1. A teaching module for H&S teaching in Canadian undergraduate engineering programs A Business Case For Health And Safety Lac Mégantic

2.  SLE reported to control: engine surges, emission of oil droplets and engine smoke  Agreement reached: park the train, leave lead locomotive running and shut the other four off  Parked downhill in Nantes, Quebec on a 1.2% grade track at 1:15 a.m.  MOT Lac-Mégantic derailment summary is here.here (TSB, 2014– Pg. 3) The Disaster

3. Cause & Effect 1.Origin-Farnham, Qc 1.1Faulty Procedures 1.1.1 Recertification 1.1.2 SPTO training 1.2 Procedures not followed 1.2.1 Absence of Penalty Brake Application 1.2.2 Negligence of previous mechanical report 1.2.3 Safety data Sheets 1.2.4 No emergency response assistance plan (ERAP) 1.3 Maintenance 1.3.1 Lead Locomotive – cause of initial fire 2. Parking –Nantes, Qc 2.1Faulty Procedures 2.1.1 Lack of Hand Brake Effectiveness Test 2.1.2 Unattended Train 2.1.3 Brake Failure 2.2 Procedures Not Followed 2.2.1 Insufficient hand brakes 2.2.2 Lead locomotive Shut Down after fire 3. Lac –Megantic 3.1 Faulty Procedures 3.1.1 Hazardous Material 3.1.2 Structure of Cars Impact -Fire and Explosions 1.Loss 1.1 47 people died 1.2 40 buildings destroyed 1.3 53 vehicles destroyed 1.4 6 million litres of petroleum crude oil wasted 1.5 Contamination of approx. 31 hectares of land 2. Rescue 2.1 Over 1000 firefighters from 80 different municipalities in Quebec & 6 counties in state of Maine participated in rescue 2.2 2000 people evacuated 2.3- major environmental clean- up 4. Lack of Oversight by Ministry of Transportation 4.1- Lack of enforcement 4.2- lack of regulation

4. Contributing Factors & Control Measures

6. Estimated Costs Accrued in Nantes$855.50 Costs Accrued and Estimated in Lac-Mégantic$646,134,654.00 Estimated Legal and Litigation Costs$71,006,583.00 Estimated Business Loss$90,339,920.00 Estimated Employees Loss$449,297.00 DamagesCost Total$770,983,207.00 The Aftermath

7. Preventative CostsCost Proper OMS/SMS and Culture Change$575,000.00 Insufficient Crew Members $ 91,340.00 Technical Upgrade of Tank Cars $ 2,220,000.00 Preventative Maintenance of Locomotive $ 558,121.00 Shippers Commitment /Compliance Emergency Crew Rail Operation Training/guide $ 5,016.00 Regulatory Oversight Enforcement $ 250,000.00 Total$3,669,447.00 Preventative Measures

8. COST / BENEFIT RATIO Total Preventative Cost $3,669,447.00 Total Damage Cost (Benefit if averted) $770,983,207.00 Cost/Benefit 0.00476 = 0.48% Cost-Benefit Analysis

9. 1. Operational Implication of the Damage Number of Years Allocated to Compensate 170 years Total Damage $770,983,207.00 Revenue Required to Cover Total Damage $3,107,550,209.00 Average Annual Revenue of Short line Rail 18,194,444.00 The Business Implications

10. 5-Industrial Composit Cost Calculator Applying Cost Calculators – Incident

11. 5-Industrial Composit Cost CalculatorApplying Cost Calculators - Investigation

12. 5-Industrial Composit Cost Calculator Applying Cost Calculators – Damage

13. 5-Industrial Composit Cost CalculatorApplying Cost Calculators - Replacement

14. 5-Industrial Composit Cost CalculatorApplying Cost Calculators - Productivity

15. 5-Industrial Composit Cost CalculatorSummary of Costs $ 1093. 61 $850.63 $ 2915.90 $ 863.49 $1303.27 $7,026.90

16. Case: Nemi Auto Body & Paint Incident Please form groups of 2 or 3. Please read the Case (handout). Using the calculator, please conduct a business analysis of this incident. Please cover the 4 suggested points. Write your names and answer on the paper provided. Your answer sheets will be collected at the end of the allotted time. You have 15 Minutes to complete the questions. (We’ll be available to answer your queries).

17. Nemi Auto Body & Paint- Damage Costs Inventory losses……………………………………………………………………… $5,000.00 Client Damage (Cab)……………………………………………………………….$60,000.00 5-I Costs: Incident Costs…………………………………………………………………………. $1,093.61 Investigation Costs……………………………… ……………………………………..$850.63 Damages to equipment……………….…… ……………………………………..$2,915.90 Replacement Costs……………………………… ……………………………………..$863.49 Productivity Costs……….……………….…… ……………………………………..$1,303.27 TOTAL……………………..……………………………………………………………….$72,026.90

18. Nemi Auto- Prevention Costs Secondary Safety Pin……………………………………………………………………$150.00 Hose Routing Canal …………………………………………………..…………..….$2,850.00 TOTAL……………………..………………………………………………………………...$3,000.00

19. Nemi Auto- Cost/Benefit Analysis Prevention Cost ……………………………………………………………………$3,000.00 Damage Cost (benefit) ………………………………………………..…..….$72,026.90 Cost/Benefit Ratio……………………..……………………...0.0417 = 4.17%

20. Nemi Auto- Business Implications Damage Cost ……………………………………………………………..…..….$72,026.90 Profit Margin= 0.12 Capital needed to cover damage…………………………………….….$600,224.17 ($72,026.90 : 0.12 ) Annual Sales = $2,500,000.00 >> Daily Sales: $6,944.00 (2,500,000/360) Time Required to Cover the Damage Cost……………...86.44Days ($ 600,224.17: $6,944.00 )

21. Nemi Auto- Cost/Benefit Analysis Prevention Cost ……………………………………………………………………$3,600.00 Damage Cost (benefit) ………………………………………………..…..….$86,432.28 Cost/benefit Ratio……………………..……………………...0.042 = 4.2%

22. Nemi Auto- Business Implications Damage Cost /Benefit ……….…………………………………………..…..….$86,432.28 ($72,026.90 x 1.20 ) Profit Margin= 0.12 Capital needed to cover damage…………………………………….….$720,269.00 ($86,432.28 : 0.12) Annual Sales = $2,500,000.00 >> Daily Sales: $6,944.00 Time Required to Cover the damage Cost……………...103.73Days ($720,269 : $6,944)