Safety pays

Both these categories are quantifiable in terms of cost, but there is a third, more intangible category for which it is difficult to assess actual costs, and which includes: damage to corporate image; loss of business; adverse effects on employees' morale, etc.

Some of these costs can be recovered by insurance (through, for example, public and third-party liability policies, contractor's all risks policies, vehicle and building protection policies, etc.) although in many instances some or all of the cost will fall under the policies' excess. The remainder of the costs will not normally be covered by insurance, notably: losses due to damage to plant, equipment, materials and products; sick-pay; overtime working and temporary labour; programme delays; investigation times; fines.

HSE research has demonstrated that uninsured losses exceed those covered by insurance, and that these losses amount on average to 10 times the insurance premiums paid for the same period. This is sometimes referred to as the "cost iceberg", with the majority of the losses uninsured and hidden below the water line.

Further HSE research has shown that for every accident involving an injury resulting in three or more lost workdays there are some 50 minor injury accidents requiring first-aid only, and 3,500 accidents not involving injuries (this is referred to as the "accident triangle"). This ratio between injury and non-injury accidents is noticeably higher in the building industry, and would suggest that construction would benefit particularly from savings arising from increased safety measures.

In 1993, the HSE conducted a detailed analysis over a period of 18 weeks of a construction project with a total cost of £8m, a programme of 13 months and involving some 120 workers. During the study period there were no fatalities or major injuries, 56 minor injury accidents and 3,570 non-injury accidents, estimated to have cost the construction company around £250,000. When this loss was extrapolated for the whole building programme, it was calculated that the losses would amount to a staggering 8.5% of the total tender price. Almost one quarter of the accidents that took place were deemed to have resulted from inadequate planning.

The obvious conclusion is that if these calculations were extended to the whole of the construction industry, the calculated loss would amount to billions of pounds. In fact, the problem may be even worse than this, as the study contractor was a wholly owned subsidiary of a large international contractor, and there is evidence considered by the committee that prepared the Construction (Design and Management) Regulations that points out to safety in large sites being substantially better than at medium or small sites.

the industry should not adopt a fatalistic approach to accidents, assuming they are inevitable due to the specific problems of construction

Management of safety
In 1988 the HSE prepared a report on the incidence of accidents in construction sites titled "Blackspot Construction". One of the points made in the report is that the industry should not adopt a fatalistic approach to the occurrence of accidents by assuming that they are inevitable due to the very specific problems affecting construction (temporary site work, transient work workforce, tight programming and profit margins, intrinsically dangerous operations, etc). It concluded that: " Construction work needs to be organised in a way that it does not continue to unnecessarily claim the lives of so many, including fit and experienced workers".

The health and safety legislative framework (either general legislation like the Health & Safety at Work Act 1974, the Management of Health and Safety at Work Regulations 1999; construction-specific legislation like the Construction (Design and Management) Regulations 1996 and the Construction (Health, Safety and Welfare) Regulations 1996 and all other regulations on specific tasks or products, like Manual Handling Regulations 1992, Control of Substances Hazardous to Health Regulations 1999, etc) is not prescriptive in as much as it sets out objectives and duties reinstating common law duties of "reasonable care", without dictating how these should be achieved or met. Therefore, it is up to individual contractors to set up, maintain and update health and safety management systems. Under Section 40 of HASAWA74 the normal burden of proof is reversed, and it is up to companies to demonstrate that adequate management systems have been adopted.

One of the peculiarities of the construction industry it that its management systems must be operated at two levels: one corporate (sometimes referred to as the "parent system"), by means of health and safety policy philosophies and strategies, the other specific to individual projects by means of health and safety Plans.

The HSE defines five steps to manage health and safety systems adequately:

The HSE calculated that losses due to accidents amounted to 8.5% of the tender

The process of monitoring should also be complemented by auditing, either internally or by specialist consultants, to ascertain whether policies, systems and organisation are achieving the desired results.

It is not always easy to isolate the cost of the application of safety management systems, but they can be broadly categorised as follows:

Management costs associated with the preparation of the project-specific health and safety plan, including preparation of risk assessments, method statements, etc. Similarly, costs associated with the preparation of the Health and Safety File must be included.

Ideally, costs relating to health and safety should be identified explicitly on tender documentation to avoid potential conflicts resulting from varying expectations by clients and contractors. Also, importantly, to level the playing field in tendering procedures by ensuring that adequate resources have been allocated.

Commentary
Research has demonstrated that even though time spent by site management on health and safety roles can be almost 40% of total management time, the cost of accidents far outweigh the costs of implementing adequate safety management systems. In 1994, the Health and Safety Commission estimated that the implementation of the CDM Regulations would result in a reduction of between 20%-33% in the total number of accidents, representing an annual saving of £220m which, presumably, excluded the intangible benefits derived for higher employee morale, improved public perception, etc. Although the fall in the number of accidents has not been as dramatic as predicted, the commercial logic of implementing strict health and safety remains valid, and should prove a further argument towards the adoption of a culture of zero-tolerance to accidents.