Medical treatment costs for an injured worker. The direct costs of an injury can include: However, when I am financially justifying program enhancements or workplace improvements, I prefer to use a more conservative multiplier of 1 to 2 times the direct costs. When I explain the concept, I use an indirect cost multiplier of 4 to 6 times the direct costs. OSHA has done a nice job of outlining how the ratio of indirect costs associated with a single injury could vary based on the severity of that injury. The ratio will also vary based on whether you are looking at the costs of one specific injury or the total costs of all injuries. Other costs are much farther beneath the surface and may not be included in some models. Some costs are very near the surface and may be included as either direct or indirect costs, depending on the observer. The imagery of the iceberg can help explain some of these differences. The estimated ratio between direct and indirect costs can vary considerably depending on the source of the estimate, the cost elements considered in the total direct costs, and the factors included in the indirect costs. The iceberg image also conveys that more of the costs are hidden below the surface than are visible above it. The more obvious point is that some costs are visible but accompanied by less visible costs. The iceberg image conveys two important aspects about the types of costs. It’s notable that you will see the same concept being used if you search online for “hidden cost of poor quality.” This concept of hidden cost is not unique to safety, and it is likely to already be understood by members of the management team. These two types of costs are often referred to within EHS as direct and indirect costs however, it may be more appropriate to describe them as visible and hidden costs.Īn iceberg is often used to illustrate the two types of costs. Other costs are embedded within larger issues or are less easily attributed to any specific injury. Some costs associated with an injury are apparent and easy to assign to a specific incident. One reason that safety initiatives can struggle to achieve sufficient support is that those of us responsible for safety in our organizations haven’t consistently conveyed the total injury costs to key decision makers.
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