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Audit of establishment, use and registration of loss and quality costs

During the course of two phases, the Petroleum Safety Authority Norway (PSA) has conducted audits of six players as regards the establishment, use and registration of loss and quality costs.


The purpose of the activity was to chart practices - not to uncover potential nonconformities. Use of quality costs is not a regulatory requirement, but a potential instrument for safeguarding functional requirements relating to measurement, follow-up and improvement in the Management Regulations, cf. Chapter V.

During the audits, we observed that the companies maintained an overview over a number of performance and loss indicators.

Nevertheless, we want to highlight a few common observations on the part of some of the companies:

  • We were unable to see that the quality cost concept is incorporated in the language used by any of the three companies in connection with systematic measures to improve safety.

  • The players had systems to record and follow-up undesirable incidents that are suitable for registration of error costs. However, there is no established practice for systematic and regular registration of error costs in connection with use of these systems.

  • It is the incident itself, not the costs related thereto, that initiates improvement processes. To the extent that error costs linked to an incident are recorded, there was no routine for conducting trend analyses of error costs to identify areas where safety improvements could also lead to cost savings (as a consequence of reduced material damage and increased operational availability).

  • The players do not have a common practice to record reductions of unnecessary costs as a consequence of safety improvement processes.

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We have asked the companies for their evaluations of our findings.

Contact person in the Petroleum Safety Authority Norway:
Mike Theiss