Orange barrels full of money

June 6, 2007

It’s hard to argue against safety. No one, especially a highway or bridge contractor, wants to be considered responsible for someone’s injury or death, whether it is a crew member working on a project or a member of the general public passing through the construction zone.

The push-back usually comes in the form of an argument about the necessary level of precautions that a contractor should take. There is certainly a cost involved in safety, and in a low-margin business like construction, the urge to cut corners on up-front costs can be powerful.

It’s hard to argue against safety. No one, especially a highway or bridge contractor, wants to be considered responsible for someone’s injury or death, whether it is a crew member working on a project or a member of the general public passing through the construction zone.

The push-back usually comes in the form of an argument about the necessary level of precautions that a contractor should take. There is certainly a cost involved in safety, and in a low-margin business like construction, the urge to cut corners on up-front costs can be powerful.

But the payoff for resisting that urge is not just in the psychic benefit of knowing the right thing has been done to protect people. There is a real, quantifiable, dollars-and-cents benefit in planning for safety at the beginning of a project with every bit as much care as what goes into planning for manpower, equipment and materials. Safety and risk management are key elements to a successful project, and a successful project means not only a profit but also a good reputation and a better likelihood of more work in the future.

It’s a dangerous job

Road and bridge construction is dangerous work. The statistics are compelling:

  • The construction industry accounts for more than one out of every five worker fatalities, according to the Bureau of Labor Statistics. In 2003, there were 1,126 construction fatalities;
  • In 2005, 1,074 fatalities occurred from motor vehicle crashes in work zones, and more than 41,000 people were injured, according to the U.S. Department of Transportation; and
  • Workers killed on the job from falls—a major concern during bridge construction—totaled 767 in 2005, according to the Bureau of Labor Statistics. Close to 40,000 were injured by falls.

The human costs are incalculable, but losses also mount in purely financial terms. A 2002 study published by the American Society of Civil Engineers found that construction workers in highway work zones suffer 27,000 first-aid injuries and 26,000 lost-time injuries per year, at a total annual cost of $2.46 billion. Motorists suffer injuries and property damages that total $6.2 billion per year.

The study’s conclusion: Highway work-zone injuries per billion dollars spent on a project cost at least four times more than in total U.S. construction.

In addition, a study by Travelers of 817 fall-related claims that resulted in more than $25,000 in losses found that the average amount paid was $270,000 per claim.

Visibility is the key

Contractors operate on small profit margins. It doesn’t take much to erode the bottom line. An accident in a work zone causes obvious direct costs but also takes a high toll in often-hidden indirect costs. Accidents bring work to a halt while aid is rendered, debris is cleared and an investigation takes place. Injured employees and damaged equipment may need to be replaced, while co-workers may become less productive because of distractions and morale problems. None of this is conducive to staying on the tight schedule that is usually required to make a profit on a construction job.

The aftermath of an accident often includes expensive lawsuits and could ultimately drive up insurance rates. Deductibles are an immediate cost for contractors, but the ripple effect of having a record of major claims against insurance lasts long after the immediate job is completed. In fact, one of the best defenses against liability claims is a good safety management record that demonstrates that risks are kept at a minimum. Those contractors who manage risk poorly will pay more in the long run.

It can be easy to lose sight of the immediate impact when the numbers are big—$8.66 billion a year industry-wide, according to the Practice Periodical on Structural Design and Construction—or when the costs are to be paid in the future.

Just one low-end example from the chart: If a project is bid with a 4% profit margin and an accident causes $10,000 in direct and indirect costs, $250,000 worth of work has to be performed to break even. That’s a quarter of a million dollars worth of work just to cover the fallout from what may be a fairly insignificant injury.

Three losses to gain

Careful planning before a project begins is necessary for an effective risk-control program. Such a program will include three levels for action:

  • Loss Prevention: This area of the program focuses on reducing the probability of accidents through establishing safety and risk-management procedures, ensuring proper equipment selection and maintenance and providing effective employee and supervisor training;
  • Loss Minimization: The impact of an accident can be minimized by ensuring workers with first aid and CPR training are available, creating an emergency action plan, providing for an accurate flow of information and establishing a protocol for quick response by emergency personnel; and
  • Loss Reduction: After an accident has occurred, losses can be reduced by planning ahead for alternative ways of continuing work, providing the best medical care possible, managing workers’ compensation claims effectively and creating contingency plans.

In addition, it is important that all levels of a company play a role in implementing risk management. Top management should show ownership by establishing safety as a priority and making sure that dedication to risk control is visible. By integrating risk control into all parts of the business, identifying management problems and correcting them and earmarking the required investment for effective safety policies and equipment, management can display its commitment.

Middle managers and site supervisors are responsible for creating a safety and loss-prevention environment, integrating risk control into their jobs, providing training and orientation for new employees, responding to employee safety concerns, performing jobsite inspections and being trained in hazard recognition and abatement.

Employees should demonstrate a safe work attitude, follow established policies and procedures and know the hazards and abatement issues in their work area.

Safety areas

Each construction site has its own risks and challenges, so good safety planning begins with a careful assessment of the specific job and its possible hazards. The following are three situations that offer opportunities to enhance safety.

Highway work zones: Whenever construction activity exists side by side with road use, there is the potential for accidents. Controlling road use through a construction zone is essential for safety. Priorities should include:

  • Inhibiting traffic flow as little as possible. When drivers proceed smoothly through an area, there is less chance for human error;
  • Guiding motorists with clear signs, markings and other information that is easy to see and understand;
  • Inspecting the work zone day and night to ensure conditions have not changed (damaged signs, missing cones, etc.);
  • Training all workers, including flaggers, to operate in a safe manner; and
  • Reviewing specific work to be done, potential hazards and risk mitigation plans at the beginning of each work shift.

Fall management for bridge projects: Each project should begin with preplanning to identify all fall hazards and controls that will be used. Supervisors and workers should review daily work with a particular focus on hazards and how they will be mitigated.

Work areas should be kept clear of debris, and cords should be taped down or hung off the ground so that people can walk and work without tripping. Instilling in employees the importance of safety and encouraging them to watch out for each other is vital.

Finally, it is important that a rescue procedure be identified, employees be drilled on its use and any necessary equipment for implementation be available at the jobsite.

Equipment operation: Contractors already know that a job goes easier when the right equipment is used. But it also is important to have the right operators who are familiar with the capabilities and limitations of the specific equipment.

While some equipment operators are regulated, others are not, but that does not mean a contractor should let down his or her guard. For example, federal OSHA regulations require a forklift operator to be certified through specialized training and that certification must be renewed every three years. However, in some states, crane operators are not required to be licensed or certified. Currently, several national organizations are advocating for the certification of crane operators. If successful, such certification will include safety training on how cranes should and should not be used, the dangers of exceeding manufacturer’s specifications and other key information.

Until such certification exists everywhere, contractors should ensure that operators have experience with both the equipment and the type of construction project that is being undertaken. It is just one more step in making sure that a job goes smoothly and safely.

Best record wins

Safety is an area where contractors can do well by “doing good.” Besides recognizing that managing risk is the right thing to do for fellow human beings, the best contractors know that their reputation and record are just as important in winning jobs as their bid.

Project owners are interested in contractors who perform well, avoid delays and deliver what they promise.

Good safety management provides the right environment for productive workers to complete high-quality projects on time. The smart contractor pays attention to safety and knows that the payoff will be reflected in the bottom line.

About The Author: Richert is a construction-risk control field manager, Midwest Region, for Travelers.

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