Calculating Safety Costs

There are numerous ways to calculate how much safety is going to cost. The risk assessment process, especially the risk expectation model or dollars at risk, is one method this chapter has explored. Before describing the varions methods available to calculate safety costs, it is important to note that there are other, less tangible activities that can affect safety costs. Their costs can be calculated using normal engineering economics methods. 

For example, Kletz (1991) states that from 5% to 10% of the capital costs of a new plant could be reduced if it were possible to reduce inventories of hazardous materials, thus lowering the cost of safety protective systems (fire protection sprinklers, etc.). Kletz goes on to point out that using inherently more efficient processes, such as smaller reactors, pressure, storage vessels, etc., will reduce the size of the process units and therefore lower the overall cost of the plant and also make an inherently safer plant. 

Of course, the best way to reduce the cost of safety in a system or process is to design it in. The beginning of Chapter 4 documents numerous examples of how having a good safety management system and designing safety from the start is the most cost-effective method. 

System Safety Engineering and Risk Assessment A Practical Approach 

The most typical safety measurement tool is to track the number of accidents. The types of data needed to do this are costs of system downtime (and lost productivity and product or market share), equipment damaged during an accident, accident cleanup, equipment replacement, and, of course, personnel injuries and death (including medical costs, workman s compensation, and potential lawsuits). These data can be easily trended and tracked on a monthly or quarterly basis. You can then compare your statistics to national averages. The U.S. National Safety Council (many countries publish comparable information at the federal governmental level) publishes accident costs across all industries. These costs include estimates of lost wages, medical expenses, insurance administration costs, and uninsured costs. 

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Another major impediment is that resource recovery facilities must compete with landfills in most communities. Most of these landfills fall far short of satisfying even reasonable protection against pollution of ground waters and threats to public health and safety. Further, few communities account for the full cost of land disposal. The value of land used as a landfill disposal facility will diminish greatly as it reaches capacity and must be closed. Few municipalities reflect this decrease in value in calculating disposal costs. Sometimes... 

The volume of sodium to be measured from systems should be accomplished by calculations of remaining sodium. If the potential exists for negotiation, the regulator should be educated on the relative safety, costs, risks and potential for environmental impacts from the presence of bulk or residual sodium. This activity can significantly reduce the cost to decommission a fast reactor. 

In order to compare the cost-effectiveness of the two measures, the cost-effectiveness ratio for both measures is calculated. The cost-effectiveness ratio for safety measures 1 and 2 is equal to C /Z and C2/Z2, respectively. Safety measure 1 is more cost-effective than safety measure 2 if Ci/Z < C2IZ2. To see whether safety measure 1 is preferred to status quo or not, the cost-effectiveness ratio has to be compared with a reference value, R. The reference value clarifies how much money the decision-maker is willing to pay to obtain one unit of effectiveness. Implementation of the safety measure is preferred to status quo if the decision-maker is willing to pay more to obtain one unit of effectiveness than the cost-effectiveness index expresses, which means that safety measure 1 is preferred to status quo if / > (C,/Z,). 

The key questions by the assessor are about an added benefit and about the medical value. In the Netherlands, the medical value is assessed unofficially by means of the Dunnings Funnel, which evaluates the candidates by defined criteria, e.g. necessity, effectiveness, safety, cost-effectiveness commonly calculated as incremental cost-effectiveness ratio (ICER), and social arguments such as budget impact or own responsibility [42]. The societies willingness to pay for an additional quality-adjusted life year gained (QALY) is as follows [43 5] ... 

Chapter 24 looks at some of the economic evaluations that can be applied to nuclear reactor systems. The calculations of costs throughout the fuel cycle and the cost of construction of the nuclear plant determine what the cost of the generated electricity will be. Chapter 25 discusses radiation protection, which is important to persons working with radioactive materials in any setting and also important to the safety of the general public. A simple form of radiation protection is sun block to protect the skin from natural solar radiation, or a lead apron by a dental technician to protect a person while X-rays are being taken. 

A mixture of qualitative and quantitative methods was used in this work. These include reliability analysis, eapital investment costs, safety, feasibility and environmental impaet assessment (ElA). Tools used include failure mode and effect analysis (FMEA), environmental impaet assessment, and risk analysis. FMEA was used to conduct a reliability analysis, EIA was used to calculate the concentration of the flared gas eomposition partieles affeeting the local environment, and risk assessment was employed to find out the hazards and exposure in the case study in order to assure safety. Cost estimation was used to ealculate the capital investment cost for each option considered. Information and expert opinions were eaptured through interviews and questionnaires. 

One common method of calculating the cost of safety is the use of expected value. This is a fairly typical method taken from economics management theory. It states ... 

The most popular method of calculating safety is the cost-benefit analysis approach. It takes the present value of the costs of injury and death to people involved in the accident with costs of equipment damage. Accident rates of similar systems or industries are estimated using a regression model, and marginal probabilities are determined. All of this information is combined into the cost-benefit model. 

The tool is based on the use of accident data from European railways to calculate estimated cost of safety, commercial and environmental losses. 

The problem of providing stable economic foundations for implementing and managing road safety programs is the key to improved effectiveness and efficiency of road safety work. A decision is seldom taken to ensure the availability of a budget for road safety activities from the national budget. Moreover, the lack of information on measures implementation costs at national and international level, combined with a lack of knowledge on the methods appropriate to calculate these costs, makes the evaluation of the actual implementation expenses an estimation by itself. 

Establish a fair analysis of the economic cost of incidents/accidents. The systematic analysis of safety and the trade-offs that it involves require a very realistic approach. Three sub-cases should accompany the risk analysis, in order to prepare for trade-offs and preserve as many as possible of the actions in this dimension of safety one sub-case calculates the cost of quality losses and damages, a second offers an assessment of the impact on the commercial image of the loss of quality and mediocre safety performance, and a third calculates the potential impact of what one is probably not going to do, due to lack of resources or due to trade-offs in favour of other priorities. 

The manufacturing cost consists of direct, indirect, distribution, and fixed costs. Direct costs are raw materials, operating labor, production supervision, utihties, suppHes, repair, and maintenance. Typical indirect costs include payroll overhead, quaHty control, storage, royalties, and plant overhead, eg, safety, protection, personnel, services, yard, waste, environmental control, and other plant categories. However, environmental control costs are frequendy set up as a separate account and calculated direcdy. The principal distribution costs are packaging and shipping. Fixed costs, which are insensitive to production level, include depreciation, property taxes, rents, insurance, and, in some cases, interest expense. 

Then, the absolute reduction in frequency, consequence, or risk can be calculated and compared to the cost of implementing the improvement, allowing you to determine whether the change represents the best use of resources to improve safety. 

The term objectives is not defined in ISO 8402 but in ISO/DIS 9000 2000 (soon to replace ISO 8402) quality objectives are defined in ISO 9004 as key elements of quality such as fitness of use, performance, safety, and reliability. It also mentions the calculation and evaluation of costs associated with all quality objectives. It goes on to suggest that specific quality objectives be documented and be consistent with quality policy as well as other objectives of the organization. You can then go on to set new objectives. 

The second option considered was use of interception wells. One- or two-pump wells could be constructed at calculated spacings to create a hydraulic trough parallel to the canal to intercept the product. This design was considered more acceptable to the safety officer and the facility engineer, but was rejected by the maintenance foreperson because of the relative complexity of the operation system. The number of submersible pumps and sophisticated electronic controls would have required employment (or training) of technical specialists beyond the cost budgeted under normal operations. 

The material of construction for the ET screw is critical in order to provide the proper strength in the event of an improper start-up procedure and to minimize cost. The maximum stress that the screw will experience during operation will be in the feed section where the root diameter is the smallest and the torque is the greatest. The calculation of the power that a screw can transmit safely is provided in Section 10.4.5. This calculation ignores the strength contribution from the flight. The safety factor for this screw made from three different materiais is provided in Table 9.6. 

A large proportion of the technology appraisals so far performed by NICE on pharmaceuticals have been on products recently introduced into the marketplace. This has created difficulties for manufacturers trying to answer the questions posed by the appraisal. For most compounds, at the time of launch it is very unlikely that outcome studies will have been completed that allow accurate cost effectiveness calculations to be performed. The emphasis in Phase III is on clinical efficacy and safety to satisfy the requirements of the regulatory authorities. In most cases, it is impossible (and probably imethical) to perform pragmatic studies on the general population imtil safety and efficacy have been satisfactorily demonstrated in a tightly defined trial population. 

Based on the average transport duration, inventory carrying costs for pipeline inventory are calculated (3.18). Further safety stocks are considered to be independent of the chosen network design and hence not considered. 

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