Accident costs and economic impact analysis

¶ … accident can give rise to many direct and indirect costs for an organization to bear. One such case study involved a diary distribution company. One of their trucks was involved in a spill on the way to delivering milk to a creamery. The spill caused much disputation for organization but also the creamery, the public using the freeway and public services alerted for the accident. The accident resulted in nearly a thousand gallons of milk being lost and deposited in the asphalt of the road. This required many hours of clean up but also lead to a freeway closure that inconvenienced many motorists during morning rush hour traffic. How does an organization begin to assess such an event? Thankfully, there were not any injuries to the employee driving or the public. This accident could have been worse in that regard. Injuries can be costly and time consuming legally and professionally for all parties involved.

Accident Costs and Consequences

The enormity of such an event can weigh heavily on the shoulders of the best of employees. An event of this size can also cause much stress and lost time for a company. It is only later when the real ramifications of the accident hit home. Not only is there a loss incurred due to the actual event but also the consequences snowball as other opportunities disappear and other functions of the company suffer as focus is centered on the accident. Therefore it is important that a company act fast to put into place damage control immediately. By having a plan set in place, gives employees and management a way of handling the consequence before they become severe. This can save money and time over the long run for an organization. Unfortunately, it will not make the accident go away but it will minimize risk for the future. Damage control can also act as a learning tool for the future should something else occur. By studying the costs of an accident, an organization can learn what methods of safety and risk analysis work and what causes more trouble over the long run. Below is a list of accident costs associated with the case study.

Accident Cost Calculator Results

TitleDealing with Incident (immediate action)

Time

Hourly Rate

First Aid hrs

Making the area safe of Incident hrs

15.00 n

Putting-out fires

Investigation hrs

Immediate staff downtime (e.g. work activity stopped) hrs

Staff time to report and investigate incident

12 hrs

Meetings to discuss incident

12 hrs

Time Spent with HSE Inspector

8 hrs

Consultant's Fees

120 hrs

Assessing/rescheduling work activities hrs

Recovering work/production (including staff costs)

12 hrs

Cleaning up site and disposal of waste, equipment, products, etc.

Bringing work up to standard (e.g. product reworking time/costs) hrs

Repairing any damage/faults

Hiring or purchasing tools, equipment, plant, services, etc.

Loss of product (milk)

950 gallons

2.75 gallon

Action to safeguard future business

Salary costs of replacement workers dys

Lost work-time (people waiting to resume work, delays, reduced productivity, effect's on other people's productivity, etc.)

16 dys

Overtime costs

24 dys

Recruitment costs for new staff

Contract penalties

Reassuring customers

Providing alternative sources of supply for customers

Sanctions and penalties

Compensation claim payments thus far

Solicitor's fees and legal expenses

Staff time dealing with legal cases hrs

Fines and costs imposed due to criminal proceedings

Increase in insurance premiums

10 dys and 6 hrs

Table 1: Accident Costs. (HSE Form).

Conclusion