Estimating the Cost of Accidents

To an alert and caiefiil operator, they won t happen. But the opportunity for them to happen abounds, especially at night and in bad weather. 

Calculating the direct cost associated with lost work hours involves compiling the total number of lost hours for the period in question and multiplying the hours times the applicable loaded labor rate. The loaded labor rate is the employee s hourly rate plus benefits. Benefits vary from company to company, but typically inflate the hourly wage by 20 to 35 percent. An example of how to compute the cost of lost hours is shown here. 

Employee Hours Lost (4th quarter) x Average Loaded Labor Rate = Cost 400 X 30.00 = 12,000 

In this example, the company lost 400 hours of work due to accidents on the job in the fourth quarter of its fiscal year. The three employees who actually missed time at work formed a pool of people with an average loaded labor rate of 30 per hour ( 25 average hourly wage plus 20 percent for benefits). The average loaded labor rate multiplied times the 400 lost hours reveals an unproductive cost of 12,000 to this company. 

By studying company records, management can also determine medical costs, insurance premiums, property damage, and fire losses for the time period in question. All of these costs, taken together, result in a subtotal cost. This figure is then increased by a standard 

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Accidents are expensive. To successfully incorporate prevention in the workplace, management must be shown that accidents are more expensive than prevention. To do this, they must be able to estimate the cost of accidents. The costs associated with workplace accidents, injuries, and incidents fall into the broad categories listed in Figure 3-1. 

Even today in the United States there are about 13 deaths daily in the workplace and 4 million injuries per year (Barab, 2012), which means we have to better integrate system safety into all engineering aspects. Studies conducted at Stanford University estimate the cost of accidents for nsers of conunercial and industrial construction at 1.6 billion annually. Hidden costs were found to be two to 18 times higher. Researchers also found that construction safety research over a 10-year period showed irrefutable... 

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