Financial Costs of Construction Accidents and the Role of Quantity Surveyor in Safety Investment

Construction work always includes heavy machinery and the handling of hazardous materials, tools and the trade is traditionally plagued with high accident rates. International statistics are no better, and governments around the world have implemented health and safety measures for the protection of the workers.

The exception is when an employer pays the above costs without reimbursement. Heinrich presents 11 concealed accident cost factors with their respective subparts for consideration during the computation of direct and indirect costs (Manuele, 2011). However, the hidden costs exclude fatalities, major permanent injuries and dismemberments and costs emerging from trivial injuries. Even so, Heinrich’s research does not enjoy validation or support from similar studies. The ratios that Heinrich computes focus more on less serious injuries, which presents this as a research limitation. Furthermore, the analysis took place in 1926, which makes the utilization of Heinrich’s ratios invalid considering the massive changes on compensation schemes, work practices, as well as business and industry practices (Manuele, 2011). Therefore, the use of such ratios in the estimation of total accident cost might be

According to the Bureau of Labor, statistics indicate that more than 4.1 million people were hurt or injured on-the-job in 2006 and 5,488 were killed in 2007 (Gomez-Mejia, Balkin, & Cardy, 2010, p. 511). Laws and regulatory requirements are currently in place to standardize and promote workplace safety. Organizations with extensive safety programs have reduced number of accidents, decreased workers’ compensation claims and lawsuits and lesser accident-related expenditures (Gomez-Mejia, et al, 2010, p. 511). This paper discusses the effects of legal, safety and regulatory requirements in

Costs associated with workers compensation can be greatly curtailed if companies initiate safety programs and safety awareness at the workplace. Most of the workers who come to see me at my law practice say they have suffered injuries while doing mundane things like stocking shelves without a step ladder or other related devices. Poorly maintained equipments and lack of basic safety devices also contributes greatly to worker injuries causing an increase in the number of workers seeking

This is because the risk of a building contractor being responsible for someone being injured is greater, and when this happens, damages are typically more. As an example, medical costs for an injury might be $200,000 to $300,000, and legal fees could total more than $100,000. If your coverage is for only $300,000, you might owe from $50,000 to $100,000 out-of pocket.

Work-related injury is a major public health problem and a worker’s recovery can be shaped by their interactions with employers, healthcare providers and the workers’ compensation system.8 The ideal solution to the real problem is for senior management to commit to a written, proactive, cost-effective, accountable safety, fully funded, and health process that focuses on applied ergonomics and over cost containment. Workers’ compensation is not the problem, but the problem is workplace injuries and illness.9 On average, workers’ compensation covers about less than 25% of the $250 billion estimated yearly cost of occupational injuries, fatalities, and

There is a financial cost to an organization for workplace injuries. Work related injuries have an average cost of $38,000 for wages, lost productivity, and medical expenses.2 Those are just the direct costs. There are also indirect costs. Indirect costs include having to train replacement employees, investigation of the accident/incident, implementation of the corrective actions designed to prevent the accident from happening again, the cost to repair any damaged equipment, lower employee morale and higher employee turnover. Also, having workplace injuries will cause a rise in the organization’s workman’s compensation insurance for several years. Oftentimes the indirect expenses for injuries are more than the direct

Professional behavior and discipline is always expected of the cost estimator since construction estimating tends to be highly technical. Estimators must also exercise holding good morals, because more often than not they receive pressure from other members of the construction team to make short-term decisions that can lead to inaccurate estimates. Resistance to this type of pressure is a part of the estimator’s job and can be beneficial to everyone in the long run. Integrity is another trait expected upon the estimator. Another important trait is to have good judgment. This is a skill obtained through proper training as well as extensive experience in the construction field. The proper use of judgment could mean the difference between profit and loss for the company or client. Estimators should approach each estimate with a professional

1. To calculate the amount a customer should be willing to pay for one of CMI’s new cushion pads, the average costs per real hour of equipment rental, labor, and overhead costs were first taken into consideration (Figure 1). These amounted to an average cost per real hour of $714.00. Next, the average costs per real hour of hidden costs were taken into consideration (Figure 2). According to the case, a contractor could spend 20 to 40 minutes moving the crane into position. This averaged to 30 ((20 + 40) / 2) minutes, or 50% (30 / 60). Similarly, another 10% to 15% was added to cover scheduling delays, mistakes, and other unavoidable problems. This averaged to 12.5% ((10% + 15%) / 2). Considering these percentages, the total hidden costs were $258.75. The total equipment rental, labor, and overhead costs with total hidden costs were $972.75 ($714.00 + $258.75). In other words, the total average cost per real hour was $972.75. Finally, using this total average cost per real hour and the case, the total costs for driving time, replacing pads for both the Kendrick Foundation Company and Corey Construction were calculated (Figure 3). The difference between the total contract costs, excluding total changing time costs, for conventional pads and CMI pads for Kendrick Foundation Company was $30,738.90. Similarly, the difference between the total contract costs, excluding total changing time costs, for conventional pads and CMI pads for Corey Construction was $30,738.90.

Another risk comes from the possibility of injuries and accidents on the job. There must be adequate safety gear provided and all safety procedures must be followed. This will require monitoring. Also, Workers Compensation Insurance is mandatory, but if anything does happen, it will slow down the project and could causes problems of legal liability. Another factor

Risk allocation is performed as part of the development of the project structure, which takes into account the distribution of responsibilities and risks during the planning, construction, financing and operating phases (Corner, 2006). The aim is to identify an efficient and effective structure that optimises the costs of the project and ensures that the risk occurrences do not damage the project (Delmon, 2009). According to Grimsey and Lewis (2007) risk allocation has two elements: optimal risk management and value for money. The first implies that the

The research takes a case study approach. The case study analysis dwelt on risk management by Contractors who work on energy and utility construction projects, including strategies and supporting structures for managing risks, complete with an analysis of how these strategies and structures are implemented and supported by the Contractors resources base. The researcher specifically chose utility contractors for this study as the Energy and Utilities sector play an indispensable role in the global economy and in the UK, industry employs around 2% of the UK workforce (AGCAS, 2012). Moreover, the UK government identified the Utilities companies as companies that are heavily involved in risky incidents affecting their sector thus playing a crucial role in the preparation and planning for emergencies responsibilities (UK Government, 2013). According to Yip (2003) construction is risky as it almost always certainly involves loss of time and money. Above all, any denial of service during outage result in impact on communities (Lindman, 2008) and utility services are no exception. Against this background, it could be argued that contractors working on construction projects undoubtedly play a significant role in managing risks in order to stay in business.

ARCHITECTURAL FAILURES, SAFETY MEASURES AND RISKS IN CONSTRUCTION - NIA 303 (2) Text of Paper presented to the NIAPPE preparatory seminar at Digital Bridge Institute on 6 March 2012 by Arc. J. O. Toluhi PART I – ARCHITECTURAL FAILURES The concept of architectural failures is better understood from the perspective of what architecture really is, criteria for architectural project success and what failure connotes. What architecture means Architecture is defined in various ways by architects and non-architects alike depending on their focus or area of emphasis. You must be familiar with the definition offered in the ARCON law which attempts to capture different ramifications of the profession. By Le Corbusier’s definition, "Architecture is

Fight A., Introduction to Project Finance, Elsevier, 2005, Ch. 2 - Understanding Key Project Risks, (pp. 45-80).

In the United States, construction has always been one of the most dangerous industries to work in. The number of fatalities that occur in this industry year after year demonstrate this. In 2014, 19.6% of worker fatalities, in private industry, were in construction (Bureau of Labor Statistics, 2015) despite the industry comprising only 6.8% of the total work force. This epidemic is not unique to the United States. Essentially every country faces similar problems regarding construction safety. For example, in 2004 the Australian construction industry employed approximately 8% of the countries workforce. However, workers compensation statistics indicated that the industry’s incidence rate was 28.6 per 1000 employees,