INTERNATIONAL MARITIME ORGANIZATION E IMO SUB-COMMITTEE ON SHIP DESIGN AND EQUIPMENT 45th session Agenda item 7 DE 45/INF.5 11 January 2002 ENGLISH ONLY MATTERS RELATED TO RESOLUTION A.744(18) An experimental Cost Benefit Assessment (CBA) on permanent means of access for tankers relating to revised SOLAS regulation II-1/12-2 and Technical provisions for means of access for inspections Submitted by Japan SUMMARY Executive summary: This paper presents a report of Cost Benefit Assessment (CBA), which is Step 4 of FSA, on permanent means of access for tankers carried out by Japan, and provides background for Japanese proposal on draft SOLAS regulation II-1/12-2 and Technical provisions for means of access for inspections (DE 45/7/2). Action to be taken: Paragraph 5 Related documents: DE 45/7/2; DE 45/INF.4 Introduction 1 The Maritime Safety Committee at its 74th session approved a draft amendment to SOLAS regulation II-1/12-2 as set out in annex 16 to MSC 74/24/Add.1. 2 Following up the decision made by MSC 74, Japan has proposed a modification of the draft amendments to SOLAS regulation II-1/12-2 and draft technical provisions for means of access for inspections in the document of DE 45/7/2. This paper presents an experimental Cost Benefit Assessment (CBA), which is Step 4 of Formal Safety Assessment (FSA), on permanent means of access for tankers carried out by Japan in order to give a background information of the proposal. Recommendations from the Study 3 Considering not only the importance of permanent means of access for tankers but also substantial high costs to the maritime industry, it is desirable for IMO to find out a reasonable risk control option () which is balanced between effects and costs. In this regard, Cost Benefit Assessment (CBA) is essential. For reasons of economy, this document is printed in a limited number. Delegates are kindly asked to bring their copies to meetings and not to request additional copies.
- 2-4 Using GrossCAF and NetCAF as indices of CBA with very simple assumptions, an experimental CBA was carried out as an example. As a result, 2, which corresponds to Japan s proposal shown in the document DE 45/7/2, is found to be the most promising. Action requested of the Sub-Committee 5 The Sub-Committee is invited to note the results of the study presented in the annex of this paper in conjunction with documents DE 45/7/2 and DE 45/INF.4. ***
1 SUMMARY AN EXPERIMENTAL COST BENEFIT ASSESSMENTS (CBA) ON PERMANENT MEANS OF ACCESS FOR TANKERS 1.1 Executive summary This paper presents an experimental Cost Benefit Assessment (CBA), which is Step 4 of Formal Safety Assessment (FSA), on permanent means of access for tankers carried out by Japan in order to give a background information of the proposal. 1.2 Related documents MSC/Circ.829, MSC 74/WP.19, DE 45/7/2, DE 45/INF.4. 2 DEFINITION OF THE PROBLEM 2.1 Definition of the problem The objective of the present study was to provide a documentation that could give a background information for IMO decisions relating to permanent means of access for tankers. Recognizing not only the importance of permanent means of access for tankers but also substantial high costs to the maritime industry, it is desirable for IMO to find out a reasonable risk control option () which is balanced between effects and costs. In this regard, Cost Benefit Assessment (CBA) is essential. In order to grasp difference of cost-effectiveness among various s, an experimental CBA is carried out as an example. Since the detail technical provisions are not finalized yet, three s are examined: 1 (an economical plan considering minimum ESP requirements), 2 (Japan proposal) and 3 (an extensive plan considering full ESP requirements). It is believed that results of an experimental CBA gives IMO a prospect of future action on this matter. More detailed information of these s is given in document DE 45/INF.4. 3 BACKGROUND INFORMATION 3.1 Recently introduced s Frequency (1/ship year 1.0E-02 1.0E-03 1.0E-04 F-N Curves of Tankers, Bulk Carrier,etc. (Structural Failure related) Bulk Carrier Tanker(1978-2000) G-Cargo(1978-2000) Pass(1978-2000) In this study, the Enhanced Survey Programme (ESP), which was introduced as A.744(18) on 1 January, 1996, and Double-Hull requirements, which was adopted as Regulation 13F of Annex I of MARPOL 73/78 on 6 March, 1992, are taken into account as already implemented risk control options. 1.0E-05 1 10 100 1000 Number of Fatalities Figure 1 F-N Curves of Tankers, etc.
Page 2 3.2 Casualty statistics concerning the problem under consideration 3.2.1 Risk of Human Life Using data during the period from 1978 to 2000 from casualty database of Lloyd s Maritime Information Service (LMIS), the average number of fatalities per ship year of tankers, i.e. the Potential Loss of Life (PLL), is calculated as follows: Cause Structural failure 0.001763 Non-structural failure 0.008242 PLL(fatalities/ship year) It is judged that PLL due to the casualty relating to structural failure of tankers is still in the As Low As Reasonably Practicable (ALARP) region comparing the criteria proposed by MSC72/16. According to the ALARP concept, this risk level implies that costeffective risk control options should be implemented. Table 1 Annual Quantity of Oil Spill and number of Oil tankers in service Year Quantity Number of (x1,000 tonnes) Oil Tankers 1980 103 7,112 1981 44 6,986 1982 11 7,021 1983 384 6,882 1984 28 6,288 1985 88 6,156 1986 19 5,985 1987 30 5,947 1988 198 5,991 1989 178 5,802 1990 61 6,011 1991 435 6,153 1992 162 6,199 1993 144 6,550 1994 105 6,639 1995 9 6,761 1996 79 6,878 1997 67 6,933 1998 10 6,960 1999 29 7,051 2000 12 7,009 Total 2,196 137,314 Figure 1 shows FN curves for different generic ship types including tankers. The figure shows that the risk level of tankers is lower than risk level of other type of ships such as bulk carriers. It is also judged that societal risk level of oil tankers in respect of human life is in ALARP region. 3.3 Casualty Data of Oil Spill Accidents According to the report (ITOPF, 2001), a tendency of annual number of oil spills over 700 tonnes had changed considerably from 1980. So oil spill data during the years from 1980 to 2000 has been taken into consideration. Table 1 shows the annual quantity of oil spill and annual number of oil tankers including product oil tankers. The number of Oil tankers are based on Lloyds World Fleet Statistics. As a result, Quantity of oil spill per ship year was calculated to be around 16.0 tonnes/ship year. The paper also showed that some 14% of incidence of oil spills whose quantities were over 700 tonnes were caused by hull failures. Another paper showed that 16% of accidents of oil tankers involving large amount of oil spill were caused by hull structural failure. So 15% is assumed in this study. Unit cost for cleaning of oil spills has varied considerably. A number of oil spill incidents, despite their large amount of spilled oil, caused little or no environmental damage, as the oil did not impact coastlines. Such examples are shown in Figure 2 whose data sources are cited from the table in web page of Ministry of Land, Infrastructure and Transport of Japan (http://www.mlit.go.jp/kaiji/yudaku/yudaku-1.htm). Average unit cost U cos t is 0.027 Million US$/tonne.
Page 3 Economic Losses (EL) due to cleaning of spilled oil was estimated from above-mentioned quantity of oil spill per ship year and unit cost for oil spill cleaning shown in the following formula: EL oil _ spill Oil _ Lost _ per _ ship _ year) = ( U where U cos t : Unit Cost for Cleaning of Spilled cost As a result, Economical Loss due to oil spill by any causes (EL total ) and Economical Loss due to oil spill by structural failure (EL structural_failure ) were calculated as follows: Cause EL (Million US$/ship year) Unit Cost (Million US$) 0.100 0.080 0.060 0.040 0.020 0.000 1975 1980 1985 1990 1995 Year Figure 2 Unit Cost of Oil Spill Cleaning Structural Failure Total 0.0648 0.4320 4 COST BENEFIT ASSESSMENT (CBA) 4.1 Method of Assessment In this study, the estimates have been tried to be given refer to the terms Gross Cost of Averting a Fatality (GrossCAF or GCAF) and Net Cost of Averting a Fatality (NetCAF or NCAF). Their definition are as given: C C B GrossCAF =, NetCAF = R R where C is the cost of the Risk Control Option, B is the economic benefit resulting from the implementation of the Risk Control Option and R is the risk reduction implied by the Risk Control Option Note: Although this kind of assessment is called as Cost Effectiveness Assessment (CEA) when GrossCAF or NetCAF is used as a index, the term of CBA was used in this study for simplicity. 4.2 Cost Estimation Cost Estimation of Risk Control Options was described in the document DE 45/INF.4 submitted by Japan. Table 2 shows the very brief summary of the results including a specification of s in cargo tanks. The maintenance cost is dependent on various parameters such as method/frequency of renewal of corrosion protection system, repair price for the renewal of access means, and is roughly estimated as 0.5-3.0 times the initial cost. However, the maintenance cost is not counted in this study to simplify it. I:\DE\45\INF-5.DOC
Page 4 Table 2 Cost Estimation of Three Risk Control Options (s) 1 2 3 DK TRANS. WALKWAY ONE THREE EVERY (Transverse) - all tank - all tank - all tank CARGO UNDER DECK TANK WALKWAY NONE ONE PERIMETRICAL (Longitudinal) - all tank - all tank VERTICAL WEB ONE THREE LADDER (PARTIAL) (PARTIAL) EVERY (Vertical) - all tank - all tank - all tank COST ( Million US$ ) 0.25 0.85 3.00 4.3 Estimation of Risk Reduction Risk reduction could be calculated simply by using Risk Reduction Rate (RRR) as shown in the following formula: PLL = PLL 1 r ) where ( Risk _ Re duction PLL : PLL after implemented PLL : : PLL before implemented r _ : Risk Reduction Rate of risk reduction It is assumed that s under consideration could prevent some part of fatal accidents caused by structural failure. Hence, risk reduction R by new s could be evaluated by using the following formula: + R = ( resp DH PLLstructural _ failure ) rrisk _ reduction (Expected Life Time of ships) where r : Risk Reduction Rate by ESP and Double-Hull Requirements + ESP DH 4.4 Estimation of Economic Benefit Assuming that 1, 2 and 3 could reduce annual quantity of oil spill caused by structural failures as same magnitude as PLL represented by Risk Reduction Rate of PLL, r _, economical benefit by could be estimated by using the following formula: risk reduction B = ( r DH ELStructural _ failure) rrisk _ ESP + reduction ( Expected _ Life _ Time _ of _ Ships)
Page 5 4.5 Results of CBA 4.5.1 GrossCAF and NetCAF It is assumed that Risk Reduction Rate (RRR) r for 1, 2 and 3 is 0.1, 0.7 and 0.8 respectively, taking into account that 1 is almost same as the current inspection method using rafts in view of risk reduction and that DE 45/INF. shows that 2 is nearly equal to 3. Using the RRR mentioned above, GrossCAF and NetCAF has been obtained as shown in Table 3. Comparing the criterion proposed by MSC 72/16, no has been recommended by this experimental CBA. Considering these results depend on Risk Reduction Rate (RRR) and Unit Cost for Oil Spill Cleaning, these might be justified by this kind of real investigation. However, it could be said that 2 is the most promising among these three s. 1 is the most economical but more convenient means of access than existing one. In case of oil tankers over 10 years, temporary staging is required for ALL WEB FRAME RINGS close-up survey in a wing cargo oil tank and a raft is utilized for the inspection of vertical web and strut in cargo oil tank. In this context, r of 1 itself must be not sufficiently big so that GCAF and NCAF may become sufficiently small. 3 is the most fully equipped case. All web frame rings in cargo and ballast tank can be 3 inspected without using a raft. Therefore, RRR of 3 r is expected to be sufficiently 3 big. Despite of sufficiently big figure of r, 3 would not be justified by this experimental CBA because GrossCAF and NetCAF are much higher than the criteria proposed 3 by MSC 72/16 even when r is 100%. Table 3 Results of an Experimental Cost Effectiveness Assessment (CEA) 1 2 3 C 0.25 0.85 3.00 r _ 0.1 0.7 0.8 reduction R 0.00264 0.01851 0.02116 B 0.10 0.68 0.78 N 0.15 0.17 2.22 4.6 The sensitivity analysis of Risk Reduction Rate (RRR) and Consideration GrossCAF 94.5 45.9 141.8 NetCAF 57.8 9.2 105.0 In order to investigate the effect of the (Monetary unit: Million US$) magnitude of RRR r, parametric calculations of GrossCAF and NetCAF were carried out. The results are shown in Figure 3. 2 corresponds to Japan proposal shown in 2 DRAFT TECHNICAL PROVISIONS FOR MEANS OF ACCESS FOR INSPECTIONS in the document DE 45/7/2. As the effect of 2 is believed to be close to the effect of 3 taking into account the corrosion pattern of deck transverses in tanks, which is assessed in the document DE 45/26/xx3, 2 might be justified by CBA. If real unit cost for oil spill cleaning is not so different from the value estimated in paragraph 3.3, it could be said that 2 would be justified by CBA using 2 GrossCAF and NetCAF under the condition that r is about 85% and over. risk I:\DE\45\INF-5.DOC
Page 6 4. RECOMMENDATIONS Considering not only the importance of permanent means of access for tankers but also substantial high costs to the maritime industry, it is desirable for IMO to find out a reasonable risk control option () which is balanced between effects and costs. In this regard, Cost Benefit Assessment (CBA) is essential. Using GrossCAF and NetCAF as indices of CBA with very simple assumptions, an experimental CBA was carried out as an example. As a result, 2 which corresponds to Japan s proposal shown in the document DE 45/7/2 is found to be the most promising. 5. REFERENCES IMO MSC/Circ.829 & MEPC/Circ.335: Interim Guidelines for the Application of Formal Safety Assessment (FSA) to the IMO Rule- Making Process, 1998. IMO MSC72/WP.19: Report of the Joint MSC/MEPC Working Group on the Human Element and Formal Safety Assessment, 2001. Lloyd s Maritime Information Services, Casualty Database, 2000 version. ITOPF (2001), Accidental Tanker Oil Spill Statistics by International Tanker Owners Pollution Federation Ltd., 2001. 7488 09 7488 09 7488 09 NetCAF (a) 1 (b) 2 (c) 3 GrossCAF,80 # 8 #0/:.9 43#,90 GrossCAF,80 NetCAF # 8 #0/:.9 43#,90 NetCAF GrossCAF,80 # 8 #0/:.9 43#,90 Figure 3 Effect of Magnitude of Risk Reduction Rate (RRR) to GrossCAF and NetCAF