Accident costs investigation

U.S. Department of Labor, OSHA (2007), in an undated bulletin titled Safety and Health Management Systems eTool—Costs of Accidents says Studies show that the ratio of indirect costs to direct costs varies widely, from a high of 20 1 to a low of 1 1. Geige Safety Group provides OSHA Academy Course 702— Accident Investigation Recommendations (April 2010). They say If the indirect (uninsured) accident cost totals 160,000 and the direct (insured) cost is 40,000, the ratio of indirect to direct costs will be 4 to 1. ... 

Direct accident costs are substantial and those costs are a form of waste. Ancillary costs, such as those deriving from interruption of work, facility and equipment repair, idle time of workers, training of replacements, and investigation and report preparation time may represent an amount of waste comparable to the direct costs. For incidents resulting in serious injury, particularly when property damage is extensive, the ancillary costs and accompanying waste can be substantial. 

Extended costs may include increased insurance or workers compensation cost, reporting of accidents, travel, investigation, cleanup at the accident site, legal and medical services, more extensive rehabilitation of the plant, and damage to public image, among others. 

Table 13.3 shows a simple scheme for the registration of accident costs. It is based on the market-pricing model and is intended for use by the investigators as a complement to the ordinary investigation form. In most practical circumstances, the lost working hours due to sickness leave will dominate the monetary losses. A simple alternative is to include the first line of the table in the form for routine accident investigations. 

Determining due care is only half of the story. It is also necessary to see whether both parties will freely choose this level of care. Game theory is a powerful tool for investigating actual behavior. It uses a payoff matrix which indicates the total care and accident cost borne by each party conditional on the level of care by both parties. The payoff matrix for the first example is shown in table 7.3. Each cell of the matrix is defined by the level of care taken by the two parties. For example the upper-right cell represents the situation where the railroad takes care but Party A does not. Inside the cell in parentheses are shown the costs to the railroad and then, after the comma, to Party A. Because these are costs, they are shown as negative amounts. For example, in the upper-right cell the railroad incurs its expected accident costs of ten plus five which is the cost of taking care, and Party A only bears its expected accident costs of ten. 

An apparently high level of effort is required to report and investigate near misses. The costs of this effort are quantifiable. The benefits of these investigations are not as easy to tabulate. The actual number of accidents that have been prevented by improved near miss reporting may never be known. However, organizations that have seen dramatic increases in near miss reporting have also seen dramatic reductions in losses. The root causes of near misses of safety consequences may be the same management system weaknesses that adversely affect operability, quality, and profitability. 

The importance of prompt follow up and implementation of recommendations cannot be overemphasized. The impact on a government investigator, or a jury, of recommendations made but ignored cannot be overstated. This is especially true if it appears that the recommendations were not implemented due to their costs. It is the company lawyer s nightmare to learn, for example, that a past audit identified a problem and years later, a personal injury-causing accident occurred because the problem was not fixed. 

The New York Times (January 27, 1985) conducted an extensive investigation involving more than 100 interviews in India and the United States about the gas leak. Its findings indicated that the plant design was from Union Carbide in the United States and that many of the safety features of the plant were inoperable at the time of the accident, in some cases to save on costs ( Design Flaws Contribute to Gas Leaks ). 

Incident Investigation, Analysis, and Costs is the title of a chapter in the 12th edition of the National Safety Council s Accident Prevention Manual Administration Programs. 

The latest spectacular accident happened in Berlin, when a US 500-lbs Demolition bomb exploded during building work. It costed the lives of three building workers. This accident emphasised the necessity for thorough site investigations for unexploded ordnance (UXO) and other dangerous left-overs, even for the price of higher development costs. 

Besides the post-TMl plant improvement programmes (prevention) which cost millions of dollars for each plant, in the Western countries investigations were started on what else could reasonably be done to the plants with the goal of stopping the progression of an impending severe accident or to mitigate its consequences. 

Accidents occur - they do not happen-, they are caused - by shortcomings on the part of the employer, the employee or both. The results can be traumatic for both for the employee in the way an injury can affect him personally, his family and their quality of life for the employer through lost production, time spent on investigations and at worst, the cost of a legal action. 

The need to use safety costs in management requires keeping track of safety costs. An accounting system must track actual expenditures. There are many kinds of safety costs as noted in Table 3-1 and Table 35-1. Injuries and illness incur costs. Changes incur costs. Training, inspections, accident investigations, and other safety prevention activities incur costs. As one completes each case or program, there should be a way to track the expenses incurred. 

Without adequate accident investigation data the Company may be subjected to costs, claims, and legal action for which it has no defence. 

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