E2 ManageTech

Beyond Compliance – Using Environmental, Safety Management Information Systems (EMISs) Provide Quantified Competitive Advantages

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In the last 20 years, federal, state and local regulations have provided regulatory incentives for industry to better manage environmental, health and safety (EHS) practices. In order for voluntary EHS management practices to move 'beyond compliance' and continue 'improving,' specific, quantifiable benefits must result. That is, companies must achieve some competitive advantage from implementing EHS improvements that are considered 'voluntary'.

Recently, many private companies and public agencies have been giving significant consideration toward the implementation of an EHS management information system (EMIS). Currently considered voluntary (i.e., not required by US regulations), the automation of EHS data collection, storage, retrieval and reporting is subject to the same benefit expectations that other EHS improvements are subject to. In fact, implementation of an EMIS may be scrutinized more closely than other environmental programs and may be considered a discretionary expenditure.

Additionally, implementation frequently involves operations and information technology professionals, in addition to EHS professionals, to effectively implement. The benefits resulting from an EMIS typically result from a reduction in either 'direct' or 'indirect' costs. Direct costs, consisting primarily of labor hours, permit fees, disposal costs, etc., are definable and easily to quantify. Indirect costs, which are comprised of reduced risks and liabilities, are less easily quantifiable. In fact, many have abandoned hope of ever quantifying expected benefits from indirect costs, and simply lump all indirect benefits into a qualitative, catch-all category called 'intangible benefits.' However, by statistically analyzing individual risk events over an expected project life, anticipated benefits can be objectively and accurately quantified.

Through the use of a case study, this paper will describe the process of quantifying direct and indirect benefits resulting from the implementation of an EMIS. The paper will describe the application of a statistical model to estimate indirect benefits and will demonstrate how the results of the benefit quantification can be used to make sound, business based decisions based on a required rate of return/return on investment.

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