FEATURES - HEALTH AND SAFETY
South Africa ’ s construction industry has a less than 50 % rate of compliance with health and safety regulations . Image : Pixabay
THE COSTS OF ACCIDENTS – DIRECT AND INDIRECT DIRECT COSTS
Direct costs tended to be those associated with the treatment of the injury arising from the accident and any unique compensation offered to workers as a consequence of being injured . These expenses that can be easily identified are the ‘ direct costs ’ of the accidents . These costs are in the main covered by workers ’ compensation insurance .
Further , historical records could be reviewed to determine the expenditure attributed to each particular injury in the organisation .
Hinze ( 2006 ) confirmed that most of these costs are covered by workers ' compensation insurance , such as medical expenses , lost wages , sick leave administration , temporary disability payments and hospitalisation . However , the remaining costs had to be covered by the business itself . What may initially be classified as an inconsequential or minor accident could prove to be exceedingly costly in terms of the associated indirect costs .
INDIRECT COSTS
• First aid treatment
• Taking injured person to hospital
• Making the area safe
• Immediate staff downtime
• Staff time to report and investigate accident
• Meetings to discuss the incident
• Time spent with inspectors
• Consultant fees to assist with investigation
• Assessing / re-scheduling work activities
• Recovering work / production
• Cleaning up site
• Bringing work up to standard
• Repairing damage / faults
• Lost work time
• Salary costs of replacement workers
• Company reputation
• Loss of profits
• Loss of skills
ECONOMICS OF CONSTRUCTION HEALTH AND SAFETY
Recent research conducted in the UK by the Health and Safety Executive ( HSE ) determined indirect costs to be 11 times more than direct costs . They determined that accidents cost as much as 37 % of the annualised profits of an organisation . The accidents costs are also determined as the equivalent of 8.5 % of the project tender price and about 5 % of the annual organisational running costs .
Research conducted in South Africa by the Nelson Mandela University determined indirect costs to be 14.2 times the direct costs . In South Africa , the total cost of accidents is estimated to be about 5 % of the value of completed construction . The cost of implementing health and safety systems within a company is estimated to be between 0.5 % and 3 % of total project costs . This indicates that the total cost of accidents exceed the cost of health and safety .
* We will continue with this topic in the next edition of SA Affordable Housing .
AFFORDABLE
SA HOUSING JANUARY - FEBRUARY 2017 27