Conducting an Accident Investigation
Course 102
Safety Certified Supervisor Series

MODULE 6: DEVELOPING RECOMMENDATIONS

A simple cost-benefit analysis

Example: If, during a safety inspection, you notice that an elevated platform area in a warehouse does not have a proper guardrail. You note that several workers work on the platform each day, and a well-used walkway passes directly under the platform. To construct a cost-benefit analysis for this situation you would answer the above questions as follows in the next few pages.

What are the estimated costs to the company if the hazard is eliminated?

Costs: $1,500 needed to purchase and repair guardrail.

How soon will the corrective action pay for itself?

If a disabling injury occurs within the next 5 years, using National Safety Council figures we can estimate a direct/indirect cost to the company of approximately $28,000. Given the cost to purchase and repair the guard rail of $1,500. The corrective action will pay for itself in just 3.3 months ($1,500/ ($28,000/60 months)).

What is our return on investment (ROI) if corrective actions are taken? The ROI over the five year period will be $25,500 or 1,800 percent!