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COST OF ACCIDENTS

COST OF ACCIDENTS. GROUP 13 SAFETY AND MANAGEMENT SLIDE COST IS THE ULTIMATE MEANS OF CONVINCING PROJECT PERSONNEL ABOUT NEED FOR SAFETY!! Should safety be viewed altruistically or economically ?. DIRECT COSTS (Easy to Measure & Realize) INDIRECT COSTS (Difficult to Measure).

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COST OF ACCIDENTS

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  1. COST OF ACCIDENTS GROUP 13 SAFETY AND MANAGEMENT SLIDE COST IS THE ULTIMATE MEANS OF CONVINCING PROJECT PERSONNEL ABOUT NEED FOR SAFETY!! Should safety be viewed altruistically or economically ?

  2. DIRECT COSTS (Easy to Measure & Realize) INDIRECT COSTS (Difficult to Measure) COST OF ACCIDENTS

  3. ACCIDENT COST DIRECT COST INDIRECT COST SS Project

  4. DIRECT COSTS Covered By Workers Compensation Ambulance service medical & follow-up treatment hospitalization medication disability benefits - % of last wages Losses covered by insurance – financial transaction Historical records can he reviewed to determine the expenditures attributed to each injury. Direct Costs are well understood and quantified with accuracy

  5. What is Workers Compensation ? Prepayment Premium or post payment penalty A mandatory government run insurance scheme that ensures compensation for workers who get injured in the workplace. The company pays the insurance premium based on man-hours to be worked

  6. Workers Compensation Many employers regard workers' compensation as an insurance policy for their employees when they are "on the clock." Premium varies based on the type of craft 20% of wage to over 100% of wage Based on overall safety record of the craft Insurance payment period & terms in the state Premium for a employer is based on local rates and employer’s EMR

  7. Experience Modification Rate & Loss Ratio EMR tends to be an evaluation of company’s safety record. Loss ratio is based on claims made .vs. premium paid Larger EMR higher the premium. EMR is modified based on three year period not including immediately preceding year. Past year cases may not have been closed yet

  8. EMR Focuses on reflecting numerous small incidents rather than few large ones Year LR EMR 1991 1.08 0.98 1992 1.05 0.97 1993 0.36 0.92 1994 0.24 0.96 1995 0.22 0.72 1996 0.37 0.66 1997 0.63 0.58 EMR is used evaluate a firms safety performance ?

  9. INDIRECT COSTS Difficult to Quantify 1. Lost time of injured worker 2. Cost of lost time of other workers who stop 3. Cost of lost time of supervisory crew 4. Time spent by site medical crew/ Transport 5. Damage to equipment, tools, materials 6. Employee welfare cost. 7. Disruption to crew composition 8. Reduced worker productivity / Supervisor productivity 9. Idle equipment 10. Overhead cost 11. Administration cost / Legal costs 12. Company Image

  10. Example A carpenter gets injured while setting a wall form which is being held by a crane 20 minutes for First-Aid treatment Indirect Losses Crew Time for 20 min Crane / Operator time for 20 min Reduced Productivity after resuming work.

  11. Quantifying Indirect Cost As a ratio of Direct cost Factor of 4 (Heinrich 1941) Factor of 10 (Sheriff, 1980) Factor of 50 (Bird & Loftus, 1976) “Insignificant” (Leopold and Leonard 87) Definition of Indirect factors is important - it varies Difficult to Quantify in any situation

  12. CII Study > 100 firms , 185 projects 34 US states $1 Mil to $500 Mil 56% Fixed Price or Unit Rate 44% Cost Reimbursable 14% New Construction, 15% Maintenance , 71% Renovation Most -Buildings & Industrial facilities 834 injuries recorded for survey 19 different trades - pipe fitters, laborers, carpenters - 52% of sample

  13. CII Study Two Categories of Injuries Medical Case Injuries Requires only doctors attention before worker returns to work Lost-workday cases Injured worker could not return to work the following workday or has to be reassigned work.

  14. Research Methodology Questionnaire Survey For each injury experienced, the site personnel were required to quantify Number of hrs missed by worker Hourly wage Supervisory time spent Crew Disruption Computations were made and the injury type and associated information were correlated.

  15. Distribution for Medical-Cases AVERAGE FIELD INDIRECT COST $442.40 (Excluding Claims) AVERAGE DIRECT COST $519.15

  16. Distribution for Lost-Day Cases AVERAGE FIELD INDIRECT COST $1613.21 AVERAGE DIRECT COST $6909.98 (No Liability claims)

  17. FINAL CII RATIOS Excluding Claims 0.85 (Medical Cases) 0.23 (Lost day Cases) Including Claims 1.182 (Medical Cases) 2.058 (Lost day Cases) Cost ratio higher on Larger projects

  18. Example Project has 34 Medical Cases & 8 Lost day cases find cost of injuries Medical Case indirect cost = 34 * 614 Direct cost = 34*519 TOTAL = $38,522 Lost Day Case Indirect Cost = 8* 14,223 Direct Cost = 8* 6,910 TOTAL = $169,064 TOTAL COST = 207,586 VERY APPROXIMATE!

  19. Example B There are 67 Medical Case Injuries & 21 Lost Day Injuries on a project Total direct cost (insurance) = 183,000 Find total cost of Injuries

  20. The Regression Models The book also presents a Regression model for computing costs At present this is regarded as an academic exercise Application is limited

  21. A REGRESSION MODEL Medical Case - Field Indirect 150 + 15*F + 30*H +100*A (R= 0.79) 150 + 80*H + 80*A (R= 0.37) Total indirect = Field Indirect * 1.4 Lost Day Case - Field Indirect 625 + 20*F + 20*H +50*V625 + 100*H + 100*V Total Indirect = Field Indirect * 9 F = Hrs lost for follow up care H= Hrs lost on day of injury A= Admin & Sup Hrs for Injury on the day V= No. Hrs spent by admin personnel to investigate

  22. Example Worker falls - gets serious cuts absent 6hrs on day of injury Absent for 10 days 6hrs lost for fellow worker Sup time = 2 hrs Follow up treatment = 30 hrs FIND TOTAL COST!

  23. COSTS NOT ASSESSED Loss of Pay for worker Pain & suffering Effects on Family members Personal Suits Damage to Company Image Reduced Profit Margins Removal from shortlists Reduced Morale Criminal Charges

  24. BIG_BLUE MILLER PARK CRANE ACCIDENT

  25. Lawsuits After a three-year court battle, attorneys for Mitsubishi Heavy Industries of America and the Miller Park stadium district “agreed Friday on an out-of-court settlement on the costs to build and repair the stadium’s troubled roof,” according to Don Walker of the MILWAUKEE JOURNAL SENTINEL. The stadium district will receive $28.95M from Travelers Indemnity Co. of Illinois, the main insurer in the case, and Royal and IINA insurance companies, while Mitsubishi will “pay the district $4[M].” Mitsubishi will receive $6M from the district, “all of which had been set aside for years under existing district budgets, and will receive $15.75[M] from Travelers, Royal and IINA.” Ove Arup, a structural engineering firm, also agreed to pay Mitsubishi $250,000. Miller Park stadium district Exec Dir Mike Duckett said the roof remains under warranty, and Walker noted the warranties “would come from firms that did repair work on the roof.” Walker wrote Mitsubishi “likely will have no further involvement” with the roof, though it “must honor its warranty obligations on non-moving parts of the roof http://www.bizjournals.com/milwaukee/stories/2001/02/19/story2.html

  26. Other Law Suits Milwaukee, WI: (Aug-07-07) The families of four workers who suffered post-traumatic stress disorder in the aftermath of the Big Blue crane collapse in July 1999 at Miller Park brought a lawsuit against Mitsubishi Heavy Industries of America and nine other defendants. The suit stemmed from the accident where three ironworkers were killed, delaying the opening of the baseball stadium until March 2001. The four workers are Joseph Edwards Jr., Shayne Olson, Robert Becker, and Thomas Freda. Sources state that Olson and Edwards were operating smaller cranes at the construction site on July 14, 1999, when Big Blue became unstable. Freda was on the roof of the stadium when he saw the crane collapse. Becker was the last person to speak to ironworkers Jeffrey Wischer, William DeGrave, and Jerome Starr, who were killed in the accident. Big Blue was lifting a 450-ton piece of the roof when the piece began swaying in the wind and the crane collapsed. Wischer, DeGrave and Starr were suspended nearby, 200 feet in the air, in a basket that another crane hoisted. Falling debris collided with the basket, instantly killing the men. In a settlement reached, the ironworkers' widows received millions in compensation under the terms of a separate agreement.

  27. Next Step People should be aware of Indirect Costs Law suites are a major component But total can add-up to be significant even without Law Suits Productivity & Safety are not in conflict

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