needs to understand that safety—even though initially costing money to implement and maintain—ultimately should be viewed in terms of cost-savings for the company. The greatest savings are difficult to measure because you never know how much the accident which was prevented would have cost you and your company. But the fact that you are working in the construction industry makes it more likely that these will be real savings. The US Department of Labor states, “According to OSHA, out of 4,379 worker fatalities in private industry in calendar year 2015, 937 or 21.4% were in construction — that is, one in five worker deaths last year were in construction.” (https://www.osha.gov/oshstats/commonstats.html)
The construction industry does not rate well when compared to other forms of industry in terms of safety. Most industrial environments have four walls and fixed machinery where the same task is repeated with relative consistency. In these contexts, it’s relatively easy to put controls in place. In contrast, a construction site is temporary, always in flux. The equipment and machinery used is designed for movement and portability. When it is “set up,” it is set up only until that part of the job is complete. As the building proceeds, the focus of work continually changes. This makes it much more difficult to have controls in place that can cover all the eventualities of such a fluid environment.
Tom Maupin, Senior Vice President of Marketing for the Builders Insurance Group, points out the effects that they’ve observed from this fluid environment on workers comp claims: “In the controlled environment there are bumps, bruises, cuts, etc.—not the severe claims. On the other side, construction has fewer claims, but these claims are usually severe. Many times, even a person’s entire career is in jeopardy.” Workers in the construction industry have two strikes against them in terms of safety: the environment itself is more prone to accident and, when accidents occur, they tend to be severe. In this context the prevented accident can be a major financial bonus for a company.
The cost of insurance, Workers Compensation and General Liability, must also be factored into the decision to develop a culture of safety in your company. Seasoned safety consultant, John Nain, of Nain & Associates, warns, “Remember, we have a very litigious society. Workman’s Compensation Insurance is a state requirement. Many/most states have lifetime medical responsibility attached to a worker’s compensation injury. Consequently, even something as simple as a back injury can run into hundreds of thousands of dollars in indemnity, medical, and legal costs. A fall resulting in paralysis could result in millions of dollars of cost. This can drive workman’s compensation premiums to the point of putting a company out of business. Subcontractors or their families can civilly sue a general contractor or property owner, or both. This can also cost your general liability carrier hundreds of thousands of dollars or more.” When claims go up, the cost of insurance goes up. These are out-of-pocket costs.
Just as real, though, are costs to the company not paid by insurance. If an employee is injured, what costs will result from the lack of production? How long will it take to get that employee back up to speed? Will that employee be able to perform at the same level he or she did before the injury? If that person needs to be replaced, how much does it cost to find their replacement in a challenging job market and train that person in? In addition to employee-related costs, you’ll also need to think of repairing or replacing damaged equipment. And, finally, not to be forgotten is OSHA. If you have not been following the OSHA guidelines and an accident occurs, the fines can be crippling and you may be facing jail time.
On a positive side, establishing a culture of safety can be very positive for company morale. If workers in your company, from the top down, experience a genuine concern for their safety and wellbeing, they are more likely to be more committed in their work and to stay with you. Turnover costs are reduced and better work results.
Simply said, safety isn’t only the right thing to do, it pays.