More on Macondo

I’ve now had time to read the whole US Commission report on the BP Deepwater Horizon disaster in the Gulf of Mexico – the discussion sections that I’d not read earlier, in order not to be influenced, when I published my initial conclusions. It is ever clearer.

“Most, if not all, of the failures at Macondo can be traced back to underlying failures of management and communication. Better management of decision-making processes within BP and other companies, better communication within and between BP and its contractors, and effective training of key engineering and rig personnel would have prevented the Macondo incident.”

My emphasis this time on their positive use of “would” – ie without doubt. My own agenda here is to pick up those communication and decision-making aspects of business management systems, but as an engineer in the downstream business and as a human, you have to feel for the guys who made the mistakes and struggled with their consequences, in many cases to their deaths.

It’s a long time since BP has been a “British” company, and any finger-pointing between BP and Haliburton an Transocean is unhelpful. Creditable to notice lines in the official (US) report like

“As BP’s own report agrees …”

compared to

“Halliburton has to date provided nothing … “

or

“Haliburton should have …”

My point is that the responsibility is shared industrially (as the report concludes), and I see BP taking its share.

I make that point because I did make an observation earlier about the hairy-arsed “wild-catting” culture present at the sharp end in this industry, with a US frontier freedoms mentality wherever in the world the operation is. Any sophisticated business managing such operations – however good BP is – would be unlikely to change that “by design” and in fact should think hard before attempting to do so.

Remember this was one of the largest, newest and most sophisticated rigs in the world. There is a recommendation about the control and monitoring systems in use, particularly during the fateful period when the “kick” had already started and the fatal blow-out was on its way :

Why did the crew miss or misinterpret these signals? One possible reason is that they had done a number of things that confounded their ability to interpret [the] signals ….

In the future, the instrumentation and displays used for well monitoring must be improved. There is no apparent reason why more sophisticated, automated alarms and algorithms cannot be built into the display system to alert the driller and mudlogger when anomalies arise. These individuals sit for 12 hours at a time in front of these displays. In light of the potential consequences, it is no longer acceptable to rely on a system that requires the right person to be looking at the right data at the right time, and then to understand its significance in spite of simultaneous activities and other monitoring responsibilities.”

Hard to argue with that ? But, very important to distinguish decision-making from decision-support. You (we all) are relying on a tremendous amount of experience and judgement, not to mention risk-taking balls, at the upstream sharp-end of the business, drilling into the unknown. There will be blood ? Hopefully not, but it is part of the risk. There are some clear management and control-system safety-critical steps in all these processes, which need to be treated as such, with fail-safe steps needed, but we need to be careful not to (try to) automate all risk out of the system. People are highly ingenious at bypassing systems that prevent them doing their job. Applying controls in the wrong places can counter-intuitively increase the risks. We need systems that support people doing their jobs, not take them out of the loop entirely. There is good reason why the human eye is brought to bear on these processes. Proper risk assessment is one thing, but knowing when to do it and what to do with the result needs focus.

There are a number of other things also borne out by the report.

If you’ve never actually experienced a disaster first hand, it is difficult to appreciate that one is actually taking place, denial is naturally human – the hope for anything but that. By definition, the safer industry in general, the fewer participants have the necessary experience. The captain of the Titanic comes to mind. Drills and simulations of the worst case risks become so important to take seriously. This point is so important it makes it into the summary paragraph above.

Integrity & pressure testing is something of which I have considerable experience. Such testing inevitably occurs late in the process, as early as possible naturally, but nevertheless towards the end of the job. Inevitably the consequences of failing such a test can therefore have great business delay, cost and rework consequences, and all the attendant contractual responsibility wrangling that might entail. So, paradoxically, it is at the integrity / pressure test point when you most want failure to occur. Such tests may be potentially destructive by design and if it’s going to fail, this is precisely when we need it to happen, when the health and safety risk is lowest and the business value risk almost at its peak. You need to be looking for failure here. It takes balls to fail a pressure / integrity test, and the people & processes here need real authority and independence from the business productivity roles. I already mentioned the need to acknowledge safety criticality in levels of surveillance and regulation imposed from outside the working team. Again the report (and BP’s own actions since their own investigation) well recognize this issue. There really should have been (almost literally) alarm bells ringing before this test process even started. It could hardly have been more critical.

From the most significant failure point to an incidental one, though both are examples of communication of information for decision-making in the summary paragraph; The confusion about whether or not the specified spacers had actually been delivered and available as the correct type (design-class), affecting the decision as to the spacing arrangement actually deployed. Several ironies in that inconclusive chain of decisions, that provided the unfortunate quote used as the headline in the report.

“Who cares. It’s done … we’ll probably be fine …”

Supply chain confusion about the type of materials actually delivered and available. How hard can it be for supplied items to be marked and systems informed with their true class (type) ? One for the information modelling and class libraries aspects of the ISO15926 day job.

16 thoughts on “More on Macondo”

  1. Alex posted on Facebook :
    “You don’t seem to address cost-based decision making issues here. My impression (not having read the report) is that, as is always the case, cost was a factor as regards the safety systems in place. Did you form that opinion or do you feel cost was not an issue?”

  2. I do address it, but it’s not my focus, since it is part of the whole process, my focus (my agenda) is the information management around decision-making (as you know), but to address your point specifically: … In this particular post, it is implicit throughout in the “risk-based decision making”, but is explicit several places too :

    The whole “integrity and pressure testing” paragraph includes things like “delay and cost consequences, and attendant contractual wrangling” and ” … health and safety risk is lowest and the business value risk almost at its peak. You need to be looking for failure here.”

    The decisions about the delivery of the spacers are all about cost and delay. (If there were no cost or delay consequences, there would have been no “decision” to make.)

    A point I also made even more explicitly in the opening paragraph of the earlier (linked) post too :
    “That balance was always between too little (mud, pressure, cement, etc) failing to control the hazardous hydrocarbons, vs too much (mud, pressure, cement, etc) destroying (the value of) the well. It may seem scary to lay people, but this is always what engineering is about – difficult judgements by responsible, moral people – we’ll “probably” be OK. It looks like “cost-cutting” to do less, but we all cost-cut (look for the best price, the most cost/value effective) every day.”

    Basically, if there was no “cost” in doing the safer thing, there would rarely be a decision to make. The whole of risk evaluation involves consequential costs as well as the predictions of likely outcomes.

  3. And in the even earlier, very brief, also linked, post the day the BP report came out, the first of only two “corollaries” I made was trying to identify the particular commercial pressures in this case (over and above the general business pressures).

  4. Yes I’ve just been back through your previous post and I see it gets a mention there. Your points on the drivers associated with responsibility for a failing test are interesting too. I had indeed missed that as I was looking for initiator decision making rather than the issues you address in that paragraph.

    Of course cost based decision making is at the core of most business processes. If critical tests such as these are influenced in the way you suggest, and I agree the human component means they likely are, then it is clear that more needs to be done to ensure the reliability of the human factor in critical testing processes.

    However within a corporate paradigm where strategic decision makers are rewarded for short-term corporate gain, and are not appropriately punished for catastrophes such as this I doubt that there is the necessary desire for such improvements to be made.

  5. Yes. So we’re agreeing, risk is a (normal) part of every business decision …. your last para is the very core of my agenda, well beyond this example case.

    I’m not so much concerned with the “punishment” as the change itself. It’s not that I’m squeamish about punishment where it produces the desired effect, just want to be sure we understand the effect we’re after. There is a paradox, that you and I have had trouble homing in on before. It is very much at the heart of this “strategic” vs tactical “short-term” decisions and the detached “objectivity” that is demanded by the world at large. The more recognizable the beans, the easier to count. It’s not that people (in general) don’t want to account for the right things. That’s why for now I’m simply glad to see the overall recommendations of the commission at the highest level, and my own demand for some subtlety in how they are addressed in practice. The follow-through is going to be important here. (Material for a separate thread ?)

  6. Yes I used “punished”, perhaps not the most apt word, as a replacement for “censured”. Tis was because I felt it would otherwise be possible to argue that Tony Hayward, through having to resign, has reaped the rewards of the failure in his aspect of the decision making process here. I would in fact argue that he has not, as he was highly paid during his tenure, and no doubt has moved to another role without any serious personal detriment – hazard of the job and so forth.

    Had he to face the possibility of a public trial holding him to account for his part in emplacing the processes that lead to a decision-making failures that ultimately lead to a catastrophic effect on the eco-system off the US coast (and economically on the lives of the individuals who depend on the fishing industry there) then I tend to think his decisions would be weighted “better”.

    I note also that the Deepwater Horizon responses seem to have more or less been a rerun of the failed actions that were taken during the Ixtoc disaster. One wonders to what extent those in the industry, presumably with with knowledge of Ixtoc, actually expected these actions to succeed or whether this was to more to provide an illusion of action to support the share price whilst covert action was taken to employ many potential academic critics, ban journalists from photographing the effects on the coastline and so on and so forth. I am still unclear as to the real damage the dispersants did underwater whilst making things look ok on the surface

    Very interesting comparative piece on Ixtoc –
    http://www.msnbc.msn.com/id/26315908//vp/37368377#37368377

    Nice to see your posts coming in on Facebook. I look forward to the next one!

  7. Understood Alex, at the risk of over-defending Hayward, we still need to distinguish between Hayward the individual human and BP CEO the role he fulfilled at the time. (I’ve made posts elsewhere defending his post incident behaviour, in terms of his competence, rather than morality). At the risk of a tasteless sound bite, akin to Hayward’s own – the king is dead, long live the king.

    Putting the BP CEO in the dock is effectively the study that we already had. Putting Hayward (or any one of the survivors) in the dock as a criminally liable individual does not necessarily add much. Clearly significant personal penalty on the one individual will “encourager les autres” but we need to be careful not to end up with a scapegoat – and a nice warm feeling – and none of the systemic problems solved. (And in fact the individual having experienced the failure may themselves be a good source of learning we need – they would tend to be highly motivated … )

    And, oh yes. Those systemic problems run right through the whole econo-ecological, business and governmental mess (before and) since. That’s why as you know, this was / is my agenda long before this incident occurred. It’s a systemic “big decision making” problem, when the system in question is “just complicated enough”.

    Thanks for the additional links …. I’ll take a look. (My own history in this space goes back particularly to events like Piper Alpha and Bhopal, as well as some shit-inducing near misses of my own.)

    (PS I doubt Hayward had much role in “implacing the procedures” that led to the decision-making failures. Need to check out more of his CEO career.)

  8. Yes I agree that putting Haywood in the dock doesn’t solve the problem. I should rather have said that putting the Board in the dock, perhaps with the shareholders alongside, would be a start.

    As I think you might agree the problem stems from the effect of corporate personhood, and the lack of any significant drivers to account for externalities such as damage to environment and/or life.

    As with the Herald of Free Enterprise, the many and ongoing rail disasters we see from year to year, oil spills around the world which we sometimes hear about if they affect the West, and so on and so forth, proving the responsibility of a “controlling mind” (at least in UK law) is not good enough.

    Those on the Board, with overall responsibilty for profit-making must no longer be sheltered from the effects of their decisions if there is to be any improvement in corporate social responsibility, safety matters and so forth.
    (IMHO)

  9. I don’t disagree that they should be responsible and not “sheltered”. I guess I’m questioning your suggestion that they are in fact in any way sheltered. They (we) all have responsibility for both profit and safety.

    “Must no longer be” is the classic “stop beating your wife” rhetoric 😉

    Hayward was in the firing line full on. Couldn’t have been more exposed. He didn’t choose to avoid the responsibility did he ? (He actually wasn’t very good at it, but that’s not his crime.) He was pressured to stand aside by the media and his critics.

    (And BTW bolstering the share-price is good policy for those hoping to sue BP …. etc …. just complicated enough, I said. Anyway, as I also say, defending him or BP is not my point. The BP story isn’t finished anyway …. there will be other actions following this commission. If we’re getting into the morality of share-holding and capitalism per se, can I ask if you’ve read Zizek’s latest “End Times”. My focus / agenda is specifically stated, and we’re getting way off topic in this comment thread.)

  10. I disagree. If I cause a death, perhaps by driving erratically, then I will be tried and society will punish me.

    If the board of a company, cause many deaths through their decisions the corporate entity may be held to account through a trial process but the only marginally effective sanction on that entity is a fine – as we see with BP.

    (And in many cases, such the recent case with BAE bribery to win contracts, the fine is such a small percentage of the profit that it can be viewed simply as a cost of doing business).

    You seem to feel that the prospect of Hayward losing his job is a serious issue for him – “in the firing line”, “pressured to stand aside” – the possibility of which would perhaps have affected his decision-making with regard to risk and safety.

    I do not as it appears to me that those at the head of large corporates seem to move from one position to another position with relative ease, and I strongly believe his next employers will be/are more concerned with the lack of PR ability he has shown (which is of course why he went) rather than any lack of investment in or thinking about safety critical processes.

    To restate my view: There can be no significant improvement in the analysis of risk within corporations, where that analysis is related to cost, when there is no significant increase in the accountability of decision-makers to society. I apologise if much of that is outside your scope 🙂

  11. Ha. Don’t get snarky. As you know 🙂 it’s not outside my agenda scope – firmly the core of it in fact – just beyond the scope of this piece.

    We can disagree about how much – quantified – accountability is enough …. it’s a balance … but we agree it’s needed. (And as you say yourself Haywood is already “damaged goods” in terms of competency and more, more than any formally penalty he has or has not received. And BP’s penalty is huge already.)

    Ever broadening the topic doesn’t help convergence on solutions I find. (Even “erratic” driving needs some investigating as to causes as part of setting appropriate sanction / punishments … and actions you could / should have taken, etc …. those causal chains are more complex here of course.)

    Punish the bastards – great. Now what next, is where I am ?

  12. Snarky? Never 🙂

    A correction though. If Hayward is damaged goods it is due to his PR ability (essential in a good CEO) rather than anything relating to the environmental catastrophe for which be bears some measure of responsibility. This, to me, seems backwards, and is no way to ensure good decision-making by responsible parties within an organisation such as B.P. in future.

    Please find some time to look at the video to which I linked. It’s back in your topic I think, and whatever the corporate penalties that were imposed after Ixtoc (if any) they clearly didn’t effect the level of change that such penalities should effect, in that it is clear B.P. learned no lessons from that disaster.

    Will the penalties imposed on B.P. this time around be large enough to effect positive change wrt risk management in the future or will they merely serve to damage U.K. pensioners?

    The absolute key here is that the people making the decisions *must* be accountable and they aren’t. The corporate person that *is* acccountable does not make any decisions. I’m glad we agree that such accountability is needed.

  13. >In summary “large enough ?”

    It is unless you are aware of actions taken against corporates by the courts, which are applicable to B.P., other than fines…

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