Download the form on work accident cost items

COST - BENEFITS ANALYSIS OF OCCUPATIONAL HEALTH AND
SAFETY MANAGEMENT IN THE ENTERPRISES
Jan Rzepecki, Ph. D.
Central Institute for Labour Protection
00-701 Warsaw, Czerniakowska 16, Poland
e-mail: [email protected]
phone (+4822) 623-46-69
Introduction
Economic studies on OHS at company level should include both, current as well as projected
cost - benefit analyses because they facilitate the planning of prevention activities in such a
way as to ensure the highest possible efficiency at the lowest cost.
Method
Supported by information technology software, a CBA model has been developed at Central
Institute for Labour Protection in Warsaw. It takes into account the following of the OHS cost
items: (Fig. 1).
Accident insurance
premiums
Costs of accidents and
occupational diseases
Costs of absenteeism
Costs of overtimes
Decreased productivity
Benefits due to work in
harmful and noxious
conditions
Costs
of prevention
Figure 1. The main sources of OHS costs
OHS costs
Working
environment
The CBA model facilitates the entering and calculating of specific OHS items listed in Fig. 1
Thanks to the software, it is possible to calculate the cost of two major types of accidents,
those involving injuries and near – accidents, which is based on the form on work accident
cost items. (Fig. 2).
.......................................................................................................
Company
Subsequent number of accident
THE FORM ON WORK ACCIDENT COST ITEMS
Date of accident:
Time:
Division / Unit:
Type of accident consequence:
Division code:
- injury (-ies) of a worker without property loss
- injury (-ies) of a worker with property loss
- accident leading only to property loss
Brief description of the accident and incurred or potential property loss
First and family name of the injured person:
I.
Control No:
WORKING TIME LOST FOLLOWING THE ACCIDENT
No.
Persons
A.
On the day of the accident:
1.
Injured person
2.
Person organising first aid
3.
Person providing first aid at the accident
site
4.
Person in charge of re-arranging work
5.
Number of
persons
Time (hours)
Wage cost
(hourly rate)
Cost
Other persons
Cost of time lost on the day of accident
B. Injured person’s absence period
C. Time spent on accident investigation:
1.
Supervision personnel
2.
Accident witness(-es)
3.
Other persons
Cost of time spent on accident investigation
D. Planning and time spent on the implementation of preventive measures and prophylaxis
1.
Manager
2.
Supervision personnel
3.
Technical construction or technology
engineer
4.
Other
Time spent on planning and research-development activities
E. Other (for e.g. time to re-train the replacement worker or the injured person upon return to work etc.)
1.
2.
3.
Other costs - Subtotal
COST OF TIME LOST DUE TO ACCIDENT
II. MEDICAL AID AND TRANSPORT
COST OF TRANSPORTING THE INJURED PERSON HOME / TO THE DOCTORS
Working time of medical personnel at the in-house medical unit
Dressing materials and medication used at the in-house medical unit
Cost of external medical care
Other items
Cost of medical transport and aid
III OVERTIME
No.
Worker
Working time (hours)
Wage cost (hourly
rate)
Cost
Wage cost (hourly
rate)
Cost
Overtime on the day of accident
1.
2.
Overtime during the absence of the injured person
1.
2.
COST OF OVERTIME:
IV. REPLACEMENTS
No.
Replacement
Working time (hours)
Replacement on the day of accident
1.
2.
Replacement during the absence of the injured person
1.
2.
COST OF REPLACEMENT:
V. PRODUCTION DISTRUBANCES
No
1.
2.
3.
4.
5.
6.
7.
Type of disturbance
Duration of
disturbance
Cost of
disturbance
Cost
Production stopped at the division
Production stopped at other
divisions
Revenue losses due to reduced productivity
revenue losses due to lower production output quality
Production assigned to sub-contractor
Machine rent
Other
COST OF PRODUCTION DISTRUBANCES
VI. PROPERTY LOSSES
Type of losses
1.
Consumed raw materials
2.
Destroyed intermediate products
3.
Destroyed finished products
4.
Lost value of machines and equipment
5.
Lost value of vehicles
6.
Purchase of new machines and equipment
7.
Purchase of new vehicles
8.
Other losses
COST OF PROPERTY LOSSES
Cost
VII. .
REPAIRS
Repairs made in house
No
Type of repair
Number of
workers
Working time
(hours)
Wage cost (hourly
rate)
Cost
1.
2.
Repairs done by sub-contractors:
No.
Type of repair
Cost
1.
2.
COST OF REPAIRS
VIII. COMPENSATIONS
No
Type of benefit
Cost
1.
Single compensations
2.
Compensation benefits
3.
Compensation allowances due to transfer to other work place
4.
Compensation allowances due to vocational rehabilitation
5.
Compensation due to the loss of personal property items
6.
Funeral allowance
7.
Fatality payment
8.
Death compensation payment
9.
Others
COST OF COMPENSATIONS
IX. OTHER COST ITEMS
No
1.
Cost item description
Cost
Contractual fines
2.
Other cost - total
COST OF ACCIDENT
X.
No
INDEMNITIES RECEIVED BY THE COMPANY FROM INSURANCE INSTITTUTIONS
Indemnities due to property losses (specified as items in section 4)
Amount
1.
2.
TOTAL INDEMINITIES
COST OF ACCIDENT
NAME OF PERSON FILLING THE FORM:
First and family name
........................................
Date .........................................................
Position .......................................................................
Signature...................................................
Figure 2. The Form on Work Accident Costs
After the user has entered relevant prevention data, the software calculates the following cost
items:
 OHS staff employment;
 Purchase and maintenance of collective protective equipment;
 Purchase and maintenance of personal protective equipment;
 Purchase and maintenance of protective clothing;
 Cleaning materials;
 Audits;
 Medical examination;
 OHS training;
 Working environment measurements;
 Rescue teams and fire fighting services;
 Promotion and information;
 Fines and penalties.
CBA Model enables the development of projection studies as well as the calculation of
estimated benefits by the way of deducting certain cost items that have been as calculated
before and after taking the prevention measures in question to improve working conditions in
the company or selected department. Moreover, it enables the verification of projections that
have been made. Return on investment provides the basis for comparison between various
options of projected investment. The return on investment is calculated in the following way:
prevention (increase of inputs)
Period of return (months) = ------------------------------------------ x 12
profits (savings)
Results
In a pilot project, the CBA model was checked in four companies, where, on the average, total
inputs on prevention measures (including the cost of OHS staff employment) accounted for
0.48% of the total cost. The share of such inputs in specific companies varied from 0.18% to
0.84% of total cost. If compared to the total prevention expenses, the share of working clothes
was considerable (47%), and so was that of the item comprising personal protection devices
(28%).
The aim of pilot project was the verification of a function related to making projections on the
expected benefits of investment projects to improve working conditions.
In two companies tested to verify the CBA model, the basic investment projects included inputs
to provide collective protection i.e. improved system of ventilation in a ship building company
(enterprise A) and noise reducing measures in a production hall in a chemical company
(enterprise B). The investment projects in question were limited to departments, where the share
of employment was below 5% of the total. In the two other enterprises, the investment projects
affected the whole of a company. They comprised construction of a new building (enterprise C)
and replacement of old window frames in a SME (enterprise D) unit employing 11 workers.
(Table ).
When analysing cost and benefits according to the CBA in question, it was assumed that the
basic benefits resulting from investment projects would include a reduced number of days on
sick leaves and enhanced work efficiency.
Results of Cost-Benefit Analysis according to CBA model.
Enterprise Number of
employees
Total cost
(in
PLN’000)
Cost of
investment
project (in
PLN’000)
36,0
Investment
project as
percentage of
total cost
0,008%
Benefits thanks
to investment
project in one
year
232,0
Period of
return on
investment
(in moths)
2
A
2 502
454 168,0
B
2 907
535 375,3
60,0
0,011%
11,4
63
C
1 059
63 733,2
8 000,0
12,552%
4 165,9
23
D
11
1 097,0
22,0
2,005%
1,3
205
Conclusions

CBA Model enables the monitoring of OHS costs and benefits. Thus, it provides the
basis for assessing both, the effectiveness of OHS management system implementation
as well as that of specific activities to improve work conditions.

The results of research work indicate that there are considerable differences amongst
expected benefits and return on investment envisaged in the companies included in the
pilot project.

In large companies, the analysis of benefits as a result of a single investment project can
be particularly useful at a department level because it seldom occurs that investment
projects are implemented to improve working conditions in the whole company .

The most notable benefits from investment projects improving work conditions have
been obtained in companies with high concentration of working stations and a large
number of manual operations.
References
1.
2.
3.
Oxenbourgh M. S., Marlow P. S.: Economic models for Ergonomists. International encyclopaedia of
ergonomics and human factor. Edited by W. Karwowski. London, Taylor & Francis 2000.
Pawłowska Z., Rzepecki J. : The proposed method of calculating the cost of occupational accidents in
the company. European Conference on Costs and Benefits of Occupational Safety and Health 1997. The
Hague, 28-30 May 1997
Pawłowska Z., Rzepecki J.: Impact of Economic incentives on costs and benefits of occupational health
and safety. International Journal of Safety and Ergonomics. Special Issue 2000, 71-83.