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Investing in MSDs: Is it worth it?
Olivia YuPhD StudentThe University of Queensland
Barriers
Regulatory compliance
Lack of ROI methods
WHS not profitable
Insufficient resources
Drivers
Reputation & public image
Cost effective
Health outcomes
Legal compliance
Corporate social
responsibility
A performance measure that evaluates the efficiency and cost effectiveness of an intervention, which is often used to compare multiple options.
It is expressed as a percentage or ratio of total benefits to total costs
ROI =$ benefits
$ costs
Return on investment
Answer questions like …
“How does
this
impact on
our KPIs?”
“How much does it cost upfront?
What about maintenance and training?
How long is it going to take to roll out?”
“Does it benefit the
business in any other
ways?”
“Is productivity going to
be affected?”
“How much will
it cost over
the life time
of the
project?”
“How much of our
budget is this
going to use?”
“What are our
options? Give me
a comparison of
their cost
effectiveness.”
Productivity improvement
Cost of intervention
Training costs Avoided
cost of injury / illness
Sick leave reductions
Workers’ compensation
reductionsMaintenance
Cost to implement
Return on investment
Costs Benefits
The Business
76 Manufacturing
2012/13
2016/17
Claims ↓ 41.18%
Average cost of claims ↑ 120%
The Task
The Solution
Upfront costs
ItemDuration of
task (hr)Cost per hour ($)* Total cost
Initial implementation
40 50 $2,000
Initialidentification & assessment
40 50 $2,000
Training 10 23.35 $234
Capitalexpenditure
$42,890
TOTAL COST $47,124
* Mix of industry average and provided data
Ongoing costs
ItemDuration of
task (hr)Cost per hour ($)* Total cost
Maintenance 5 60 $300
Ongoing training
2 23.35 $47
TOTAL COST $347
* Mix of industry average and provided data
Avoided costs of injuries
Risk
Severity
Disruption
Immediate costs
ItemDuration of
task (hr)Cost per hour ($)* Total cost
First aid 2 50 $100
Transport to hospital / clinic
1 50 $50
Lost productivity
3 74 $222
Making area safe
0.5 50 $25
Other $20
TOTAL COST $417
* Mix of industry average and provided data
Investigation costs
ItemDuration of
task (hr)Cost per hour ($)* Total cost
Investigation incident
4 150 $600
Complete reports
2 50 $100
Otherpaperwork
2 50 $100
WorkCover 1 50 $50
Follow up meetings
1 150 $150
TOTAL COST $1,000
* Mix of industry average and provided data
Damages
ItemDuration of
task (hr)Cost per hour ($)* Total cost
Assessing damages
1 33 $33
Repairs / replacements
4 80 $320
Coordinatingrepairs
1 50 $50
Property damage
$2000
TOTAL COST $2,406
* Mix of industry average and provided data
Job task replacement
ItemDuration of
task (hr)Cost per hour ($)* Total cost
Hiringreplacement worker
1 50 $50
Trainer time 2 33 $66
Trainee time 2 33 $66
TOTAL COST $182
* Mix of industry average and provided data
Productivity loss
ItemDuration of
task (hr)Cost per hour ($)* Total cost
Lostproductivity
10 33 $330
Manage injury claim
10 50 $500
Capacity of worker upon RTW
1064 23.35 $24,844
TOTAL COST $25,674
* Mix of industry average and provided data
Benefits
ItemDuration of
task (hr)Cost per hour ($)*
Total savings (p.a.)
Productivity gains
1008 50 $29,413
Reduced absenteeism
76 50 $2,218
Workers’ compensation savings
$20,000
Other $5,000
Incidents avoided
10
TOTAL COST $56,631
* Mix of industry average and provided data
Return on investment
ROI$69.85 of
benefit per $ of costs
Payback period:
1.6 months
Total value of costs
$50, 591
Total value of benefits:
$3, 533, 951
Over 10 years...
Overview of benefits
Improved productivity
– more streamlined processes
Improved service delivery
Surpassing customer
expectations
Reduced risk of injury
Reduced time
investigating incidents
Greater worker
participation – hazard
identification & RM
Elements of a cost saving program / intervention
Worker involvement
Management commitment
Ergonomic expertise
Implementing 'easy' or low cost interventions first
Human-centred design
Some (free) tools…
Puget Sound Chapter, Washington
http://ergo.human.cornell.edu/CUROIEstimator.htm
Time Intangible benefits
Inadequate & inconsistent data
Lack of evaluations of WHS ROI tools
usefulness
Limitations
“Price is what you pay. Value is what you get.”
Olivia YuThe University of [email protected]
