Safety Saves Lives and Dollars
By Jim Bifulco

Construction is second only to manufacturing in Occupational Safety and Health Administration (OSHA) recorded and lost workday incident rates.

Despite recent industry-wide initiatives to control accidents, construction continues to be one of the most hazardous occupations. The cost of accidents to the industry is staggering. It is estimated that accidents cost as much as 6.5 percent of all dollars spent annually on construction. Although insured or direct costs are significant, the bulk of these costs are indirect or non-insured costs.

Direct costs include such items as workers compensation insurance premiums, general liability insurance premiums, deductibles and legal fees. Direct costs, which are not always considered, are federal, state and local enforcement agency citations and fines issued for non-compliance with safety standards. These fines can range from hundreds of dollars to hundred of thousands of dollars.

Indirect costs are conservatively estimated to be six times the direct costs of accidents. These costs include: loss of productivity, disrupted schedules, administrative time for investigations and reports, training of replacement personnel, wages paid to injured workers and other workers for time associated with the accident where work was not performed, repairs and damage to equipment.

Other non-quantifiable costs include adverse public relations and negative public perceptions related to significant accidents, and lost opportunities due to the growing tendency for owners to pre-qualify contractors based on past safety performance.

Construction managers and contractors must realize that they can successfully influence cost through safety initiatives on construction projects. In addition, what is not always apparent is that owners have an economic incentive to help reduce the number of accidents that occur on their projects as they ultimately pay the price.

A building owner or developer must maintain some control over safety, since the owner can be legally responsible for the overall project, but more so, because of the negative impact poor safety performance can have on the project. Legal liability and direct cost can be minimized through risk transfer, which includes specific contract language, indemnification and additional insured status, however, owners can not escape reduced productivity, delays and other indirect costs associated with poor safety performance.

Progressive owners, construction managers and contractors have realized the importance of effective safety management, and have been able to foster financial growth through safety initiatives. Those with above average safety performance have significantly lower insurance premiums, which increases profits and makes them more competitive. Loss-sensitive owner-and contractor-controlled insurance programs are commonplace on larger projects.

Under these programs, owners and contractors are able to reap enormous financial dividends from reduced claims and losses. Additionally, third-party claims and OSHA citations are dramatically reduced by implementing effective safety management. Projects where safety is considered a component of production and quality are more frequently on time and under budget.

Owners, construction managers and contractors should consider guidelines that are critical to effective safety management. These include:

• Education in recognizing project hazards.
• Preplanning to consider exposures and methods used to reduce or eliminate exposures.
• Developing contract specifications outlining expectations including parameters for safety performance.
• The ownersÕ willingness to invest necessary resources to implement safety programs.
• Establishing pre-qualification criteria for contractors.
• Creating a system to ensure compliance with stated guidelines.
• A full investigation and prompt and accurate recording of all accidents.
• Requiring construction managers and contractors to designate competent safety professionals to coordinate site safety.
• Discussing safety at owner-contractor meetings.
• Professional safety personnel should represent the owner in order to gauge the performance of safety initiatives.

To preserve the economic health of the construction industry, it is essential to implement effective safety management programs on construction projects.

Owners must realize that simply adopting a safety program will not ensure the desired result. It is only through a genuine commitment to safety and a demand that contractors embrace and cause implementation of that commitment will you be successful.

The author of this column, Jim Bifulco, is a certified safety professional, a New York City site safety manager and a New York State work place safety and loss prevention consultant and an authorized OSHA construction safety and health trainer.

Story ©2001 New York Construction News.