not have clear charters that document compliance commitments, outcomes and the level of obligation.They often are still based on paper paradigms and do not exploit best practices or current technologies. It is common to find that compliance programs do not include adequate support for: Change management Risk management Continuous improvement Compliance assurance Process support Without these capabilities it is not possible to sustain compliance let alone improve. 2. Reduced Workforce The workforce is getting smaller, younger and has less experience knowing how to meet compliance and therefore rely on programs, systems and processes to fill in the gaps. Given the state of compliance programs, workers will often lean on their own ideas of what should be done. This leaves companies vulnerable to unnecessary compliance risk. 3. Increasing Compliance Demand The face of compliance is changing. Regulators are moving away from prescription to performance based specifications. In addition, compliance often now requires additional capabilities to support: risk based methods, evidence based processes, along with advancing program maturity through a model of continuous improvement. These changes affect how a company approaches compliance. At a minimum, this moves the focus from complying to regulatory elements to achieve compliance outcomes driven by risk based commitments. Some standards organizations are softening the impact by publishing umbrella guidelines or making compliance voluntary. However, there should be no mistake, there is a sea change and compliance is changing and for many it already has. 4. Poor Processes Current processes that deliver program objectives tend to be based on activity and not on outcomes. As a result, associated procedures can become overly prescriptive and simplistic in their approach in an attempt to keep things simple. This is a false economy that leads to a one size fits all approach resulting in too much effort for some cases and not enough for others. Processes based on this approach will contain excessive waste as people spend time: entering data that is not needed, waiting for unnecessary work to be done, creating reports that no one reads, and not having the information that is needed to achieve compliance outcomes. 5. Sporadic Improvement Compliance programs do not change very often and only do so when there are findings arising from audits that are conducted yearly or less often than that. In addition, there is often no process in place to improve compliance capabilities in between audit cycles. The pace by which programs improve is far too slow to keep up to current obligations let alone adopt new ones. One year is far too long to wait to find out you are out of of compliance and for improvements to occur. #ComplianceTheats #ManagementProcesses #Risk #OperationalExcellence

In a previous blog, I outlined 5 threats to compliance. In this blog, I will look at how to address them. At first glance, it may seem appropriate to conduct more audits to identify compliance gaps and then make the necessary changes. This is in fact the most common approach across many industries. While the audit-fix cycle can achieve results, it is a brute force approach to improvement. The output from audits tend to create action items and sometimes quite a few. Death by a thousand action items is how many managers feel about this approach. This problem is similar to what happens when instead of fixing potholes the road should be expanded to handle more traffic. In the current business climate of "doing more with less" not only is no one looking for this, the prospects of doing anything other than fixing potholes seems remote. So many go back to fixing potholes only to repeat the process after the next audit. However, this audit-fix cycle while insufficient to address compliance gaps, also leaves companies vulnerable and not able to make required transformations from prescriptive-based compliance evidenced by audits to performance-based compliance evidenced by achieving outcomes. The latter is required more and more from standards and regulatory bodies. 5 Compliance Multipliers To achieve this transformation it is necessary to take existing effort and do more with it. This means that you need some sort of force multiplier to provide, instead of a mechanical advantage, a compliance advantage. The following approach anticipates the impacts arising from the sea-change in compliance along with consideration of the current business climate specifically: the reduction in workforce, loss of compliance knowledge, and years focused on prescriptive compliance. Each multipler takes compliance effort and increases its affect similar to what a lever does when creating a mechanical advantage: 1. Managed Obligations Identify and clarify compliance obligations Identify what is Critical to Compliance (CTC) Identify how progress will be measured Align with strategy, mission, and goals 2. Increased Capabilities Make room for compliance improvement to occur Eliminate Non-Value Added (NVA) activities Free up resources to work on improvements Exploit existing technologies 3. Embedded Compliance Embed Critical to Compliance (CTC) Actions Embed evidentiary actions and documentation Introduce normative standards and best practices 4. Leveraged Rules Break old rules and eliminate work-arounds based on old habits Leverage new rules to maximize compliance outcomes 5. Continuous Improvement Monitor measures of compliance, performance, and effectiveness Establish incremental and continuous improvement process Companies will benefit from using these compliance multipliers to amplify their existing effort so that they can better meet and sustain compliance. #ComplianceImprovementSteps #ComplianceMultipliers #Proactivecompliance

If opportunity doesn’t knock, build a door – Milton Berle There is ample evidence that employees do not just wait for life to happen to them. Rather, they try to affect, shape, curtail, expand, and temper what takes place in their lives. This is at the heart of what it means to be proactive and the catalyst for operational excellence initiatives across the majority of industries and organizations. However, research tells us that a precondition for proactive behavior is situational accountability. Where there is clear accountability you are more likely to find employees being proactive. "The dynamics of proactivity at work", Adam M. Grant, Susan J. Ashford, 2008 That is why it is important that companies take ownership of their obligations as the first step in improving their performance and their compliance.. Performance models (and this includes compliance) based on the reactive audit-fix cycle have not been able to keep up with continuous streams of changes that come from all directions. To achieve mission success in the presence of continuous change, you need proactive behaviors which in itself is: a process that anticipates, plans, and acts to ensure that objectives are met and outcomes are advanced. This applies to all activities that service the value chain particularly compliance programs. Here we find that compliance has been too slow, and too late to keep up with ensuring that companies stay within the lines. This increases the chance that only one recall, one defect, one violation, or one incident may result in the loss of business. Companies do not need to wait for the audit committee to knock on their door to create the opportunity for improvements. They can start building more effective programs today. To reduce the possibility of loss of business, it is essential that compliance adopts a proactive mindset that encourages continuous improvement towards strengthening an organization's ability to always be in compliance. These abilities include: obligation management, risk management, and compliance assurance tied to mission outcomes. Increasing the effectiveness of these programs will result in greater certainty that outcomes will be achieved and greater resilience to threats. Both of these lead to increased stakeholder trust. And it is this trust that determines whether or not a company will survive should an adverse situation occur. #Proactive #OperationalGRC #OperationalExcellence #RiskbasedThinking #ComplianceInsights

"We must make decisions, here and now, even though the best means and the best goals can never be discerned with certainty. An aim, an ambition, provides the structure necessary for action. An aim provides a destination, a point of contrast against the present, and a framework, within which all things can be evaluated. An aim defines progress and makes such progress exciting. An aim reduces anxiety, because if you have no aim everything can mean anything or nothing, and neither of those two options makes for a tranquil spirit. Thus, we have to think, and plan, and limit, and posit, in order to live at all." – 12 Rules for Life - Jordan B. Peterson Peterson associates decision making with aim and the process of aiming. Aim can be defined as the thing we are pointing at or the act of aiming itself, to intend or direct for particularly effect or purpose. Peterson speaks to the effect. Aim provides a structure necessary for acting. This structure affords us with "a framework, within which all things can be evaluated", which is how aim helps us make decisions. A decision is a conclusion or resolution made after evaluating the effects of conditions, current and planned actions, and progress towards where we are aiming at. The kind of things we might evaluate include: Uncertainty - threats and opportunities Results - progress Effectiveness - progress against effort Capability - competency and capacity Character - virtues and values Peterson, continues to say, "if you pay attention, when you are seeking something, you will move towards your goal. More importantly, however, you will acquire the information that allows your goal itself to transform … If you bend everything totally, blindly and willfully towards the attainment of a goal, and only that goal, you will never be able to discover if another goal would serve you, and the world, better." What Peterson is saying is profound and very much applicable to both personal and corporate achievement. The goals themselves will not save us. We need to be open to changing them and reorient ourselves as reality manifests itself. It is precisely this that makes what we are aiming at so important. Peterson suggests the more our aim has to do with character and ability the better we can prevail against adversity and challenges both in our personal and corporate lives. Perhaps the most important decision then is where we are aiming. That is why when we aim we need to aim high or as Peterson writes, "we need to orient ourselves towards the most possible good." I believe this text from the World English Bible says it well: "whatever things are true, whatever things are honorable, whatever things are just, whatever things are pure, whatever things are lovely, whatever things are of good report; if there is any virtue, and if there is any praise, think about these things. (World English Bible - Philippians 4:8 ) Thinking about these things will help orient our goals and even our values, that is, what we think is important. Who knows what our lives, families, community, or even our businesses might look like if we did. #Ethicalcompliance #Value #DecisionMaking

When my children were younger we would regularly go on road trips to visit family. Five minutes after leaving the house they would start asking a question which they would not stop asking until we got to our destination, "are we there yet?" Even at their age they knew that progress was an important thing to measure. When it comes to compliance we also need to answer this same question. However, it is is not as easy as reading the odometer on a car or looking at the GPS. One of the reasons why this may be difficult is that compliance may not have the necessary instrumentation to determine progress. I often hear from managers that they are not sure what they should be measuring or what indicators to use. Without knowing what to measure it is not possible to know your progress. However, you might also conclude that the problem could well be that compliance does know where it is going and without a destination you also cannot measure progress. Perhaps, herein lies the rub. To explore this further let's consider a quality program that uses ISO 9001 to define normative behaviors. According to ISO 9000, effectiveness is defined as “the extent to which the anticipated results/objectives are achieved." Having goals around effectiveness is reasonable and something companies should have, although reportedly 70% of companies do not measure the effectiveness of their compliance programs. Measuring effectiveness requires that two aspects are evaluated: effort and outcome ; where: effort is the time, money, resources committed to building, maintaining, and improving a compliance program, and outcome is defined as the impacts that these efforts have on the level of compliance and business performance (margins, safety, customer satisfaction, stakeholder trust, and so on) It is common to only focus on effort when first building a compliance program. As companies progress in their compliance maturity the focus shifts to outcomes. However, determining effort and tracking outcomes is not common which may be attributed to a lack of compliance maturity or as research also shows a lack of proper motivation. Studies have shown that if the motivation for pursing compliance is stimulated by external pressures, such as pressure to obtain ISO 9001 certification, then organizations end up conforming only to administrative or surface level requirements without optimizing their program effectiveness. In these cases companies are not interested in whether their program is effective but merely that they are able to obtain certification. For many companies, compliance was about jumping into the car and just start driving. Maybe that was enough back then, however, now the kids in the back want to know where you are taking them and when they will get there. And they will not stop asking until you give them an answer. The first step is to change compliance from an external motivation to an internal one. This involves taking ownership of your compliance obligations and deciding what your destination is, which may be many along the way. You will then be able to measure your progress along with effort so that you can know how effective your program is. #ComplianceEffectiveness #MeasuringEffectiveness #CompliancePrograms

One of the key misconceptions about LEAN is that its goal is to reduce the workforce. No wonder people might resist adopting it. However, as we shall see, LEAN is about engaging the workforce and not letting them go. To better understand this we need to go back to the early days of LEAN when it was first introduced by Taiichii Ohno at Toyota in the 1950s. In the book entitled, "Management Lessons From Taiichi Ohno," Lesson 6 talks about what a leader should do when an improvement is made. Instead, of letting a person go, you involve them in working on more improvements. When Ohno introduced this concept he called it the "outside line man." These people would eventually become known as team leads. Over time, Ohno would take a group of leads and create a maintenance department whose job was to do kaizen (i.e. continuous improvement). This department, made up of people who had worked on the line before and understood how things worked, would now be tasked to make further improvements so that more people could be taken out of the line. They also created new lines with the freed up resources and the knowledge they had learned. "Making an improvement that can take one person out results in just one person's cost being saved. If you take that person and have her make improvements, you start getting savings of two, three, four, and five people and so forth. Taking out the best person and making her improve the rest is really effective." This multiplication effect is what makes LEAN transformational. Companies that adopt LEAN to reduce their workforce miss out on benefiting from further savings. They also end up removing the very people they need to transform their business to compete better, increase quality, and achieve the intended outcomes from compliance. Instead of letting workers go, keep them and improve. To learn more on how to apply LEAN Thinking to your business visit our website at www.leancompliance.ca #LeanImprovement #TaiichoOhno #OperationalExcellence

Compliance programs, systems, and processes are often used interchangeably when referring to improvements. However, there are important distinctions that if understood will help to identify where and how to make improvements to effect the best outcomes. In this blog post, I will outline the differences between these functions and show how each helps organizations better target their resources to improve compliance. Let's start with defining what a process is. Process Model (simplified): A process is a set of ordered steps that takes input and transforms it to produce an output. These steps are outlined in a process plan where each step can be further described by a procedure. The purpose of a process is to execute the process plan. Consistent output is accomplished by consistently following standard work plans . Systems Model (simplified): A process becomes a system when it is connected with other elements particularly other processes. The most important, from a systems perspective, is connecting with measurement processes to control and reduce output variability. This is often simplified as a feedback loop. The purpose of a system is to execute the process and keep the output within specified limits. Consistent output is accomplished by both process consistency and by controlling the process using a feedback mechanism. Program Model (simplified): A program defines the outcomes that the systems and processes are to achieve. It also provides the resources and capabilities need to support them. While systems focus on consistency and greater efficiency, the role of a program is to improve outcomes. Programs exist to reduce safety incidents, reduce risk, reduce costs, increase reporting of near misses, and so on. Programs serve to change the state of the organization and use systems to do that. As targets are changed, the program also changes by adjusting: capabilities, capacity, processes, and system controls. As previously mentioned, the purpose of a program is to achieve a change in state. This is different from the purpose of a system which resists change to maintain the current state. Failure to understand this distinction has often been the cause of system failures for many IT initiatives. Projects, which temporarily serve a program function, introduce new capabilities and corresponding systems and then disband at the conclusion of the project. At that time the system often incorrectly moves to a maintenance mode. When this happens the program functions essentially stop. Systems in a maintenance mode are only provided with enough resources to execute the processes and fix issues. The only program level governance come from audits which as we mentioned in a previous blog is not the right driver for improvements. Another important function of a program is to validate outcomes. It is well understood that you can have an efficient system, that produces the specified outputs, and at the same time fail to achieve the intended outcomes. Validating that programs actually achieve their targeted outcomes is essential to meeting compliance. How To Introduce Change Introducing changes is necessary to improve program outcomes as well as to control system processes. From a compliance perspective, changes need to be made in such a way to: maintain compliance continuity, manage risk, and achieve the desired intent of the change. The Plan-Do-Check-Act (PDCA) improvement cycle can be used to show how changes are introduced from both the program and system level. The following diagram uses a modified PDCA cycle ( IDEF0 Format) to show the interaction between the program level (shown in red) and the system level consisting of a primary process (shown in blue): As an aside, IDEF0 depicts control inputs as lines coming in at the top which helps to visualize the feedback points. In addition, the PDCA Act function has been divided into "Manage" and "Provide Resources" to better show where the program and system functions reside. From this model, we can see where changes are triggered and how they interact at both the program and system level. Managing change triggers in a controlled fashion will help to preserve continuity when adapting to changes in compliance demand. Where to Improve Compliance The models presented so far help clarify important differences between programs, systems and processes. The following table summarizes these distinctions, some of which have been previously mentioned along with a few new ones: Knowing what these distinctions are allows us to also know where changes need to be made and how to make them. For example, if a program outcome is not being achieved the first step is to verify that the systems are executing consistently. This is a verification activity that can be conducted as an audit or as embedded measurements within the process itself. If the system passes verification then it is the role of the program to assess capabilities and make changes to mature them or introduce new ones. Rapid introduction of new capabilities can follow a Lean Startup (MVP) approach followed by continuous improvement (PDCA) on the system side. To learn more on how to build sustainable compliance platforms visit our site at ( www.leancompliance.ca ) #compliancemodel #complianceframework #complianceimprovement

Changes to safety-critical positions in regulated industries must follow a process to manage risks associated with transitioning a new person into a role or when the position itself has changed. The need to manage organizational change safely is called out by various regulations and standards such as: OSHA 1910.119 40 CFR Part 68 PHMSA RP1173 Pipeline Safety Management National Energy Board (NEB) CSA Z767-17 Process Safety Management And others This process is one of several to manage change safely and is often part of an overall Management of Change (MOC) program, and is commonly referred to as: Organizational Management of Change (OMOC) or Management of Organizational Change (MOOC) At a high level an OMOC process will follow steps similar to the following diagram: The first step is to scope out the change to collect relevant information and identify possible risks and impacts. This information will be used to determine appropriate actions to successfully transition the role or position. The OMOC Facilitator is the role assigned to the person who is responsible for the personnel change and who will conduct the scoping activity usually in an interview format. The best time to conduct the scoping interview is when the incumbent (i.e. outgoing person) is still in the existing role. This will help to identify if critical knowledge needs to be captured along with undocumented duties or activities that need to be transitioned. In many cases it is only after the role has been vacated that the change is initiated and the scoping activity can be done. For vacated positions a temporary change maybe necessary to cover safety-critical roles until the position is permanently filled. The following template has been used to scope hundreds of personnel changes affecting safety-critical roles. OMOC - Scoping Interview Template Interview Facilitator : OMOC Facilitator (or Implementer) Who should attend: Roles that are typically involved in the scoping interview include: Outgoing Person (incumbent) Incoming Person HR Representative Immediate Manager OMOC Facilitator Instructions: At the onset of the interview it is helpful to remind everyone that this is not a performance review of any kind. The purpose of the meeting is to identify any gaps in accountability, authorities, and duties, along with other impacts that may arise from the transition to or changes in the position itself. With the help of those participating in the interview, the OMOC Facilitator will identify relevant information to understand what is being changed and what steps have already and that still should be done to fully implement the personnel change. It is important to identify and document all changes to: Regulatory roles such as: Steam Chief, Incident Commander, On Call, Compliance Officer and so on, along with Compliance management roles, committee and project team assignments All transition steps identified in this meeting should be tracked so that progress along with risk mitigations can be monitored. Review this list with all participants prior to the conclusion of the meeting. New positions can be difficult to address as they may not yet have adequate accountability documentation prior to the change being initiated. You may need to use the job description along with information from a corresponding org structural analysis (if this is part of a structural change) where changes in accountability and authorities have been defined. Temporary assignments will require additional care and should be captured and transitioned appropriately. Make sure that dates are recorded for when the temporary assignment should end and add a step to verify that the permanent transition has occurred. Background Information: Document any background information that will help identify transition steps and possible risks: How long has the person been in the role? List certifications and qualifications the incumbent has (some may not be required formally in the role but may have been relied upon as backup coverage for other roles) What other circumstances may impact the successful implementation of this change? Scoping Questions: These questions serve as triggers that will be aid in the development of appropriate transition, communication and risk mitigation plans. 1. What is being changed as part of this personnel change: Transferring into a new role Transferring into an existing role Transferring out of an existing role Staying in the same role but with changed accountability, authorities, or assignments 2. What is the reason for this change: Structural change (previous position no longer exists or has been redefined) Job transfer (permanent, temporary/acting) Leaving the organization Joined the organization 3. Does the change involve a position with potentially significant PSM impacts such as changes to: Emergency Response Personnel Health and Safety Personnel Environmental Personnel Process Operator (or technician) Line supervision or management Maintenance Personnel Technical operations support (operations engineer, plant engineer) 4. What steps are needed to transition previous accountability and authorities? Reassignment of existing tasks Reassignment of compliance program assignments Contacting chairs of committees, working groups, or project teams Documenting critical knowledge Training new person in previous position Covering previous accountability and authorities until another person fills the position Updating of any training, procedures or work instructions Notifying any regulatory authorities Updating any systems, databases, or records Other steps 5. What steps are needed to transition into the new accountability and authorities? Management on-boarding PSM on-boarding Job orientation Specific training Operator qualification Other steps 6. What risks are anticipated during the transition or after the change has been implemented: Critical work will not get done in a timely manner Critical skills or certifications will be lost or reduced Increase in workload due to covering previous duties and responsibilities Preparation of regulatory reports will be impacted There are potential impacts to the health and safety of people, process, or the environment because of this change Other risks 7. What steps should be taken to mitigate these risks? Discuss risks with new or previous manager Communicate risks to affected compliance program owners (PSM, HSE, Quality, etc.) Other actions 8. What is the target date for when this change will be implemented (i.e. all transition steps completed)? 9. Identify and list all: transition steps, communications, and risks Review list with participants Enter this information into the OMOC tracking system and operational risk registers To learn more on how to manage organizational changes safely and meet regulatory standards and guidelines visit our web site at ( www.leancompliance.ca ). #OrganizationalChange #SafetyCriticalRoles #ScopingPersonnelChanges #PSM #HumanResources

Keeping people, processes, and the environment safe during facility changes is important to most companies and is a central part of every process and pipeline safety management program. This is true not only for asset changes but also for changes to personnel. Changes in job responsibilities, loss of key personnel, and even changes in shift hours can lead to serious incidents with potentially severe consequences. It is during these kinds of changes that impacts are felt not only immediately but long after the changes are completed. These impacts can introduce new risks and expose latent ones leaving companies at risk and vulnerable. Ensuring the continuity of safety-critical roles during personnel changes will help eliminate gaps in your safety program so that incidents do not occur. Unfortunately, many companies either do not track or are even aware of which roles are safety-critical. When this information is missing from job descriptions it is not possible for management to know if and when gaps are created as people move in and out of roles. Even when this information exists, it is common to find gaps between the formal, documented requirements for a position, and the activities actually performed by the person currently in the role. To ensure that each personnel change comprehensively covers the duties and responsibilities, it is helpful to conduct interviews with both the out-going and in-coming person as part of the change process. For each personnel change it is important to: Document critical knowledge from the out-going person Understand the risks that are being managed by the role Reassign existing tasks and assignments Account for all other duties and responsibilities Ensure that the incoming person has the appropriate skills and competencies During personnel changes it is crucial to give appropriate attention to the transition of the incoming person when additional training may be required and critical safety tasks can get overlooked. It may be necessary to have the out-going person (if possible) temporarily cover critical tasks until the incoming person has obtained proper training and competency. New positions can present additional challenges as they can sometimes lack detailed job descriptions necessary for a person to properly transition into the role. In these cases, it is important to track the progression of the role description from the time when the person is first installed into the position and then again when the position has been finalized. Continuity of safety-critical roles is essential to maintain safety programs. This starts with identifying which roles are critical and then making sure that they are properly transitioned as people move in and out of them. Plan -Do-Check-Act Questions: How does your company ensure that safety-critical roles are properly transitioned during personnel changes? How are risks identified and managed while transitions are occurring? What steps can be taken to improve the continuity of safety-critical roles during personnel changes? Which step can you start today? #SafetyCriticalPersonnelChanges #OrganizationalChange #EHSS

Continuous improvement is important and necessary to maintain sustainable programs. However, all too often, the pursuit of improvements can result in activities, that while good, may not be improving the overall outcomes for the organization. This may be due to poor program alignment or goals that are not specific and measurable. However, sometimes it is because the goals themselves need to improve. To achieve better outcomes we need to pursue outcomes that are better. When considering improvement initiatives it is helpful to ask open ended questions that help clarify direction and ensure that improvement activities are advancing the right things. Here are a few " What would it be like if " questions that may help take your program to the next level: What would it be like if ... the places we worked at were more productive and safer? improvement initiatives were fully embraced by all levels of the organization and people enjoyed doing them? operational excellence initiatives were better coordinated and integrated into work management processes. the management systems we used were simpler, more effective, and tied closer to the work we did? the information we needed to do our job was accurate and provided without having to look for it? we had the support we needed to do all the work that was asked of us? management had an increased understanding of what and how work was done? all facility changes (MOCs) were documented and all process information was updated and maintained in a timely manner? companies took better care of the environment and at the same time increased economic benefits? front line workers were more engaged and managers encouraged and supported improvement initiatives? Asking the right questions is often the most important step when deciding how to proceed with improvement initiatives. This can start by asking if the direction itself needs to improve. Plan -Do-Check-Act Questions: What examples can you come up with when changes where made and the program goals were not achieved? What examples can you come up with when program outcomes did advance and yet the overall situation did not get any better? What would help align improvement initiatives so that program outcomes were met and they also made things significantly better? What step can you take to towards making improvements that produce better outcomes? #OperationalExcellence #betteroutcomes

Maintaining a facility, pipeline, or process is essential to operate safely. A key component of this is to choose the right maintenance projects that will produce the best outcomes for the organization. Many companies use a simple ranking system to prioritize which projects to approve and which ones will be deferred until some time in the future. This strategy can result in important (perhaps strategic) projects not being funded which can increase compliance debt and future risk. It is common to rank projects using a set of parameters such as: value (or benefit), cost, and risk. Projects are ranked by benefit first followed by those with the lowest project risk. The cost of these projects are added up until the maintenance budget has been reached. The following chart illustrates this process showing that Project A and Project B have been selected: Highly regulated companies often prioritize projects by their compliance risk which is a measure of compliance threat or benefit. Understanding, that in this example, risk is used in a different manner than the previous scenario, the following diagram shows that Projects C, F and G have been selected: Projects with low compliance risk (even with high value) are often deferred until their risk becomes great enough to bubble up to the top of the priority line. This is where the rub is when using single criteria ranking. Project value and risk are more nuanced making simple ranking less effective. There are other factors that contribute to a poor (or less optimal) selection of maintenance projects: Project value tends to be limited to benefits in a given year (i.e. within the planning cycle) and often does not consider technical debt caused by deferred maintenance. Risk is more complicated than just project risk. For example, there are other kinds of risk such as: PSM risk, compliance risk, environmental risk, and complexity risk. Each of these will influence the selection in different ways. Project selection using single criteria ranking can only prioritize one factor and therefore cannot produce a balanced investment across programs, processes, and areas across the business. Deferred projects can result in increased risk, higher costs, and delayed benefits. Selecting and approving once a year using the entire maintenance budget leaves no contingency to address changes throughout the year. This can result in excessive re-planning which adds risk and cost when new projects are introduced. Selecting maintenance projects is analogous to managing a project portfolio which is typically monitored and adjusted on a periodic basis. Portfolio management introduces tools and techniques that can help select more optimal sets of projects by using multi criteria decision analysis (MCDA). Project selection can incorporate multiple project parameters such as: complexity, integrity, reliability, safety, technical debt, compliance risk, and so on, to help determine the best or at least better maintenance outcomes. Here are seven steps to achieving an optimal maintenance portfolio: Define what a balanced maintenance investment (portfolio) looks like. Decide on an appropriate MCDA method such as: analytic hierarchical process (AHP), multi-attribute additive model, real options, etc. Identify the project parameters needed to support the selected method Test and calibrate the optimization process. Use optimization results to generate candidate portfolios Select portfolio that produces a balanced investment Regenerate portfolio candidates as projects are completed and as new ones are added throughout the planning cycle to keep the investment balanced. Using multi criteria decision analysis techniques will take a little longer but will result in a more balanced maintenance investment, improved consideration of compliance debt, and reduced costs associated with excessive re-planning. Plan -Do-Check-Act Questions: How is compliance currently considered during maintenance project selection? What benefits would result from having a more balanced portfolio for maintenance projects? What would need to happen to improve the project selection process within your organization ? What step can you take to reduce compliance debt? #compliancedebt #deferredmaintenance #projectselection