Hidden dangers lead to hidden costs
Contractors don’t normally involve the estimating department in safety concerns except for those that affect the actual work of the estimator such as job site visits and the like. There is a much larger picture that does involve not only the electrical contracting industry but can also affect the estimators’ productivity and success rate.
Unless you have been living under a rock, you’ve likely heard about the effect of compensation rates as applied to the number of hours, which has become front-page news in many areas of the country. Recent articles in trade publications underline the threat that these costs can wreak havoc for some projects. On the positive side of this news, it would appear that NECA contractors probably have a lower loss rate than other sectors of the industry. The unfortunate fact is that when accidents are reported and the case is publicized, there is seldom any consideration for the safe firms; we’re all painted with the negative brush.
Workers’ compensation insurance rates have a finite effect on the bottom line of the firm and the final bid price. Like bonding costs and permit fees, these values were low in comparison to the other direct costs of an estimate. As things stand now, these costs can’t be taken for granted any longer and the estimator’s cost sheets needs to be current if the estimate is to be accurate.
Another cost factor that is part of the direct costs of a project are the other insurance rates that apply to field operations. While not as severe as workers’ compensation, the costs do mount up, and at times rebates may be omitted. These rebates are not of great consequence, but they do figure into the bottom line of the company and therefore the selling price of the job.
Aside from the costs, there are other factors that really can’t be quantified. One consideration often mentioned by the various construction users councils is the safety record of the various firms. The training of NECA employees should be looked at as a selling point. It is likely some of these points will make very little difference to an owner, but this is where the positive records of a firm should be used to the utmost.
From personal experience, I have observed that most of the accidents labeled “electrically caused” are the effect of untrained or minimally trained, and inexperienced persons doing journey-level work for a contractor. While younger workers seem to be more exposed to these accidents, age isn’t the real factor; it is the training that makes the difference. The costs to a firm when there is a serious accident can be tremendous. Fines by OSHA are a small part of the costs. The interruption of production on the job and the outfall of key personnel being tied up to answer legal queries can seriously damage the ability of a firm.
Those that have had an opportunity to review general contractors’ contracts will be aware that there are safety concerns covered in these contracts. In most cases, these clauses are unilateral and not in favor of the subcontractor. Estimators need to become familiar with these clauses and produce an affirmative answer to questions that come up in negotiations. When undertaking the review of contracts, depend on the legal staff and insurance specialist to provide the answers. There are also industry publications and those of allied trades that can serve as a primer for the estimator.
If the firm for which you are working has a sales team, sales brochures and the like, make sure that it does mention the good safety record of the firm and the training the company provides. Further, boast of the training the workers have completed, the more the better. Although electricians like to project a tough image, when they are recognized for the additional training that helps to make them safer workers, it does mellow some of these “tough” folks.
Costs of safety programs must be recognized and recovered in some way. These costs should not be a reason to at least provide the free training available from your insurance company and industry suppliers.
NECA and IBEW can assist with safety concerns on many fronts, including classes and specific training. The material is out there. Contact your area chapter for handouts and sources for other safety items. Most are low cost but have stood the test of time. Safety pays; make an effort to understand the nuances. EC
DAVID is a professor of electrical technology at Long Beach (Calif.) City College, a consultant and an expert witness. He can be reached at 562.597.1877 or at email@example.com.