1. COST BENEFIT ANALYSIS OF SAFETY
ASPECTS – A CASE STUDY
DINESH SIVARAM M
RAVI MANDAL

2. ABSTRACT
 It is a common assumption that implementing safety
norms or following safety rules is expensive and not
economical.
 But it has been proved in the recent past that
following safety norms and implementing them is
actually economic
 Though putting safety precautions in place can be an
annoyance and an extra expense for an employer, the
financial benefits can drastically outweigh the costs.
 To bring awareness about the importance of safety
engineering and Prove the fact that implementation
and strict following of safety rules will boost the
economy of the firm by increasing the profit
The International Labour Organization estimates there
were 47,000 deaths from occupational accidents in
India in 2003

3. Safety engineering
Focuses on preventing accident and lessening
opportunity for human error
The process of designing safety procedures, standards
and also ensuring that safe environment is
maintained.
Cost benefit analysis
 A methodology for valuing costs and benefits that
enables broad comparisons to be made and imposes
an accounting framework that prescribes classes of
benefits and costs to consider, means to measure
them, and approaches for aggregating them.
 Monetary or safety valuation of the risk of
performing a task vs. benefit of performing the task

4. COST BENEFIT ANALYSIS

5. The costs of accidents incurred by contractors
 Cost of construction health and safety measures
first aid; machinery; personal protective equipment; safety training;
investigation etc..,
 Direct costs on insurance; damage to buildings and equipments or vehicles;
damage to the product; cost of health or expenditure on medical care; cost
of investigation legal costs; death; permanent disability; worker illness; losses
of current production
 Indirect Costs.
May not be covered by insurance
cleaning up; hire costs of temporary equipment; waste disposal; temporary
labor costs of advising and consulting experts; lost time, sick pay, overtime
working and temporary labor; and; loss of business reputation
Calculating simple ROI (cash on cash) for cash flow and investment analysis

6. Safety softwares
Cost/Benefit Analysis calculator Cost/Benefit Analysis calculator

7. Small business safety calculators

14. Case study -Ritrama
 There is a direct, positive correlation between investment in safety,
health, and the environment and its subsequent return on
investment
 As part of their business strategy, to decrease injuries and illness,
increase profits and help create jobs
 As illnesses, injuries and fatalities decline so to do health care and
workers compensation costs
 Companies that invest consistently in safety realize positive bottom
line results, reduced absenteeism, lower turnover rates, higher
productivity, increased employee morale and a positive brand image
 For every $1 invested in an effective workplace safety program, $4 to
$6 may be saved as illnesses, injuries and fatalities decline
 Ritrama, a multi-national company with 110 employees at the
Minneapolis plant, manufactures pressure-sensitive films and labels
for the automotive, beverage, health, beauty and pharmaceutical
industries

15. MNOSHA citations
Develop a leadership/management program, Involve employees in a
safety and health program Appoint a safety director, form a safety
committee and develop an implementation plan for it and
develop a recordkeeping program for injuries and illnesses and
plan for implementing it.
selected a four-phase plan that included:
 Determining the root causes of the citations;
 Bringing the plant into compliance;
 Establishing a new safety and health program; and
 Ensuring that the above three phases were implemented.
 In addition, they hired an off-site, safety and health consultant
firm
Consultant found that
 Most injuries were a direct result of the employees' failure to
follow established safety and health practices.
 Accidents, injuries and near misses were not properly
investigated.
 The treatment for injured employees was not being followed up

16. Recordable 1995-2005
 Text Version:
Title: Recordable 1995-2005
Type: Vertical Bar Graph
Chart Elements: 11 - One bar for each year
showing the number of recordable
Values:
 1995 = 14
 1996 = 13
 1997 = 14
 1998 = 13
 1999 = 10
 2000 = 15
 2001 = 19
 2002 = 4
 2003 = 5
 2004 = 7
 2005 = 5


17. Lost Time Cases (1995-2005)
 Text Version:
Title: Lost Time Cases 1995-2005
Type: Vertical Bar Graph
Chart Elements: 11 - One bar for each year
showing the number of lost time cases
Values:
 1995 = 10
 1996 = 13
 1997 = 10
 1998 = 9
 1999 = 6
 2000 = 8
 2001 = 4
 2002 = 1
 2003 = 0
 2004 = 0
 2005 = 1

18. Lost Workdays 1995-2005
 Title: Lost Workdays 1995-2005
Type: Vertical Bar Graph
Chart Elements: 11 - One bar for each year
showing the number of lost workdays
Values:
 1995 = 107
 1996 = 82
 1997 = 20
 1998 = 19
 1999 = 19
 2000 = 196
 2001 = 20
 2002 = 180
 2003 = 40
 2004 = 50
 2005 = 31

19. Restricted Days 1995-2005
 Title: Restricted Days 1995-2005
Type: Vertical Bar Graph
Chart Elements: 11 - One bar for each year
showing the number of restricted days
Values:
 1995 = 269
 1996 = 189
 1997 = 214
 1998 = 105
 1999 = 161
 2000 = 69
 2001 = 266
 2002 = 0
 2003 = 11
 2004 = 0
 2005 = 0

20. Average Lost/Restricted Days Per Case
1995-2005
 Title: Average Lost/Restricted Days Per Case
1995-2005
Type: Vertical Bar Graph
Chart Elements: 11 - One bar for each year
showing the number of restricted days
Values:
 1995 = 38
 1996 = 21
 1997 = 23
 1998 = 14
 1999 = 30
 2000 = 33
 2001 = 72
 2002 = 180
 2003 = 6
 2004 = 0
 2005 = 0

21. The Impact
 The $44,000 reduction of workers' compensation premiums
from 2000 to 2003
 The overall benefits to Ritrama include increased
productivity and quality of the products;
 The percent of credits and returns to sales went from a high
of 2.22 percent in 2001 to 1.24 percent in 2006, which when
translated into sales figures means that from a production
standpoint, average sales rose 7.5 percent.
 The number of manufacturing defects and amount of waste
went from $2.7 M in 2001 to $435 K in 2005
 The costs of hiring the Safety Consultant and installing new
safety equipment have also been recovered

22. ANGLO AMERICAN MINING COMPANY
 ANGLOW AMERICAN Is the worlds most diversified
mining company
 commodity mix Like platinum group metals,
diamonds, copper, nickel, iron ore, metallurgical and
thermal coal are mined
 They operate on six continents with 150000
permanent and contract employees.
 Between the years 2002 to 2007 ANGLO AMERICAN
SUFFERED CLOSE TO 200 FATALITIES
 In the year 2007 Cynthia Carroll became the CEO of
the ANGLO AMERICAN COMPANY
 She was dissatisfied with the safety knowledge of
the supervisors and the managers
 Visited mines and did a research
 A decision was made and the company was shut
down and was planed that after a perfunctory safety
check would resume production as soon as possible

23. RESULT - Below are some of the data’s got from HARVARD
BUSINESS REVIEW)
40000
35000
30000 OPERATIN
G INCOME
25000 IN $ US
MILLIONS
20000
REVENUE
15000 IN $ US
MILLIONS
10000
5000
0

24. Cost of accidents

25. Direct benefits
 costs savings
 saving of time,
 expenditure on medical care
 reduction in the costs of accidents
 reducing insurance premiums;
 reducing litigation costs;
 reducing sick costs;
 improving production
 productivity rates
 lowering accident rates
 reducing material damage
Indirect benefits
 include reducing absenteeism;
 improving corporate images,
 improved job satisfaction,
 reducing sick pay,
 lost time,
 overtime working and clean

26. The Hidden Cost of Unsafe Behavior –
Running the Numbers
 According to information provided in a report
by a nationwide insurance
company, approximately 60% of company
executives figure that their companies save $3
for every dollar spent on safety programs. A
$10,000,000.00 company that spends 1% of
their budget on safety can figure to save
approximately $300,000.00. OSHA puts the
figure to be more