Safety Management Systems, Human Factors & Return of Investment (ROI). Source: F. J. Mendi (2014).

//Safety Management Systems, Human Factors & Return of Investment (ROI). Source: F. J. Mendi (2014).

Safety Management Systems, Human Factors & Return of Investment (ROI). Source: F. J. Mendi (2014).

By | 2018-03-02T16:52:01+00:00 March 2nd, 2018|Categories: |

It is highly possible that any air operator is in one of these cases:

* Has an SMS and still has difficulty understanding its scope and applicability.

* Has an SMS and currently works on its implementation, development or improvement.

* Does not have an SMS.

Traditionally, even before the existence of SMS, many companies invested numerous resources in the identification of these weaknesses, also known as latent failures (Reason, 1990).

Although it seems clear that an advanced SMS will improve the results of your company (Malesic, 2011) it is vital to know what investments in safety are profitable and which are not, and have it clear wether we invest because of the regulatory framework or based on decisions that have to do with a potential improvement of the Return on Investment (ROI) (Johnson & Avers, 2012).

Some companies defy security, increasing their production at all costs, boasting of being able to survive one or even two accidents. They rely on the replacement of insurance but forget or belittle the impact of accidents on public opinion and its consequences.

Interestingly, after the study of most of the aerial catastrophes it is concluded that these could have been avoided by means of simple safety interventions with minimal and limited associated costs.

The collection of information is key and its exploitation should aspire to much more than identifying, managing or mitigating risks, it should be our basis for a change oriented towards adopting ROI practices (Huang et al., 2009).

We need to know the costs of delays, duplications, investigations, but we also need to identify risks and define intervention strategies according to them. Once we have compiled the necessary information, we have integrated it in our SMS and exploited efficiently we will understand better the costs of our errors, failures, incidents, and accidents. We will then be able to justify the real costs associated with the operations and therefore able to define strategies and interventions that involve savings and benefits for our company. The above is basic and also one of the biggest challenges we face (Johnson & Sian, 2000).

Although there are several methodologies for the above, perhaps the most appropriate approach in aviation is the one proposed by Dr. William B. Johnson in 2006 and in which the calculation of the ROI is based on the costs associated with a certain event, those of correction, repair or replacement and the probability of success of our intervention.

According to its approach, the procedure to calculate the ROI is the following:

Calculation of the annual cost of a certain event: Cost (C)
Calculation of the cost of repair: Cost Repair (Cf)
Calculation of the probability of success: Probability of Success (Ps)
Calculation of Return (R): (CxPS) – CF = R
Calculation of the ROI Ratio (RR): R / Cf = RR

One of the advantages of this approach is that in a simple way we can calculate both the ROI (R) and the ROI (RR) ratio and therefore the time in which we will recover our investment. We just need to divide the time by the ROI Ratio. If, for example, we want to calculate it in months then we would divide RR by 12.

We need an operational turn. On the one hand, we need to provoke a change of mentality of the managerial steps and the financial departments, on the other, we need professional experts in security and human factors, in audit techniques and in the use of the aforementioned methodologies and taxonomies; and finally the conviction that these security interventions really improve our results and the profitability of our companies.

We all understand that the calculation of ROI is not exact but a prediction, an approximation. But it has to be precise and to make it so, the definition of the probability of success becomes key. This probability is the result of statistical and probabilistic calculations. The more accurate we are in defining this probability, the more accurate our calculations will be, and this is where specialized software is especially effective.

The probability of success of the intervention is the result of the analysis of multiple parameters grouped into four areas:

1.- Previous experiences of similar interventions.

2.- Level of support of the company’s management levels and relationship with customers.

3.- Availability of material human resources.

4.- Quantity and quality of planning prior to the adoption and implementation of the intervention.

Following the reasoning of this article, we can state that today it is already possible to demonstrate that production and protection are not at odds; furthermore, we can show that the greater investment in protection, the greater production.

Based on the Article titled Safety Management Systems, Human Factors and Return on Investment, published by Francisco Javier Mendi in the Aviador magazine, May 2014.

Picture: Ejército del Aire de España.

Otras fuentes:

Huang, Y., et al., (2009). Financial Decision Maker ́s Views on Safety: What SH&E Professionals Should Know. Professional Safety .

Johnson, W. B., & Sian, I. B. (2000). Measuring the Impact of Human Factors Interventions. Warrendale: Society of Atumotive engineers, Inc.

Johnson, W. B., & Avers, K. (2012). Return on Investment Tool for Assessing Safety Interventions. Shell Aircraft Safety Seminar , (págs. 1 – 11). The Hague, The Netherlands.

Malesic, C. L. (2011). The Savings in Safety. Insights magazine.

Portch, B. (2006). Maintenance Human Factors: Investing in Regulation and Beyond – What is it for us? Conference at RAF Bentley Priory.

Reason, J. (1990). Human Error. Cambridge: Cambridge University Press.