IE438 Industrial Safety and Health Lecture 2 PDF

12/13/22 The Cost of Accidents IE438. Industrial Safety and Health Lecture # 2 Dr. Majed Moosa 1 The True Cost of An Accident: Hand Injury 2 1 12/13/22 Chapter 1 - Safety and Health Movement, Then and Now ESTIMATING THE COST OF ACCIDENTS • Successful, safety & health professionals must sho...

12/13/22 The Cost of Accidents IE438. Industrial Safety and Health Lecture # 2 Dr. Majed Moosa 1 The True Cost of An Accident: Hand Injury 2 1 12/13/22 Chapter 1 - Safety and Health Movement, Then and Now ESTIMATING THE COST OF ACCIDENTS • Successful, safety & health professionals must show that accidents are more expensive than prevention. – They must be able to estimate the cost of accidents. The procedure for estimating costs set forth in this section was developed by WorkSafeBC. Occupational Safety and Health for Technologists, Engineers, and Managers By David L. Goetsch © 2011, 2008, 2005, 2002, 1999 Pearson Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 3 Chapter 1 - Safety and Health Movement, Then and Now Cost-Estimation Method • To have value, a cost estimate must relate directly to the specific company in question. – Applying broad industry cost factors will not suffice. • To arrive at company-specific figures, divide costs associated with an accident into insured & uninsured costs. – Determining insured costs of accidents is a matter of examining accounting records. Occupational Safety and Health for Technologists, Engineers, and Managers By David L. Goetsch © 2011, 2008, 2005, 2002, 1999 Pearson Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 4 2 12/13/22 Chapter 1 - Safety and Health Movement, Then and Now Cost-Estimation Method • To calculate uninsured costs, divide accidents into the following four classes: – Class 1 accidents - lost workdays, permanent partial disabilities, and temporary total disabilities. – Class 2 accidents - treatment by a physician outside the companyʼs facility. – Class 3 accidents- locally provided first aid, property damage less than $100, or loss of less than eight hours of work time. – Class 4 accidents - injuries so minor they require no physician attention, property damage of $100 or less, or eight or fewer work hours lost. Occupational Safety and Health for Technologists, Engineers, and Managers By David L. Goetsch © 2011, 2008, 2005, 2002, 1999 Pearson Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 5 Chapter 1 - Safety and Health Movement, Then and Now Cost-Estimation Method • Average uninsured costs for each class of accident can be determined from records of accidents in a specified period. – For each accident in each class, record every cost not covered by insurance. Compute total of these costs by class of accident & divide by the total number of accidents in that class to determine an average uninsured cost for each class, specific to the particular company. Occupational Safety and Health for Technologists, Engineers, and Managers By David L. Goetsch © 2011, 2008, 2005, 2002, 1999 Pearson Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 6 3 12/13/22 Chapter 1 - Safety and Health Movement, Then and Now Cost-Estimation Method • Shown is an example of how to determine average cost of a selected sample of Class 1 accidents. There were four Class 1 accidents in the pilot test. The accidents cost the company $554.23 in uninsured costs, or an average of $138.56 per accident. With this information, accurate cost estimates of an accident can be figured, and accurate predictions made. Occupational Safety and Health for Technologists, Engineers, and Managers By David L. Goetsch © 2011, 2008, 2005, 2002, 1999 Pearson Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 7 Chapter 1 - Safety and Health Movement, Then and Now Other Cost-Estimation Methods • Costs associated with workplace accidents, injuries, & incidents fall into broad categories such as: – Lost work hours – Medical costs – Property damage – Fire losses – Insurance premiums and administration – Indirect costs Occupational Safety and Health for Technologists, Engineers, and Managers By David L. Goetsch © 2011, 2008, 2005, 2002, 1999 Pearson Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 8 4 12/13/22 Chapter 1 - Safety and Health Movement, Then and Now Other Cost-Estimation Methods • Compile total number lost hours for the period and multiply times the applicable loaded labor rate. – The employeeʼs hourly rate plus benefits. Occupational Safety and Health for Technologists, Engineers, and Managers By David L. Goetsch © 2011, 2008, 2005, 2002, 1999 Pearson Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 9 Chapter 1 - Safety and Health Movement, Then and Now Estimating Hidden Costs Accident costs are like an iceberg, in that the larger part of the actual cost is hidden beneath the surface. • Slowdown in production near the site • Need to replace the injured worker – Costs associated with the learning curve • Accident investigation team time Occupational Safety and Health for Technologists, Engineers, and Managers By David L. Goetsch © 2011, 2008, 2005, 2002, 1999 Pearson Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 10 5 12/13/22 Piper Alpha § 167 dead § Estimated cost of over £2 billion 11 Grangemouth § § § § BP refinery fire in 1987 One person died Cost £50 million in property damage Cost further £50 million due to business interruption 12 6 12/13/22 Chapter 1 - Safety and Health Movement, Then and Now Estimating Hidden Costs Occupational Safety and Health for Technologists, Engineers, and Managers By David L. Goetsch © 2011, 2008, 2005, 2002, 1999 Pearson Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 13 Chapter 1 - Safety and Health Movement, Then and Now GLOBAL IMPACT OF ACCIDENTS AND INJURIES • Rapid development & pressure of global competition are resulting in increased workplace fatalities in China and the Pacific Rim countries. – Many developing countries becoming industrialized lack a safety and health infrastructure. • Occupational safety & health must be seen as a strategy for sustaining economic growth & social development in emerging countries. • The ILO reports record-keeping & reporting systems in developing countries are deteriorating instead of improving. – Only a fraction of the real toll is being reported. Occupational Safety and Health for Technologists, Engineers, and Managers By David L. Goetsch © 2011, 2008, 2005, 2002, 1999 Pearson Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 14 7 12/13/22 Chapter 1 - Safety and Health Movement, Then and Now GLOBAL IMPACT OF ACCIDENTS AND INJURIES • Occupational injuries in developing countries are more prevalent in such high-risk industries as mining, construction, and agriculture. – Men tend to die as the result of accidents, lung diseases, & work-related cancers such as caused by asbestos. – Women suffer more from musculoskeletal disorders, communicable diseases, and psychosocial problems. – Younger workers are more likely to suffer nonfatal injuries. • Older workers are more likely to suffer fatal injuries. – More than half of retirements are taken early to collect pensions based on work-related disabilities rather than normal retirement. Occupational Safety and Health for Technologists, Engineers, and Managers By David L. Goetsch © 2011, 2008, 2005, 2002, 1999 Pearson Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 15 Five Steps to Determine Accident Costs 1. 2. 3. 4. 5. 6. Incident Cost Investigation Cost Damage Cost Replacement Cost Productivity Cost Total Cost 16 8 12/13/22 Five Steps to Determine Accident Costs 1. Incident Costs Time for first aid § § § Salary cost of first aid attendant assisting injured worker Salary costs of people arranging for emergency services and transportation Salary cost of first aid attendant filling out First Aid Record Time for transportation to medical care § Salary cost of waiting for transportation § Salary cost of person taking injured worker to hospital § Salary cost of person remaining with injured worker at hospital Lost productivity of workers § Salary cost of injured worker § Salary costs of all people temporarily not working, if not recorded elsewhere (e.g., 4 employees x 1 hour) 17 Five Steps to Determine Accident Costs 1. Incident Costs Lost productivity of employers Time to make area safe § § Cost of activities to make area immediately safe (e.g., stopping machinery, installation of scaffolding and barriers) Costs of evacuating the area and emergency rescue First aid supplies and equipment Ambulance or taxi cost Other cost 18 9 12/13/22 Five Steps to Determine Accident Costs 2. Investigation Costs Investigation time § Investigating incident, including time to interview injured worker and witnesses, examine equipment, photograph site, and take measurements § Meeting with manufacturers, engineers, and other specialists, as required Completing incident investigation report Completing company paperwork § § § § Company records Accident book Payroll records Company report forms Completing GOSI paperwork 19 Five Steps to Determine Accident Costs 2. Investigation Costs Serious incident reporting/investigation § § § Reporting to GOSI Meeting with GOSI officers Assisting with GOSI investigation as needed Follow-up meetings to discuss incident (workers) § Meeting with workers and worker representative or safety committee members to discuss incident, the investigation findings, and any required changes to procedures or processes Follow-up meetings to discuss incident (employers) § § § 20 Meeting with workers and worker representative or safety committee members to discuss incident, the investigation findings, and any required changes to procedures or processes Meeting with injured worker and worker’s family Following up with GOSI officer Other costs 10 12/13/22 Five Steps to Determine Accident Costs 3. Damage Costs Time to assess damage § § Determining what repairs or modifications may be required as a result of the incident investigation Determining if equipment or parts need to be upgraded or replaced Time to repair or replace equipment § Labour costs for repairs Time to coordinate repair work § § § Coordinating purchases Coordinating modifications to equipment, including temporary modifications Coordinating production to accommodate repair work 21 Five Steps to Determine Accident Costs 3. Damage Costs Cleanup time § Time for workers to clean up site § Time to coordinate cleanup Outside contractors and materials for cleanup Disposal of damaged equipment Replacement parts, equipment or lost product § § § § Robbery Spoilage Miscellaneous damage Loss of truck load Other costs 22 11 12/13/22 Five Steps to Determine Accident Costs 4. Replacement Costs Hiring or relocating replacement worker § Evaluating whether existing workers can be relocated to cover duties of injured worker or replacement worker needs to be hired § Reviewing resumes, conducting telephone interviews, and scheduling in-person interviews § Testing and interviewing potential new workers § Coordinating training and orientation of new or relocated worker § Completing paperwork Relocating or rescheduling of another worker § § Overtime costs and difference in pay Lost productivity at relocated worker’s original location Trainer time for new or relocated worker § § § Time for training Time for added supervision of new or relocated worker Lost productivity of person required to train and supervise 23 Five Steps to Determine Accident Costs 4. Replacement Costs Trainee time for new or relocated worker § Time for training § Reduced productivity of new or relocated worker Cost to hire a replacement worker § § Advertising costs Agency fees if temporary worker used Other costs 24 12 12/13/22 Five Steps to Determine Accident Costs 5. Productivity Costs Lost productivity due to disruption (e.g., delays) § Reduced productivity (e.g., production lines less efficient) § Contractors or subcontractors standing idle § Lost production on day of incident (e.g., overtime required to replace lost production) § Lost production during investigation § Reduced productivity due to anxiety and stress felt by coworkers Managing the injury claim § § § § § Contacting worker and GOSI to coordinate return-to-work activities and dates Updating co-workers on progress of injured worker Updating injured worker’s family Updating police Completing Human Resources and Skills Development forms (e.g., Record of Employment) 25 Five Steps to Determine Accident Costs 5. Productivity Costs Lost productivity due to disruption (e.g., delays) § Reduced productivity (e.g., production lines less efficient) § Contractors or subcontractors standing idle § Lost production on day of incident (e.g., overtime required to replace lost production) § Lost production during investigation § Reduced productivity due to anxiety and stress felt by coworkers Managing the injury claim § § § § § Contacting worker and GOSI to coordinate return-to-work activities and dates Updating co-workers on progress of injured worker Updating injured worker’s family Updating police Completing Human Resources and Skills Development forms (e.g., Record of Employment) 26 13 12/13/22 Five Steps to Determine Accident Costs 5. Productivity Costs Reduced productivity of injured worker following return to work § § § Time to "get up to speed" on production or current project Worker may still be recovering and not able to carry full workload Time for follow-up medical appointments Other costs 27 Example: Construction Incident Worker injured after falling 3 m (10 ft.) A residential construction worker broke his ankle and forearm after falling 3 m (10 ft.) off an unguarded scaffold onto the main floor of a construction site. Costs are based on one employer and a five-worker crew. Estimated wage rates: Workers = $20/hr Employer = $30/hr 28 14 12/13/22 Step 1: Incident Costs Time (Hours) Time for first aid Time for transportation to medical care Lost productivity of workers Lost productivity of employers Time to make area safe Rate ($/hour) Cost $ 2 20 $40 2 20 $40 8 20 $160 1 30 $30 1 20 $20 First aid supplies and equipment $50 Ambulance or taxi cost $500 Other cost $0 29 Step 2: Investigation Costs Time (Hours) Investigation time Cost $ 30 $60 Completing incident investigation report 1.5 30 $45 Completing company paperwork 1 30 $30 1 30 $30 Serious incident reporting/investigation 2 30 $60 Follow-up meetings to discuss incident (workers) 2 20 $60 Follow-up meetings to discuss incident (employers) 0.5 30 $15 Completing GOSI paperwork Other cost 2 Rate ($/hour) $0 30 15 12/13/22 Step 3: Damage Costs Time (Hours) Rate ($/hour) Cost $ Time to assess damage 0 0 $0 Time to repair or replace equipment 0.5 20 $15 Time to coordinate repair work 1 30 $30 Cleanup time 0.5 20 $10 Outside contractors and materials for cleanup $0 Disposal of damaged equipment $100 Replacement parts, equipment or lost product $0 Other cost $0 31 Step 4: Replacement Costs Time (Hours) Hiring or relocating replacement worker Cost $ 30 $90 Relocating or rescheduling of another worker 0 0 $0 Trainer time for new or relocated worker 2 30 $60 Trainee time for new or relocated worker 20 20 $400 Cost to hire a replacement worker Other cost 3 Rate ($/hour) $0 $0 32 16 12/13/22 Step 5: Productivity Costs Time (Hours) Rate ($/hour) Cost $ Lost productivity due to disruption (e.g., delays) 4 20 $80 Managing the injury claim 1 30 $30 Reduced productivity of injured worker following return to work 30 20 $600 Other cost $0 33 Step 6: Summary of costs Summary of costs Incident costs Investigation costs Damage costs Replacement costs Productivity costs Total costs Cost $840 $280 $150 $550 $710 $2,530 34 17 12/13/22 Example 2: Hospitality incident In Class Exercise: Housekeeper sprains back A hotel housekeeper sprained his back while turning a big bed. Costs are based on one employer and a fiveworker crew. Estimated wage rates: Workers = $12/hr Employer = $20/hr 35 18