Page 146 - Urban Construction Project Management

Safety 105
STANFORD ACCIDENT COST ACCOUNTING SYSTEM

Michael Robert Robinson developed the Stanford Accident Cost Accounting System.
The matrix is noted in Exhibit 5-27. The matrix shows:

1. Body part injured
2. Nature of the injury (sprain, fracture, bruises, etc.)
3. Down time required of the worker
4. Cost associated with the injury
5. Information based on historical data

Contractors can use this matrix to approximate the cost of an accident that may occur
on the job site. The negative cost information would then be placed as a liability on the
balance sheet for the project. These negative costs can have a profound impact on the
bottom line cost of a project.

WORKERS’ COMPENSATION

Workers’ compensation rates for various construction trades throughout the United
States are indicated in Exhibit 5-28 from Engineering News Record-McGraw-Hill
Companies. The rates are given per $100 in wages. Therefore, for New York, an iron
worker’s workers’compensation would be $16 for every $100 of wages. If we review the
wage rate for iron worker as noted in Exhibit 5-29 we see that workers’ compensation
constitutes approximately 12% of the wage.

The workers’ compensation rates noted in Exhibit 5-28 are for “average” accident rates.
If an iron worker works for a company where the accident history is higher than the
average, then workers’ compensation rates start to escalate. If you look at Exhibit 5-29,
we now see that the workers’ compensation rates now constitute 17% of the total wage.
In addition, the total wage rate has gone up $9.00 per hour. This could make a big dif-
ference when one is bidding a job.

The adjustment to the rate is called the experience modification rating (EMR). The
EMR is based on a three-year accident history of the company being evaluated and the
number of accidents (and severity) that occurred over that period.

LIABILITY INSURANCE

The insurance companies look over the contractor’s safety record for the past five
years. They look at the number of accidents and the severity. In addition, they want to
make sure that all cases have been resolved. If the safety record has not improved, then
the premiums will increase or the insurance company will not renew the policy.