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Spe 108523 MS P PDF
Spe 108523 MS P PDF
Spreadsheet Simulators That Demonstrate How Statistics Can Lie About Safety
Performance
Carl Veley, SPE, vPSI Group
Abstract
The science of statistical analysis uses advanced
mathematics beyond the capabilities of most people, but the
principles behind those high level equations are essential in
understanding the role of chance in conventional safety
performance metrics. A series of spreadsheets has been
developed to illustrate some of the essential principles,
without utilizing the daunting rigorous mathematical proofs.
Readers who experiment with these spreadsheet simulators
may be surprised to find some of their routine or basic
assumptions about safety statistics are actually scientifically
indefensible. Studying the principles illustrated by these
simulators may suggest needed modifications to common
industrial safety programs.
Introduction
There are many reasons for wanting to know the likelihood
of future accidents. Insurance companies must guess how
many accidents a client will experience in the next year, then
estimate how much those accidents will cost and calculate
premiums accordingly. Consequences of guessing wrong may
be very costly. Large companies or organizations often
reward departments, managers, or individual employees who
have the least chance of future accidents, and mistaken
rewards can also have costly consequences.
Ultimately these are two examples of the same process
using trailing indicators to forecast future performance and
issuing rewards based on that forecast. The objective of this
study was to illustrate why this practice is unreliable and often
has damaging consequences.
The phenomena described in this paper are easily
explained with high level mathematics, but most managers
making business decisions based on accident probabilities are
not skilled in such specialty mathematics. There is a need for
easily understood ways of illustrating the underlying
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SPE 108523
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SPE 108523
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SPE 108523
the assigned goal. The net effect for top managers is that their
own policies shield them from problems they need to correct
but never see.
We cannot draw firm conclusions from the example data
because we do not know how many employees were involved
each year, and the possibility of a steady decline is greater
with larger numbers of employees. However, the principle
remains the same, and for companies with only a few thousand
employees it is easily possible to construct a spreadsheet
simulator modeled after this example and check believability
of data. Remember the old adage, When something seems
too good to be true it probably is.
What can we do instead?
The only quantitative measurement that can be directly
related to future performance is based on systematic
evaluation of reported corrective actions. This is a system1,2
that shows great promise and deserves careful investigation by
anyone concerned by the use and misuse of conventional
safety statistics.
Conclusions
The mathematics of statistical analysis are so daunting that
important principles tend to be overlooked, misunderstood, or
ignored by people in charge of safety or accident prevention
programs. Spreadsheets based on standard random number
algorithms can demonstrate, illustrate, or help explain the
following points pertinent to industrial safety management:
1. Conventional safety statistics are trailing indicators that
range from useless to highly misleading when used as
probabilities in forecasting future performance.
2. Programs that rely on conventional safety statistics for
issuing either punishments or rewards are unreliable and
may be counter-productive.
3. Standard measurements used by Governments and
regulatory agencies, such as the OSHA Recordable
Injury Rate, are scientifically indefensible when used for
forecasting purposes.
4. Managers who rely on conventional safety statistics may
be making serious mistakes about effectiveness of their
favorite programs and miss warning signals that changes
are needed. They can use spreadsheet simulators to get
an objective indication of how realistic their goals and
reported results really are.
1
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