and welcome once again to these lectures on principles of construction management where
we are talking about different aspects different facets of managing a large construction project
in the last few lectures we have been talking about construction safety the importance of
that the statistics of construction safety the personal protective equipment that is
used by the workers to make sure that the injury arising out of an accident is minimized
and so on and today the discussion focuses on implications of construction accidents
and the cost of safety now to recapitulate a little bit about construction accidents
construction site is an inherently dangerous place with a high degree of risk and hazards
they will be work at heights they will be work in confined spaces they will be work
underground but that doesnt mean that the construction activity shouldnt happen all
that we need to do is to take precautions so that an accident does not happen
accidents at construction sites are unforeseen events that have several implications expenditure
of resources on accidents is completely avoidable if we get this thing clear in our mind that
accidents are avoidable a lot of things would fall in place implications of an accident
could include loss of life and property with obvious delays in the construction project
financial loses compensations hospitalization costs cost of investigation and so on are
perhaps only a minor part compared to the indirect and intangible loses and sufferings
of the victims and also the indirect loss that the company or the employer suffers on
account of loss of reputation and so on
a construction manager needs proper understanding of not only construction related issues at
work like the p p e the labour loss and so on but also of the direct and indirect costs
involved in the case of an accident and its prevention there are essentially two sides
to the coin when we talk of cost of accidents one is the cost incurred when an accident
occurs and the other side is the cost involved in preventing that accident preventing that
accident the cost incurred in the later part is basically what can be called the cost of
safety a final decision is of cost taken on the basis of the balance of the two if the
cost of the accident involved was negligible then nobody would spend any resource on preventing
that accident but if the cost of the accident involved is unacceptable then obviously as
much resources as may be required shall have to be spent in preventing that accident this
balance is basically at the route of all hard thought processes when we talk of construction
safety and try to understand the cost implications the cost of an accident of course is different
for the employer and the employee or the victim
we must remember that as far as construction accidents are concerned the person who gets
injured or perhaps looses a limb or life is not necessarily the employee it could be a
bystander it could be a passerby or it could be somebody not directly working with the
employer which is responsible for that accident so those are some final details of the issues
involved but essentially we must understand that the cost to the employer does not necessarily
all the time include all the costs that the employee or the victim has to incur now this
here is a typical job safety cost breakdown in the case of medical case injuries there
is cost associated with injured worker cost material in equipment damage cost crew cost
impact cost and supervisory in administrative cost
when it comes to restricted activity and lost workday cases the distribution between the
injured worker costs the impact costs crew costs material in equipment damages supervisory
and administrative cost and replacement worker is given on the figure on the right hand side
now when it comes to accident costs the cost associated with the accidents can be the following
one is the direct costs that is cost that occur directly as a result of an accident
and include medical costs compensation and so on as far as indirect costs are concerned
these are less obvious but a direct consequence of an accident
the indirect costs are hidden difficult to quantify and possibly incurred over a much
longer period of time by the same token direct costs are incurred over a reasonably or relatively
shorter period of time after the occurrence of the accident now this is a very simple
way of looking at the accident costs we look at the costs to the employee or the worker
or the victim and we look at the cost of the employer and in both cases we need to look
at the direct and indirect components this is the proverbial tip of the iceberg representation
of the direct and indirect costs traditionally indirect costs are measured is being four
times the direct costs but the indirect costs of injuries may range from two to twenty times
of the direct costs
so it is not important to assign a value to it but it is important to understand that
the direct cost is only a small part of the overall or total costs involved whether it
is the employer or it is the victim or the employee now let us look closely into some
of the components of these direct and indirect costs with respect to construction accidents
as far as the direct cost of the employer is concerned it could be loss of property
hospitalization and medication of the victims or the people who have been affected by the
accident the compensation which has to be paid to them the salary payment for the unperformed
work there are provisions in the contract that if a worker is injured while performing
his duties employer will pay him full wages for the time that he is hospitalized or incapacitated
that is salary payment for the unperformed work replacement of machinery if involved
and the cost of investigation so these are some of the direct costs
coming to indirect costs of the employer the list is very long and lets begin with the
pain and sufferings this is simply very difficult to convert in to monitory terms time lost
from work by the injured worker and lost time by the fellow workers very often in a construction
related accident the time lost that occurs is not only because of the absence of the
worker who is hurt or who is incapacitated but also fellow workers who have to immediately
take care of him accompany him perhaps to the hospital and so on loss in earning power
of the injured worker cost of the new or replacement of the employee cost to train the new worker
damage to equipment and tools loss of production and productivity cost of delays an accident
could cause appreciable delays in the project depending on the severity of the accident
the work at a construction site could be actually closed till sustainers investigation is completed
and that kind of a stoppage is unplanned and could be very dear as far as the contract
is concerned and as far as the project completion is concerned
failure to meet contract demands overhead costs associated with the disruption of work
and loss of reputation loss of reputation would include a possibility that the contractor
or the employer is debarred from bidding further in other projects for a certain period of
time now as far as the cost to the employee or the worker is concerned the direct cost
is basically the loss of income and the possibility of loss of job and the health care cost no
matter how much coverage is there from the employer or the insurance company as far as
health care cost is concerned there will be a substantial amount of expenditure which
will be incurred directly by the employee or the worker or the victim in health care
depending upon the severity of the accident
as far as indirect costs is concerned it is the pain and suffering of the injury and the
illness the family sufferings is not only the person whose injured or incapacitated
who suffers but all those around him go through a very difficult time in the course of recovery
loss in earning power time lost from work and economic loss to the families so these
are some of the components of the indirect costs as far as the cost of the employee is
concerned now construction accidents can also be looked at in a very different way there
is a component which could be called the insurance costs and the uninsured costs
depending on the provisions of the contract the employer or the contractor takes insurance
policies which cover the possibility of an accident but some of the implications of that
accident are covered by the insurance policy which is what is being called as the insurance
costs but then there are several other things which are simply not covered and that is what
is being called as the uninsured costs now looking at the insurance costs or the cost
which is covered by the insurance company it is employers liability in terms of the
insurance policy for the workers which could cover hospitalization and other compensations
depending on the severity of the accident and the product liability which could be insurance
for the equipment
as far as the uninsured cost is concerned it would be the product and material damage
lost production time legal costs over time and temporary labour investigation time or
administrative costs supervisors time fines involved loss of expertise or experience loss
of morale of the workers and bad publicity there is no way that these costs can be insured
against simply because it is completely uncertain as to what the kind of costs would be bad
publicity is something which cannot be simply converted to money terms
similarly fines its very difficult to figure out what the kind of fines would be imposed
on the contractor in the case of an accident similarly loss of morale is also something
which is simply cannot be compensated and so is the loss of expertise or experience
in case of the worker which has been lost or incapacitated now having covered some discussion
and having a better understanding of the cost involved lets move for step further and discuss
the following having talked about the cost of an accident we also need to look at the
cost of preventing an accident now we must remember that insurance cost is not an accident
prevention cost but an insurance to offset the actual cost of an accident its very difficult
to take an insurance policy to prevent an accident the insurance policy only protects
you against large amounts of expenditure in the event of an accident
as far as the accident prevention is concerned it is the employer who has to take appropriate
preventive measures of course the expenditure on accident prevention programmes could be
one of the factors that could determine the premium for the insurance cover at a construction
site what is being said is that if the employer takes a lot of precautions and the insurance
company believes or feels that with these measures in place the likely hood of an accident
at that site is lower the premium could be lower so let us try to look at the elements
of the cost of safety what does it cost to a company to prevent an accident the first
thing that comes to mind is the cost of the safety personnel the employer has to have
a very elaborate setup of trained safety personnel at their head offices at each construction
sites they have to be qualified they have to be experienced and they have to be given
responsibilities as we have discussed it
the safety personnel have to be experienced qualified and cost to the company that is
there is a salary involved and there is indirect cost in terms of all their benefits so this
standard cost that is applied to all other employees is also applicable to safety personnel
so all the expenditure that the company incurres in terms of safety department is definitely
billable or accountable in the sense of a cost of safety moving further there are safety
meetings where not only the safety personnel but also people from the other departments
participate
so this time that other suspend in safety meetings is also part of the expenditure toward
safety and that accounts as part of the cost of safety safety training and orientation
programs whether they are held every day whether they are held only at the time of induction
of the worker whether it is only for the safety personnel to upgrade their skills or for everyone
else to better understand concepts of safety and its importance all these safety training
and orientations programs that time spent by all the employees of the company is part
of the costs of safety
personnel protective equipment of course is definitely part of cost of safety and conducting
safety audits which could be cheques carried out by people within the company or outside
the company and drug and alcohol testing any kind of medical testing which is part of a
safety program because its very clear that healthy workers are our prerequisites to having
a safe environment so at times we can say that yes drug and alcohol or any medical testing
which is a part of the worker programme can also be counted towards the cost of safety
though in the larger sense this could be part of a medical insurance programme or the cost
of health as far as the company is concerned
so without getting into the final detail as to which way we should count them we must
understand a comprehensive picture that yes in order to prevent accidents there is a cost
involved and that cost is made up of several components which has been discussed in this
slide so moving forward what we really have to do is to be able to carry out a cost and
benefit analysis as far as safety is concerned what that means is to find out how are the
prevention and accident costs and the safety benefits related there is a positive relationship
between the prevention costs and the benefits from preventive measures so if we increase
the preventive costs that is we spend more money spend more resources in preventing an
accident the benefits from preventing those measures are positively related they also
increase also the cost of accidents is inversely related to the cost of prevention as more
resources devoted to prevention the resulting cost of the accident decreases and a similar
inverse relationship exists between the accident costs and the benefits from working safely
this is represented in this systematic diagram here which talks of the relationship between
accident costs prevention costs and benefits so if we increase our prevention costs then
the accident costs which is shown here decreases and as we increase this the benefits increase
so this picture here is a schematic representation when of how the accident costs prevention
costs and benefits are related
so this comprehensive discussion of how these three parts are related more or less brings
be to an end of the discussion today were we briefly talked about how to look at the
cost of an accidents from the employers perspective and from the employees perspective in terms
of direct and indirect costs and we also spend some time talking about the components of
the cost of safety and insurance this here is some of the references which we can suggest
and you may use to deepen your understanding about these aspects relating to safety and
i look forward to talking to you once again on an other topic
thank you