CM
CORROSION MANAGEMENT
Cost of Corrosion:
Key Performance Indicator
abduLaZiZ r. moShaWeh,
mohammed F. aL Shahrani,
and LaY Seong teh, Saudi Aramco,
Dhahran, Saudi Arabia
50 APRIL 2020
This article discusses a new key per-
formance indicator (KPI) to measure a
facility's overall performance in man-
aging its costs of corrosion and corro-
sion control activities. The KPI is com-
posed of different metrics, in which
each metric measures a specific cor-
rosion control cost related to the
overall business objectives of the
facility. A proactivity metric is also de-
fined and introduced, which mea-
sures how “proactive” a facility is. The
KPI is believed to be more represen-
tative than using the corrective-to-
S
preventive cost ratio as a KPI.
Several cost of corrosion studies were
conducted in different countries 1-10 using
different approaches. 1-4,9 Some studies
considered only direct cost while others
included indirect costs, which were not
defined and applied consistently. The costs
of corrosion were estimated to be equiva-
lent to 0.7 to 5.2% of individual gross
domestic product (GDP). The International
Measures of Prevention, Application, and
Economics of Corrosion Technologies
(IMPACT) study1 estimated the global cost
of corrosion to be US$2.5 trillion, which is
equivalent to 3.4% of the GDP. The study
estimated that savings of between 15 and
35% could be realized by using available
corrosion control practices.
Nevertheless, this subject lacks a key
performance indicator (KPI) to measure
the overall performance of an operating
facility in managing corrosion. Most facili-
ties use the corrective-to-preventive cost as
an indicator.11 This severely underrates any
maintenance or replacement undertaking
by the facility to proactively control a fore-
seeable corrosion threat.12
This study proposes a new lagging KPI
to study the performance of both existing
and newly deployed corrosion control
activities and programs for an operating
facility.
The use of a corrective-to-preventive
cost ratio as a KPI has several limitations.
First, it does not account for the indirect
cost caused by corrosion. Second, it does
not address the main objectives of the facil-
ity, which might change significantly from
one facility to another. Finally, it does not
appreciate any proactive measures taken
by the facility to tackle corrosion threats.
This newly proposed KPI tries to overcome
these limitations, while still building on the
strengths of corrective-to-preventive cost
ratio.
It should be noted that programs and
projects are not interchangeable in this
study. Each one has a very specific defini-
tion to capture the different categories of
costs defined below.
Definitions
Corrective Cost—Cost incurred for
removing an existing nonconformity or
defect.1
Indirect Cost—Cost incurred due to
any unscheduled shutdowns caused by a
corrosion failure.
Overall Cost of Corrosion—Total cost
of all corrosion control programs and activ-
ities, and projects (Figure 1).
Preventive Cost—Cost incurred for
taking the actions to remove or control the
WWW.MATERIALSPERFORMANCE.COM
causes of potential nonconformity or
defect.1
Proactive Cost—Cost of facility-wide
projects that were initiated before any loss
of containment due to corrosion occurs.
Proactivity Metric—A metric used to
measure how proactive a facility is in
responding to foreseeable corrosion
threats.
Production Target—The annual pro-
duction level set by management.
Reactive Cost—Cost of facility-wide
projects that were initiated after a loss of
containment due to corrosion.
Unscheduled Shutdown—Shutdown
of a facility due to a failure that poses risk
to health, safety, and/or the environment.
Only shutdowns caused by corrosion fail-
ures are considered in this study.

Cost Categorization
To enable cost optimization and activi-
ties prioritization, and to better capture a
facility’s major business objectives, the cor-
rosion cost elements are categorized into
preventive, 1 corrective, 1 proactive, and
reactive costs, as defined above.
Categorizing and grouping the corro-
sion cost elements into preventive and cor-
rective costs provides informative statistics
for decision makers to use to optimize the
overall cost of corrosion. Based on these
definitions, some corrective costs are
incurred due to the “proactive” practice of
replacing a component that has an existing
nonconformity or defect, but has not
caused a catastrophic failure and/or an
unscheduled shutdown. It should be noted
that this division will not affect the total
cost calculation; it is done only to capture
the costs of the different projects in the
facility, and to facilitate the calculation of
the KPI.
The Difference Between
Projects and Programs
and Activities
Programs and activities are the normal
practices in any facility to inspect, monitor,
and mitigate corrosion, and are usually
time- or risk-based (e.g., ultrasonic test
inspection of vessels and piping, and corro-
FIGURE 1 Cost categorization for the development of the KPI.
sion monitoring using coupons and
probes). Programs and activities usually
target all types of degradation of material.
Projects, on the other hand, are a set of
programs and activities that target a spe-
cific type of corrosion damage before (pro-
active), or after (reactive) a loss of contain-
ment has occurred. Not all facilities initiate
specific projects to respond to a specific
corrosion threat. For example, if the facility
starts a chloride stress corrosion cracking
(SCC) project across the facility to change
the susceptible materials to more immune
ones, then this is a project. If changing was
done during a scheduled turnaround and
inspection (while looking for any degrada-
tion and without a well-structured
approach to inspect, monitor, and mitigate
the problem), then it is a normal corrective
activity and not a project.
The Indicator: Objectives
and Metrics
The main objectives of the facility
under consideration are:
1) No loss of containment due to either
a catastrophic failure or pinhole
leaks.
2) Reduce the cost of corrective actions.
3) Invest more on proactive projects
than on reactive projects.
Thus, the proposed KPI should con-
sider these objectives, each with its own
metric. The following is a proposed for-
mula for calculating the Cost of Corrosion
KPI. It is an average-weighted lagging KPI.
It is called the Composite Cost of Corro-
sion (3C) Indicator:
3C Indicator = A × Indirect Cost Metric
+ B × Number of Pinhole Leaks Metric
+ C * Corrective Cost/Preventive Cost Metric
+ D × Proactivity Metric (1)
where A, B, C, and D are the weighted-aver-
age percentages with a total sum of 100%
3C Indicator Metrics
Indirect Cost Metric
Indirect cost is incurred due to any
unscheduled shutdown caused by a corro-
sion failure. This metric measures the
increase or decrease in indirect cost
incurred annually. The target is a decrease
in annual indirect cost. The scores for this
metric are shown in Table 1.

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CM
CORROSION MANAGEMENT

project, and 140% of the cost will be

TABLE 1. INDIRECT COST TABLE 3. CORRECTIVE COST TO
counted if the project is reactive. Finishing
METRIC PREVENTIVE COST METRIC a project before the planned end date will
Metric Value (%) Description Metric Value Description not add a “merit” to the KPI: this to prevent
(%) over planning of any projects.
100 No unscheduled
shutdowns 100 Corrective cost to It is worth mentioning that after finish-
preventive cost <0.5 ing the first cycle of a project, and the facil-
50 Unscheduled
70 0.5 ≤ corrective cost to ity decides to carry on with the practice,
shutdown(s), but still
meeting the annual preventive cost <0.75 this will change to a normal program.
production target The proposed percentages are shown
30 0.75 ≤ corrective cost to
in Table 4.
0 Unscheduled preventive cost ≤1
shutdown(s), and not 0 Corrective cost to
meeting the annual preventive cost >1
Conclusions
production target 1. A new KPI was developed to quantify
the corrosion control performance of
TABLE 4. PROACTIVITY METRIC a facility.
TABLE 2. NUMBER OF PINHOLE
Metric Value Description 2. The model puts forward a systematic
LEAKS METRIC (%) approach to account for the indirect
Metric Value 100 Proactive projects cost cost of corrosion.
(%) Description to reactive projects cost 3. Proactive and reactive project defini-
100 Reduction in pinhole ≥1 tions are introduced. Proactive proj-
leaks recorded 70 0.75 ≤ proactive projects ects are started before any failure
compared to last year cost to reactive projects occurs, while reactive projects are
0 No reduction in cost <1 initiated after failure.
pinhole leaks recorded 30 0.5 ≤ proactive projects 4. The KPI captures the main objectives
compared to last cost to reactive projects of the facility. This KPI is modular in
year; or unscheduled cost <0.75 nature and can be tailored to suit the
shutdown(s) occurred in needs of any operating facility. More
10 Proactive projects cost
the facility metrics can be added or deleted from
to reactive projects cost
<0.5 this composite indicator.
5. The KPI is suitable for any future
Number of Pinhole Leaks Metric optimization and corrosion control
The second metric for the KPI measures the target is ≥1. Tackling corrosion prob- program and project prioritization.
the increase or decrease in the annual lems in the facility before they cause any 6. The KPI measures—for the first
number of pinhole leaks. The target is a failures is a sign of proactive corrosion time—the “proactivity” of the corro-
reduction in annual pinhole leaks. The management. This can only be done sion control projects at the facility.
scores are outlined in Table 2. through special projects that address spe- 7. The proactivity metric also accounts
cific corrosion threats (e.g., hydrogen- for proper project planning.
Corrective Cost to Preventive induced cracking survey, corrosion under 8. New metrics are being developed for
Cost Metric insulation survey, dead leg corrosion man- different facilities.
The ratio of corrective cost to the pre- agement, etc.). If these special projects are
ventive cost is captured in this metric. For initiated and deployed after a failure has
an aging facility, corrective costs are usu- occurred, then they are considered to be Acknowledgments
ally substantial, thus an “ideal” target is set reactive projects. Similarly, if these “proac- The authors would like to express their
to be <0.5. An “ideal” target is rather subjec- tive” projects have fallen behind and were gratitude to the facility management for
tive although “<0.5” is proposed. Different not finished by the planned end date, this their endless support and for Saudi Aramco
ratios, supposedly more stringent ones, will reduce the Proactivity Metric score, for allowing us to publish this paper.
should be customized for new facilities. based on the number of years delayed com-
The scores for this metric are tabulated in pared to the total number of years in the References
Table 3. original plan. For example, a chloride SCC 1 G. Koch, et al., “NACE IMPACT—Interna-
project was started and was planned to be tional Measures of Prevention, Application,
Proactivity Metric finished in five years. If the project was not and Economics of Corrosion Technologies
This metric is used to calculate the finished on time and had fallen behind by Study,” NACE International, 2016.
ratio of the proactive corrosion control two years, only 60% of the total cost of the 2 H.H. Uhlig, “The Cost of Corrosion to the
projects cost to the reactive projects cost: project will be counted if it is a proactive United States,” Corrosion 6 (1950): p. 29.

52 APRIL 2020 WWW.MATERIALSPERFORMANCE.COM

 Cost of Corrosion: Key
Performance Indicator

3 T.P. Hoar, “Report of the Committee on Cor-

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in Existing Saudi Aramco Operations,” Saudi
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sion Map of Korea—Based on the Data from
2005 to 2010,” Corrosion Science and Technol-
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China,” 2017.
11 L.S. Teh, “2017 Abqaiq Plants Cost of Corro-
sion,” APOD/APOE, 2017.
12 A.R. Moshaweh, “2018 Abqaiq Plants Cost of
Corrosion,” APOD/APOE, 2018.

ABDULAZIZ R. MOSHAWEH is a corrosion

engineer at Saudi Aramco, Dhahran, Saudi
Arabia. He previously worked as a corro-
sion engineer, either as permanent or
seconded, for ExxonMobil, Maersk Oil,
Lloyd’s Register, and Intertek in the United
Kingdom and the Middle East. Moshaweh
has a Ph.D. in corrosion from the University
of Cambridge and has CEng MIMechE,
NACE Senior Corrosion Technologist, and
MICorr certifications. He has been a
member of NACE International for over 10
years.
Find a mentor. Be a mentor.
MOHAMMED F. AL SHAHRANI is a corro-
sion engineer at Saudi Aramco and has
been with the company for 12 years. He
has a B.Sc. in mechanical engineering. Al
Shahrani is a member of NACE.
nace.org/mentors
LAY S. TEH is a corrosion engineer at Saudi
Aramco. He previously worked as a materi-
als and corrosion engineer for PETRONAS
in Malaysia and as an asset integrity
consultant for DNV GL in Singapore. Teh
has a Ph.D. in mechanical engineering from
the University College London. He has
been a member of NACE for over five
years.

MATERIALS PERFORMANCE: VOL. 59, NO. 4 APRIL 2020 53