Part 5 – The Even Higher Cost of Non-Safety
We have spent the last few months elaborately identifying safety producing costs. In our final part of Exploring the True Cost of Jobsite Safety series, we will look closer at those expenditures resulting from a lack of safety, namely accidents, fines and lawsuits. Just like safety-producing activities, lack of safety also has direct and indirect costs associated with it. In reality, the cost of safety-producing efforts, although they can be high, are a mere “drop in the bucket” compared to the potentially catastrophic losses related to incidents that occur from a lack of safety.
Direct cost associated from a lack of safety are the easiest to see and understand, and the only insurable costs related to safety. These cost include emergency room and doctor visits, medical bills, medicines and the expense of rehabilitating an injured worker. Unfortunately, they are only a fraction of the full actual cost of accidents. According to the National Safety Council, the average direct cost of a construction related accident is $48,000 and an accident related to any kind of fall goes up significantly, to $107,000 for roofers and $98,000 for carpenters, respectively. Other direct costs that often get associated with non-safety include Workers Compensation premiums which are normally billed against each labor hour at the rate of a particular trade, and modified by a company’s safety performance. General liability insurance premiums, also considered a direct cost of non-safety, are related to type of work, value of work in place, and losses. In both cases, safety performance plays into the cost of these insurances and can even impact the overall safety reputation of a contractor and thus, affect their ability to gain inclusion into a builder’s or general contractor’s bidding process.
Regulatory penalties are also a component of direct cost associated with non-safety. These penalties, in the form of OSHA citations, are in many cases, more feared by contractors than the potential risk and consequences of the accidents themselves. The magnitude of the fines are likely to cause many smaller contractors to go under. “OSHA is like the IRS, if they audit you, they are going to find something,” shared Kevin Roberts, Contract Lumber safety administrator and ex-framing contractor. “When you fine a small framing contractor eight or ten thousand dollars, that’s a lot of money – more profit than they make in 5 homes. Then, if they get hit for the same infraction later, its 10-times that amount. A small guy just can’t handle that and that’s why they fear OSHA so much. Of course, they don’t associated themselves with the consequences of suffering an accident because so many of them have never experienced or witnessed any significant incident. They just don’t realize the potential financial loss and personal heartache they are subjecting themselves and the families too, by not taking jobsite safety seriously.”
Indirect expenses associated with lack of safety are generally expressed as a multiple of direct costs and depends on the severity of a particular event. Minor accidents usually have indirect costs, such as lost productivity, diverted management attention, expense and time related to accident investigation, raises in insurance premiums, work delays, replacing the hours lost of the injured employee, loss of reputation, unwanted media attention, and more, that amount to around four times the direct costs. However, with serious accidents, these expenses can rise 10-15 times the direct cost, especially if litigation ensues and generally, lawsuits are an outcome to be expected when accidents occur. So, just using National Safety Council’s average of $48,000 in direct costs of a construction accident – times four, the indirect costs would total $192,000. Add that to the $48,000 and your true cost of a minor workplace accident would total $240,000. For simple math sake, if your business profit margin was 10%, you would need $2.4 million in additional revenue to offset the loss. Imagine if your business experienced a serious incident?
So, as we look back at our safety series, the two thing we can all agree on is that implementing a comprehensive jobsite safety program is expensive and, the lack of jobsite safety is potentially even more expensive. And therein lies one of the biggest obstacles regarding the whole idea of safety – whenever anyone talks about construction safety, it always seems to be from an “expense” perspective, never as a value, a benefit, or an asset. Many construction-related business owners and upper management cannot seem to look beyond the “cost” of safety implementation to see the catastrophic economic exposure they are subjecting their operations too should a major incident occur. And let me add that few fully comprehend how their company can be drawn into an incident through OSHA’s multi-employer citation policy. They assume that by pushing safety responsibility down the line to subcontractors they are protected but there is a plethora of legal precedent across the country that will challenge that assumption. It all points towards the need to create a construction business culture that genuinely values safety. To gain that status within an organization, it will take a willingness to integrate safety ideals into the operational and organizational systems of the company, fully supported by ownership and management through both words and deeds. And it is ownership and upper management that are in the best position to compare/comprehend the value of safety against the consequences of non-safety, both from the human side of keeping good people from getting hurt to the economic realities of averting major losses.
The Start of Behavior Modification
Although compliance with federal, state & local rules and regulations remains the key concern, the construction industry is starting to see a shift from strictly compliance driven safety programs to those emphasizing the human side that stress the health and welfare of workers. By focusing on eliminating dangers at construction sites through an approach that personalizes safety, construction executives can embrace and promote a safety philosophy throughout their organization. This approach modifies the traditional enforcement mentality, which immediately threatens employees and subcontractors who violate standard safety rules with disciplinary action. This personal-based safety ideology follows the premise that if employees are reminded on a daily basis, of the impact that an injury can have on their home life and personal relationships, they will be more likely to work safely and avoid risks that could result in accidents. When they believe that the safety practices are all about them and not just about adhering to safety rules, compliance has a better chance of falling into place.
One way that this is being accomplished is by focusing on at-risk behavior and what drives people to place themselves in harm’s way. By analyzing the “state-of-mind” of a worker, it allows a concentration on the way a worker approaches the tasks they perform and to better grasp where and what the true risks are. This approach is referred to as a “behavior based safety process” and has been extensively developed and promoted by safety consultant, Larry Wilson. The downside to this process is expense and the time it takes to see significant results but those that have stayed-the-course, have successfully changed the safety culture within their organizations.
Behavior based safety process starts with detailed analysis of incident data to determine behaviors or factors that contribute to a bulk of the incidents or injuries. There may be a dozen or more identifiable “critical behaviors” that are gleaned from incident data. Then, training is focused on improving or eliminating these critical behaviors, even tracking and recording safe behaviors. Often times, organizations just don’t have the patience or dedication to commit to the entire process because it involves having people observe and make recommendations of safe behavior offering appropriate feedback to workers. It is through this rote observation and repetition that critical behaviors are eventually brought up to “habit strength”, which means even if the employee isn’t thinking about the risk, the behavior will be performed safely. That takes time. Observers come from within the workforce and do need a level of training. Also, these observers only offer a couple observations a week which is not enough to make decisive difference in behavior in a short time.
One suggestion that Wilson makes if you are seriously considering committing to this safety strategy is to hire an experienced safety consultant to get the program started. It is such a departure from the progressive discipline based mentality that employees can be reluctant, especially if they are observing, for fear that their observations will get someone in trouble. The consultant can also keep progress in perspective since the nature of construction environment accentuates reducing costs and minimizing build days. Other implementation challenges include the transient workforce and constantly changing tasks the construction process lends itself too. The small crew size can also hamper the observation component as the mantra is normally “all hands on deck” at the jobsite. Having a team member standing around observing may seem counterproductive and even awkward, regardless if observing was limited to short snippets of time or not. Some construction companies who have had success with BBSP concentrate on utilizing field managers to make observations, give positive feedback and encourage people to work safely but they stop short of issuing penalties. They do not act as the safety police but rather as safety teachers.
The premise behind the behavior based safety process can be compared to driving a car. It is estimated that more than 90% of vehicle wrecks are caused by driver error – not weather or road conditions, or mechanical issues. Driver error is the equivalent of unintentional mistakes and poor habits. Eliminating unsafe conditions will have minimal impact. But if you focus on helping workers minimize human mistakes you can have a significant effect. Human errors that cause over 90 percent of all injuries, regardless of the industry, are the following – eyes not on task, mind not on task, moving into or being in the line-of fire, and losing balance, traction or grip. Interesting enough, for the most part, these are unintentional at-risk behaviors that do not fall under the rules and regulations or discipline-type issues. Having consequences may be able to change behaviors that are deliberate but how do you teach workers to make fewer mistakes, the ones they were never trying to make in the first place.
Extensive research recognizes that before one of those four errors occur, there is almost always at least one of four “human factors” or states that predicates the mistake. They include – rushing, frustration, fatigue, and complacency. One of the first steps of BBSP training has to be understanding of the correlation of “state-to-error patterns”. If you can get a worker (or co-workers) to recognize when they are in one of these “states” and that they are putting themselves and quite possibly their co-workers at risk, then you have real potential to drive down job-site hazards and with it, injuries and their detrimental consequences.
In conclusion, when I started the process of working on this series way back in February, I was told by Contract Lumber’s safety coordinator, Kevin Roberts, (see The Kevin Roberts Story) that everyone who ventures into the world of safety gets overwhelmed. I’m not sure I’ve had a more factual statement uttered too me since the day I interviewed Kevin. This has easily been the most difficult assignment I’ve undertaken, especially trying to maintain some sense of readability and holding interest with such a complex topic – a topic many in the construction industry would prefer turn a blind eye to. The other “truth” that I have formulated over the last nine months is that being safe is a personal decision that every worker makes. Simply put, for safety to really work it has to focus on each individuals desire to be safe. And while there are certainly no guarantees because accidents can and do definitely happen, if each worker makes conscious decisions throughout the day to be safe the likelihood of jobsite injuries will be significantly reduced. One of the most powerful expressions of this that I ran across was the story of Eric Ciguere, a construction worker who was buried alive when a trench caved in on him. Eric’s story is typical of many where attitude and haste turned tragic. But unlike many similar stories, Eric survived and after a long road of recovery, is actively promoting safety awareness by telling his story through speaking engagements and a video developed and distributed by Safety Awareness Solutions (www.safetyawarenesssolutions.com).