The Cost of Health and Safety

The Cost of Health and Safety (H&S): A Summary Professor John Smallwood

Introduction

The extracts presented in this summary have been extracted from the paper ‘Optimum Cost: The Role of Health and Safety (H&S)’ presented at the International Cost Engineering Council 4th World Congress, Cape Town, 17–21 April 2004.

Literature

The Business Roundtable (1995) cites research conducted in the USA, which determined that the cost of administering an H&S programme usually amounts to 2.5% of direct labour costs.  Based upon two projects undertaken by a South African general contractor and that direct labour costs usually constitute 25% of the total project, the cost of administering an H&S programme was estimated to amount to 0.65% (25% x 2.5%) of the total project cost (Smallwood, 2000). However, given that the structure of the industry has changed, the aforementioned must be deliberated with circumspection.

Research Findings

Research conducted relative to the paper from which the findings have been extracted entailed the survey of 28 general contractors (GCs), which achieved a place in the then BIFSA National H&S Competition during the period 1995 - 2002. At the time of compiling the paper, 9 GCs had responded to the postal survey, which represents a response rate of 32.1% (Smallwood, 2004).

In response to the question “On average, approximately what percentage does the cost of H&S constitute of total project cost?” of the eight (88.9%) GCs that responded, two GCs (25%) recorded a percentage, namely 3% and 0.5%, and six (75%) identified ranges: three (50%) ‘0 ≤ 1%’, and three (50%) ‘> 1 ≤ 2%’ (Smallwood, 2004).

Future research

There is a paucity of research findings relative to the cost of H&S. This is partly attributable to contractors not establishing a separate cost centre for H&S and that there are certain H&S costs that are allocated to preliminaries and trade items.

However, the author will be conducting a cost of H&S study among, among other, members of the KZN Master Builders.

References

Smallwood, J.J.  2000.  A study of the relationship between occupational health and safety, labour productivity and quality in the South African construction industry.  Unpublished PhD (Construction Management) Thesis.  Port Elizabeth: University of Port Elizabeth.

Smallwood, J.J.  2004.  Optimum cost: The role of health and safety (H&S).  In: J.J.P. Verster (ed.) Proceedings of the International Cost Engineering Council 4th World Congress, Cape Town, 17–21 April. Cape Town: ICEC, Smallwood-J - Optimum Cost-Health & Safety.pdf.

The Business Roundtable. 1995. Improving Construction Safety Performance Report A - 3.  New York: The Business Roundtable.

Supplied to the Association by Prof John Smallwood