Small Measurement Errors Add Up
How a 1% Error Can Produce a $1,000,000 Loss
David W. Spitzer, P.E.
In our hectic work lives, we sometimes lose track of the importance of our jobs. While it may at times seem as if we are merely purveyors of technical expertise, our work often has an economic impact that can be mind-boggling. For example, I recently had the opportunity to audit a number of steam flowmeters for a cogeneration company that produces electricity and sells steam to a local host that uses the steam for its processes. An excerpt from my report on this project reads:
Relatively small measurement errors can have a relatively large economic effect in custody-transfer installations for high-value products, large pipelines, or both. For example, assuming the average annual steam flowrate is 100,000 lb/hr of steam valued at $10.00 per 1,000 lbs., the flowmeter would pass approximately $8,760,000 of steam per year (100,000 lb/hr * 8,760 hrs/yr * $10.00/1,000 lb).  

The large economic value of the fluid over time means that even small measurement errors can be significant. In the above example, a 0.01 percent measurement error would result in a billing error of $876 per year. Therefore, even small errors, such as rounding or unit conversion, can result in significant billing errors. Meanwhile, measurement errors of a few percent, can result in billing errors that can approach $1,000,000 per year.  
In many such installations, total steam consumption is more than (the stipulated) 100,000 lb/hr, so the economic implications can be considerably larger. It takes only a 1 percent error on another client’s billing of $100 million per year for the error to exceed $1,000,000 per year!  

There is much that you can do after you are armed with this information. Initially, you can evaluate heat and material balances to determine the magnitude of suspected flow measurement errors. This can be followed by an examination the entire flow measurement system. Be sure to examine ALL aspects of the installation, including the upstream and downstream piping, process conditions, flow element, taps, impulse tubing (or other process connections), instrument installation, instrument specifications, calculations, configuration, wiring and communications, indicator, totalizer, and other aspects of the measurement, as may be required.  

Remember, the idea behind this approach is to find, identify, and quantify flow measurement problems. While cursory
investigation may uncover some issues, detailed investigation is advised because errors associated with virtually any of the above aspects of the flow measurement system can result in errors that can exceed $1,000,000 per year in many processes.
David W. Spitzer, P.E., is a regular contributor to Flow Control. He has more than 30 years of experience in specifying, building, installing, startup, and troubleshooting process control instrumentation. He has developed and taught seminars for over 20 years and is a member of ISA and belongs to the ASME MFC and ISO TC30 committees. Mr. Spitzer has written a number of books concerning the application and use of fluid handling technology, including the popular “Consumer Guide” series, which compares flowmeters by supplier. Mr. Spitzer is currently a principal in Spitzer and Boyes LLC, offering engineering, product development, marketing, and distribution consulting for manufacturing and automation companies. He can be reached at 845 623-1830.


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