cost of occupational accidents: an activity based analysis pall rikhardsson msc phd the aarhus...
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Cost of Occupational Accidents:
An Activity Based Analysis
Pall Rikhardsson MSc PhDThe Aarhus School of Business
Department of [email protected]
Presented at the Safe Community Conference 2001Viborg County Denmark
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
The SACA project
The Aarhus School of Business and PricewaterhouseCoopers
9 case companies 27 occupational accidents 31 interviews
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
The SACA project
Aims Test a method for assessing company
occupational accident costs Indicate size of these costs Assess the effects of stakeholder interest in
occupational accidents on company costs
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
The SACA metod
AccidentAccident Activity-analysis
Cost analysis
Results
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
Production loss due to replacement personnel
Company time - meeting with H&S authorities051015202530
100 % salary to victim, first 14 days
Lost hours on day of accident - victim
Internal investigation and safety forms
Administration - safety manager
Information to upper/top management
CEO/manager time
Time used by helping colleagues
Administration, department manager
Extra costs of salary administration
Supplementary salary to victim
Administration -legal department
Colleagues discuss the accident
Company time - meeting with police
Information to staff functions
Training of replacement personnel
Change in technology/new instructions
Extension of safety meetings
Colleagues visit victim
Information meeting and communication
Cost of employing a new employee
Investment in new machines/technology
Presents and flowers to victim
Extra safety meeting
Preventive education/training
Colleagues overtime
External manpower
Costs when victim returns to work
Fines
Compensation
Activities
6 activity groups1. Absence2. Information3. Administration4. Preventive5. Production loss6. Other
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
Costs
Time Materials External services Other
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
65%4%
13%
3%
14%1%
AbsenceInformationAdministrationPreventive actionsLoss of productionOther
Distribution of accident costs
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
Total accident cost pr. company
CompanyAccidents in the year 2000
Range of total accident costs (DKK)
Contruction 1 149 3.006.52 - 8.976.505 5.681.171
6 25.038 - 161.706 71.530
12 29.820 - 1.542.708 585.236
43 414.950 - 5.919.251 3.846.794
5 34.695 - 107.910 75.300
3 26.964 - 277.344 110.424
40 222.280 - 3.746.920 1.507.853
7 85.442 - 1.373.841 520.828
5 14.660 - 287.250 123.998
Average totalaccident cost (DKK)
Contruction 2
Contruction 3
Service 1
Service 2
Service 3
Production 1
Production 2
Production 3
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
Total accident cost pr. employee
-
2.000
4.000
6.000
8.000
10.000
12.000
14.000
C1 C2 C3 S1 S2 S3 P1 P2 P3
Company
Acc
iden
t co
st p
r. e
mp
loye
e
DK
K
Lowest/employee
Average/employee
Highest/employee
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
Conclusions (1)
The SACA method can be used for accident cost analysis in most companies.
Cost behavior varies due to e.g.: Accident type and duration of absence Wage structures and policies OHS management system scope Production process vulnerability
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
Conclusions (2)
Costs of occupational accidents differ regarding management visibility
The average ratio of visible/invisible costs is 1:1,5
These costs are usually not insured
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
Conclusions (3)
Few companies use the accounting information system for accident cost management in spite of being technically possible
The reason given is limited managerial and practical feasibility
A feasible way might be to periodically calculate costs of selected accidents and then estimate total costs
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
Conclusions (4)
Reported level of general stakeholder‘s interest in company occupational accidents is negligible
Only customers and labour unions have expressed explicit interest in accidents
Effects on costs are non-existing Accident prevention is seen as potentially
more important in the future
The Aarhus School of Business
Pall Rikhardsson - Department of Accounting
Pall M. Rikhardsson MSc PhDAssociate professorThe Aarhus School of BusinessDepartment of AccountingFuglesangs Allé 48210 Aarhus VDenmark
Tel.: + 45 89 48 66 88Dir.: + 45 89 48 63 76Fax: + 45 86 15 12 90Mobile: +45 28 59 98 32e-mail: [email protected]://www.hha.dk/EOK/REGN/STAFF/PAR_FORM.HTM