In our April column, we discussed the cost of accidents. We demonstrated the amount of work the electrical contractor must perform in order to recover the cost of an accident. Therefore, safety becomes an economic, legal, contractual and business issue. To summarize our April column, every accident has a direct cost and an indirect cost associated with its occurrence. Direct costs include transportation for treatment, cost of the treatment itself, temporary wage replacement, permanent impairment awards and the replacement cost of damaged property and equipment. It has been found that every accident has an associated indirect cost, often referred to as a hidden cost. And this indirect or hidden cost is much higher than the direct cost. It may be 1.5 to 6 times the direct cost of an accident.
So if the direct cost of an accident is $1,000 (and it certainly does not take a very serious injury to generate $1,000 in direct costs), the hidden cost could be up to $6,000, meaning the total economic cost resulting from a relatively minor injury is $7,000. And for an injury of major proportions, which would generate a very high direct cost, the indirect or hidden cost makes the total cost of a serious accident much higher than one would expect.
Many factors add to the direct cost. However, it is difficult to quantify and identify some of the indirect costs of an accident. The multiplier of six for tabulating the indirect costs of an accident may, in fact, not be high enough to reflect all of the indirect or hidden costs.
When an accident occurs on a job site, the call for help must immediately be made. Some seek immediately to render first aid and stabilize the victim. Emergency equipment from the job site first-aid kit is deployed. Others rush to notify emergency medical services personnel. It is important your employees know to contact you as soon as possible. As a supervisor, you may have to call fire and police departments for assistance. It is up to you to activate the job site emergency plan, which should be a long-standing policy for procedures in the event of an accident. People may be dispatched to direct incoming emergency vehicles and/or to assist with traffic control and with clearing the way for the emergency personnel. Many people on the job site must be completely occupied in assisting with the emergency, as it should take priority over production.
Therein lies the cost: The clock continues to run, and the costs of these people now assisting with the emergency continue to accrue. Supervisors also must account for the employees who have become spectators. Those people are not directly involved with the incident and are standing by to see whether they can assist or are simply watching. These things lead to indirect costs.
But the list of things to be done continues, and costs continue to mount. Someone or some group of fellow workers often will accompany the victim to the hospital or will meet the emergency vehicle there. They may wish to remain there until the news is delivered regarding the condition of the victim. Someone from the company will need to notify the victim’s next of kin if there is a death and will often go in person to be with them or to accompany them to the hospital.
Sometimes news media will appear on the job site, and someone will need to deal with reporters. Accident reports and insurance forms will need to be completed. Most company policies will require that a post-accident investigation be completed and reports filed.
When work resumes on the project, productivity is invariably at an extremely low level. Everyone is talking about the accident, the person and the effects of the accident. Morale suffers on the job site and throughout the victim’s company and often for a considerable period of time after the accident. Productivity again suffers.
Practically speaking, when the work resumes, a replacement worker will have to be found, in order to fill in for the victim. This involves finding a new worker and also training that individual. It also involves a time of adaptation and team building as the new work team develops its group dynamics.
Another practicality is that the supervisor and project manager must complete daily logs to accurately reflect the events before and after the accident. Endless forms must be completed and filed. Additionally, the company’s workers’ compensation insurance rates will increase. Premiums for other insurance may very well increase, as well. The contractor’s cost of doing business increases.
Totaling these costs is almost impossible to do accurately. However, several things are certain. First, while the direct costs of any accident are substantial, the indirect or hidden costs are certainly many times higher. And because of this fact, taking elements of safety into your job site is an immeasurable investment into the financial security of your company. As the supervisor, don’t take no for an answer when requesting more safety measures.
ROUNDS is the AGC endowed chair and professor of civil engineering at the University of New Mexico. E-mail him at firstname.lastname@example.org. SEGNER is a professor of construction science at Texas A&M University. Contact him at email@example.com.