The Monetary Value of Safety

November 15, 2006 • Injuries at the workplace cost the United States of America billions of dollars every year. Even one workplace injury could affect the livelihood of a small business. According to the National Academy of Social Insurance's study on workers' compensation, nearly $87.4 billion was spent on employees in 2004 to cover workplace accident costs. In an effort to encourage safety training and make business owners understand the monetary risks involved in a poor training regimen, OSHA has compiled a website titled, “Safety and Health Topics: Making the Business Case for Safety and Health,” a one-stop area where employers can find research papers, case studies, and real-life success stories of employers who have successfully integrated safety programs.

 

While much of the information available on the site is dated, a treasure trove of useful advice and pertinent facts can be gleaned from the various pieces that are spread throughout the site. A vast amount of knowledge is just a few clicks away, and topics include motor vehicle safety, occupational exposure, personal protective equipment, and ergonomics. The designers of the site have even compiled studies particular to specific industries, and list three case studies that are particularly pertinent to the construction field: “The Great American Ballpark,” Design for Construction Safety, and "A Survey of the Safety Roles and Costs of Injuries in the Roofing Contracting Industry." The following highlights from the topics page are meant to encourage you to read the case studies in whole and to review the website for additional resources.

 

The Great American Ballpark

The Great American Ballpark case study, which was formulated by OSHA and Abbott Case Studies, explores the decision-making process of “Patrick,” a county administrator whose task was to oversee a safety program for the Great American Ballpark, a new baseball stadium the would be built for the Cincinnati Reds. Patrick had two other recent stadium construction projects in Milwaukee and Cincinnati to serve as examples for his project.

 

While the Milwaukee project suffered three fatalities and finished a year late, the Cincinnati football stadium finished on-time and with an above average safety record. The difference between the two projects was that the Cincinnati stadium had been a compilation effort between OSHA, the county in which they were working, and the major contractors on the project, with money budgeted for training and testing. The Milwaukee project had not endorsed any such training and had come in $91.9 million above the budgeted price, without including the damages to the tipped crane or the awards from lawsuits. In an effort to determine the cost effectiveness of both projects, Patrick studies the two construction projects and determines the amount of money spent on each.

 

In the end, Patrick decided to approach the Great American Ballpark construction effort through the OSHA MASTER program, which was attributed to the success of the Cincinnati football stadium success. Through the safety efforts of those in charge of the project, After more than 1.2 million construction hours, the jobsite had logged a job-lost time rate of 0.8 (national rate for construction industry: 4.0 and below the 0.95 rate achieved on the Cincinnati football stadium project). This success was in conjunction with an Owner Controlled Insurance Program (OCIP). The project attempted to quantify the savings from this approach. The estimated savings for the project from July 1999 to May 2003 was $3.125 million.

 

This study provides a wonderful example of an attempt to cut costs by increasing safety. Since there is so little time lost of because of injury and accidents, any money that is spent to train or test individuals is quickly regained through high work efficiency.

 

Design for Construction Safety

Design for Construction Safety is a collaborative website created by Mike Toole at Bucknell University in conjunction with the ASCE Construction Institute's Site Safety Committee and the OSHA Alliance Program Construction Roundtable. While not a case study, this website is a great tool for integrating safety into the construction workplace.

 

Several articles by various experts in the field are featured on the website including: “Improving Construction Safety through a Project's Design: The Impact of Design on Safety” by John Gambatese and “Design Engineers' Responses to Safety Situations” by T.M. Toole. Design for Construction Safety functions as another tremendous safety resource for any construction employer.

 

A Survey of the Safety Roles and Costs of Injuries in the Roofing Contracting Industry

While the other two sections listed in this article discuss the advantages of safety when it is properly conducted, “A Survey of the Safety Roles and Costs of Injuries in the Roofing Contracting Industry” takes a different approach to the subject matter. It analyzes the direct and indirect costs of accidents on the jobsite while trying to determine the role of safety programs and the opinions held toward those programs by management. Sang D. Choi, Ph.D., CPE, and an assistant professor in the Occupational Safety and Health Department at the University of Wisconsin-Whitewater, conducted the survey. His findings again find that safety can not only increase worker's well-being, but increase profits.

 

In his study, Choi found that larger companies were more apt to have full-time safety directors, while smaller businesses simply relied on the foreman to enforce proper safety practices. However, the well-being of the employee seemed to be the top priority of most roofing companies, but the motivation to change a safety program often came as a result of an injury or illness.

 

Choi's conclusions led him to believe that proper implementation of an effective comprehensive safety program would not only increase safety but decrease insurance premiums leading to increased profits. He believed that smaller companies had the greatest room to improve these numbers.