KMI EHS Software Logo

In order to include this in the NPV calculation the dollar value of losses due to injuries and the potential savings due to injury reduction must first be determined and documented. A well accepted calculation to determine the total cost of injuries at a company is to simply add the direct costs to the indirect costs. Direct costs typically include medical costs, workers compensation claims and increases in insurance premiums. Indirect costs include lost productivity, reduced efficiency of employees, retraining, hiring and recruitment, and possibly fines or penalties. Indirect costs are commonly estimated to be 3-4 times greater than direct costs. Once direct cost data is gathered, multiply the value by a reasonable indirect cost factor between 2-4 and add the result to the direct cost value {TC = DC x 3 + DC} where TC = total cost, DC = direct cost and 3 is the indirect cost factor. The OSHA website also provides some tools to help with simple accident cost estimates (http://www.osha.gov/SLTC/etools/safetyhealth/mod1_estimating_costs.html).

Chart 1 Declining Injury/Illness Rates*

Recordable Injury/Illness Rates by Year Chart

*These are actual figures from an existing implementation. The company name has been withheld for privacy.

RESOURCE USAGE REDUCTION AND SUSTAINABILITY

Using the environmental performance metrics module to manage sustainability programs may be one of the largest areas of potential cost savings. By setting targets and tracking items like Greenhouse Gas (GHG) emissions, water consumption, energy usage and off-site waste treatment, module users can leverage the system as a key part of the overall sustainability program. The reduction in spending on water, energy and waste treatment can easily be obtained and turned into a financial figure. Gathering current cost data and applying a very conservative reduction target results in a quick potential cost savings calculation.

Register with KMI here to download the PDF version!

< Previous 1 2 3 4 5 6 7 Next >