In many cases, contractors consider health and safety a legal requirement that means spending money without any hope of profit. But a quick look at the cost of workplace injuries and the potential return on investing in accident prevention shows that a safe, healthy workplace can be a profit centre. Direct and indirect costsInjury costs are subtracted from a contractor's bottom-line profit. These costs can't be depreciated, written off as business losses, or deducted as expenses. To offset $50,000 in losses from injuries, illnesses, or damage and still make a 3% profit, a company must sell an additional $1,667,000 in services. Injuries involve both direct costs and indirect costs. Direct costs consist of
The average WSIB cost of one lost-time injury in construction is $35,000. In most cases, direct costs are covered by the WSIB and therefore have little or no immediate impact on profits. But they do impact on future profits, since they drive up the cost of doing business. Indirect costs include disrupted work schedules, lost productivity, clean-up and repair, hiring and training replacement workers, bad publicity, and time spent on accident investigation, claims management, and litigation. CSAO has found that the average ratio of indirect to direct costs in Ontario construction is 5 to 1. Indirect costs exert an immediate impact and usually result in lost profits. ResearchRecent studies indicate that investing in health and safety can yield financial advantages. Some highlights:
Too often, contractors are reluctant to invest in health and safety because of limited resources or because they don't realize the potential benefit to both the workforce and the company. The investment naturally costs money in the short run but in the long run it can save lives, reduce injuries, and increase profit. This can be vital to a contractor's financial health during bust as well as boom times.
Graphs
reproduced from A.J. Joseph, "Safety costs money and can save money" in
Singh, Hinze, and Coble (editors),
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