Project Practitioners > Costs of Workplace Illness & Injuries

Costs of Workplace Illness & Injuries

By Morley Selver, P.Eng IPMA B

A few years ago, during a refinery startup after a shutdown, they had an explosion killing 15 people and injuring over 170. The refinery was fined $96 million dollars and it caused $50 million in damages. They accepted responsibility and paid out over $1.6 billion in compensation. 

This is an extreme case, however, there is a cost to workplace illness and injuries and I want to go over them with you. While I am talking about them, think of your own situation and what would happen should you get seriously injured. Also keep in mind that what would affect you has the same affect on others.

If your project is behind schedule, there can be a lot of pressure from management to get the equipment on line and make product. This is not the time to be taking shortcuts and doing unsafe acts. Management have to realize that it is going to take what it takes to get the equipment running in a safe manner. You need to be vigilant to safety issues and impress upon others the need for safe practices.

The Cost

The first issue is the training cost of replacement workers. The more knowledge and experience the harder it is to replace the person. We talk about Operators being involved in startup and the knowledge and experience they acquire. One accident and all this could be wiped out. You can not just bring in a green person and turn them loose. It can take months to get people up to speed and several years to get them to a point where they can really understand the process. In the incident noted above it will take a long time for the company to recover from this accident. It is important for you to take the necessary steps to protect the workers. 

There is damage to equipment, property, or product. In the above incident, the refinery had $50 million in equipment damage. Think of the pumps, pressure vessels, exchangers, piping, electrical and instrumentation that has to be replaced. Some equipment is no problem, while others can be a big issue. If you have housing around the facility, you could end up with shrapnel falling on private property. As well, a lot of facilities have dangerous chemicals that can be released into the atmosphere. I worked in one facility where we were offloading liquid chlorine. The pump failed and chlorine gas was released. Fortunately, no one on site nor in the surrounding community was injured.

When your facility or equipment is out of service, then other workers are down as well. If it is a long term issue, what happens to the other employees? More than likely, they will be unemployed. Downtime also affects the surrounding community as there is less money to spend. This can affect the employment with contractors, stores, service industries and others. 

For any injury, there are reports that need to be filled out. The more serious the injury, the more paper work required. It will require accident investigations. All this takes people and money away from other work that could be done. For the above noted accident, there was a panel formed to investigate what happened and write a report with recommendations. This took about two years to complete and the recommendations resulted in more paperwork at the operating level.

When your company has a reportable injury, your Workers Compensation insurance premiums increase. This costs your business more and this cost will be reflected in the price of your product. Some companies track safety using the Experience Modification Rate or the EMR. This is a number used by insurance companies to gauge both past cost of injuries and future chances of risk. The lower your EMR means the lower your worker compensation premiums will be. An EMR of 1.0 is considered the industry average. An EMR of 1.2 would mean that insurance premiums could be as high as 20% more. That 20% more must be passed on through your product. With some facilities, if you don’t have an EMR of 1.0, you can’t work in the facility. Keep in mind, that although you have a contractor on site now with an EMR of 1.0, this could change through injuries somewhere else or they are bought out by someone with a different EMR. You need to keep your ear to the ground all the time.

When accidents happen, there is an impact on employee morale and productivity. Employees, start to wonder just how safe is the workplace. If the workplace has had numerous injuries, the employees will be constantly complaining about safety and not paying attention to productivity.  When the employees know that management is concerned about their safety, they will be more productive.

If there is an accident or injury, the equipment or facility could be shut down for a length of time. If the injury is serious, the government will shut down the facility until management can prove the facility is safe to operate again. This causes problems in trying to meet supply contracts  and service agreements. The contracts have to be filled and the company will have to buy product on the open market to fill these contracts. If you are a service company and your EMR goes bad, how do you fill your service agreements if you are not allowed on site? This could have a devastating effect on the financial health of your company.

Accidents also have an impact on the companies reputation. No company wants to be on the five o’clock news or be known as an unsafe company. If you are noted as an unsafe company, the government may start passing additional regulations affecting your industry. Right now, in 2014, there is a lot of oil being shipped by rail. Because of recent derailments and fires, the government is passing regulations on how the rail industry needs to handle trains hauling hazardous chemicals.

If you look through your local workers compensation branch newsletters, you will find in the back several pages of prosecutions and fines that have taken place for various accidents and injuries. Some of the finds can be quite hefty, and these fines are passed on through the cost of your product. As well, management can be prosecuted, including yourself, if you are found at fault. Therefore, you have to do your due diligence, to protect yourself and your company.

If you were in an accident, and lost a limb, just think of the impactthat would have on your life. How would it affect your family? Your recreational activities may disappear from your life. In some cases the impact can be devastating. Even simple accidents can have an affect on your health many years hence. You should insist that your workers report any accident, as the affects could show up years later. One of my sons, then in his 20’s, fell down a set of stairs while out with his friends. There was no serious damage and he shrugged it off. He’s now in his 40’s and paying for it. The doctors are attributing his headaches and back pain to that fall over 20 years ago. They can alleviate some of the pain but not all of it. This is affecting his work and quality of life. 

To sum up, you want to make sure that safety is one of your top priorities. You do not want to get injured nor do you want someone else injured on your projects.

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