- Email: [email protected]
Participation for understanding: An interactive method
Journal of Safety Research - ECON proceedings 36 (2005) 231 – 236 www.elsevier.com/locate/jsr
www.nsc.org
Economic Evaluation Proceedings Paper
Participation for understanding: An interactive method Ernst A.P. Koningsveld TNO, Hoofddorp, The Netherlands
Abstract Introduction: There are many available models that help evaluate the effectiveness of safety and health measures, but many are complex and require input from many departments within an organization. There is a need to develop a more user-friendly model. Method: A participative model was developed that involves face-to-face interviewers with workers, maintenance department, purchasing department and health and safety experts. They were asked about costs, efforts, benefits, and effects of gauging the effects of prevention efforts. Results: Cost effectiveness analyses are essential in all cases and can include whatever the end-user requires, whether it is a small or lasting improvement. Having management participate helps validate the data. Conclusions: Organizations who collaborate with someone with at least some skill in cost-benefit evaluations will find that they will be able to establish policies and procedures from the data. The end result is a calculation that is understood by all involved. D 2005 National Safety Council and Elsevier Ltd. All rights reserved. Keywords: Economic evaluation tools; Safety; Costs; Evaluation models
1. Introduction
2. Goals
Over the past few decades many models have been developed to evaluate the cost effectiveness of health and safety measures. Many of these models are complex and require that data must meet the specifications defined by the model, which oftentimes requires data collection from different departments within an organization. Working with available and easily-accessed data would be more clientoriented and more efficient. The needs of the organization need to be addressed when developing an appropriate model, and questions need to be addressed. Why do they want cost benefit evaluations? Who will be the one to make them? What data will be available or can easily be produced? What level of details is necessary? And which level of reliability will be required? We developed a participatory approach to address these concerns that is efficient, quick, and gives the insight that is needed to make decisions.
Cost effectiveness evaluations can be made with several goals:
E-mail address: [email protected].
1. To convince people that investments in health and safety are useful. 2. To evaluate a proposed investment, or to evaluate the decision afterwards. 3. To benchmark to other companies. 4. To follow a trend in time. 5. To sell products, systems. As the goal is to decide what kind of tool or evaluation method one should use, we will explain what the impact is of each of the five goals. 1. Examples of cost benefit analyses can be so convincing that the outcomes will not only validate current investments, but they can be expanded to be used in other situations. The calculation for these analyses must be plausible and easy to understand. Data are sufficient if the input data are considered to be in the expected range, they do not need to have a high level of reliability. A practical example is a small computer program that calculates the cost
0022-4375/$ - see front matter D 2005 National Safety Council and Elsevier Ltd. All rights reserved. doi:10.1016/j.jsr.2005.06.004
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E.A.P. Koningsveld / Journal of Safety Research - ECON proceedings 36 (2005) 231 – 236
of absenteeism, which we developed and is now available on the internet for several sectors in the Netherlands (e.g., www.keerpunt.nl, in Dutch). 2. Management will make a decision on the basis of several considerations. Financial considerations (e.g., the expected return on investment) are among these, but certainly not the only consideration. Next to quantitative parameters, qualitative pro’s and con’s count, sometimes even more so. Most of the company’s decisions are only partly based on financial terms; ‘‘abdominal feelings’’ are also important, although people don_t always admit this. Cost benefit analyses need to be accurate in proportion to the extent and consequences of the investment. For smaller investments, a quick analysis partly based on estimations may be good enough. 3. Benchmarking is a hobby for managers. Often the size of the differences gets more attention than the background of the differences. Of course this is not correct. In order to make benchmarks useful, it is highly recommended to use the same evaluation method, as well as the same assessment tools. This implicates that a well-balanced method should be developed, which is not easy. The method needs to be described in as much detail as possible in order to guarantee a use according to the specifications. Such methods will often be difficult to apply, resulting in little use. Many of the cost effectiveness methods in the field of health and safety suffer from this. In the Netherlands the national costs of poor working conditions were investigated for 1995 and for 2001. While the same method was used, after only six years many categories could not be compared due to changes in legislation and losses of data files. 4. To follow a trend in time is useful for management to evaluate the progress of the business. The only important qualification is a well-described method that at different moments in time will be applied in the exact same way. Estimations don_t fit in such methods. 5. Producers and retailers like to convince their potential clients of the benefits of their products. Of course there are honest companies and people, but it is likely that these groups are tempted to use invalid methods. While their published data and methods may look reliable, the opposite may be true. Always ask for the details of the model used, and ask by whom the data were collected. If you want to use cost benefits to sell your products, let the evaluation and calculation be made by an independent and reliable party.
3. Method development The Dutch method was developed on the basis of expertise built up over a period of about 10 years. Most of the work consisted of research. In early 2003, a project changed the view on cost effectiveness models radically. The Ministry of Social Affairs and Employment in the Netherlands promoted Design for All (D4A) as an approach to help reduce lost workdays and disability. D4A, also
known as Universal Design, aims to design and produce products that allow as many people as possible to use these products effectively, and without a health or safety hazard. The same principles can be used to design workplaces and work organization. In the project, 10 cases were evaluated with an emphasis on cost effectiveness. Given the budget and the access to data, all relevant data were collected in a conference-like way. The owner of the improvements (e.g., an employer or a producer) was invited, and a team of health and safety experts interviewed him/her. Items in the interviews were: – What belongs to the specific case? – What made you choose a D4A-solution? – Which investments in money and time did you spend, and what further efforts had been brought in? – Which effects can be seen as a result of the investments and efforts? Can these be specified in terms of money? If not in quantitative data? If not in qualitative statements? Five fairly different groups of experts did the interviews. The experts had no insight or knowledge about the cases beforehand. A list of potential categories for costs, efforts, benefits, and effects was drafted as a reference for the interviews. After the 10 cases, the list was slightly adapted. In the 12 years since the onset of the project, the list has been used about 30 times for different goals: health improvements, safety measures, and environmental projects. Very few adaptations have been necessary, so now this list is considered as a general means. Some general calculation rules can be defined, but the general rule is that each case has to be customized. Some cases deal largely with productivity aspects, others with absenteeism or accidents. A general model turned out to be impossible.
4. The method The method was developed mainly for goals 1 and 2, and under restrictions for goal 5. This choice implies that it is more a consultation method than a research method. The level of accuracy and reliability is not higher than what is expected by the owner of the question. Basically the model is a participative model. The cost benefit experts interview the one who wants to have a cost effectiveness evaluation. In many cases some other people take part in the interview as well: users, workers, maintenance departments, purchase departments, or health and safety experts. The list of potential items is used as a reference manual, not as a strict program. The consulting skills of the experts, in particular their skills to analyze deeply, is essential to
E.A.P. Koningsveld / Journal of Safety Research - ECON proceedings 36 (2005) 231 – 236
bring all relevant aspects up. An example illustrates this (see inserted text block).
Box 1 An example to illustrate the advantage of participation In a steel plant liquid iron is transported by rail wagons to the steel factory. The wagons have an inside ceramic covering to prevent hot iron to melt the wagon. The covering needs to be replaced regularly. The masons_ work is physically straining, resulting in a high percentage of absenteeism and cases of disability off and on. Besides the population gets older, so there is a need of urgency to improve. Many different solutions were evaluated, and the use of smaller blocks (less thick) was considered to be a good option. Blocks of a 30% reduced thickness met ergonomic standards. The logical expectation was that this measure would result in 30% more repairs. The calculation of management showed that the solution would result in extra costs of $ 300.000/year. In the cost effectiveness interview the expert heard about the thinner covering. He asked: ‘‘A thinner covering will result in a higher volume of melted iron on the wagon; will the axes and the track be strong enough to bear the extra load? Management answered enthusiastic: ‘‘Yes, that_s no problem. But: more iron in each wagon means less transports, so reduced costs!’’ The next question was: ‘‘Are you sure that a 30% thinner covering will have a 30% shorter life cycle?’’ The discussion turned into the question if a thinner ceramic block would have the same qualities as a thicker one. The blocks were tested and it showed that the hardness of the thinner block was evidently higher! In the cost benefit calculation the factor for the extra repairs (30%) turned out to be essential for the outcome: a break even was reached as this factor was 27%! So management decided to start a test in practice with one wagon, in order to examine the endurance of the thinner covering. The expert can also help in finding and processing data that are required for a cost effectiveness analysis. Next the expert makes a draft of the analysis. In a participative session the draft is discussed. Potential missing data can be added, either by comparing company records or by estimations. Critical factors can be discriminated. The outcomes are discussed. The result is an analysis that has a broad basis.
233
Depending on the goal of a cost and benefit evaluation, the method can be chosen. A quick scan is adequate for a relatively small investment to improve the work of one person or a small group. For long lasting improvements with a wide scope, a more thorough assessment of factors and parameters is more appropriate. In general, if estimations have to be made, it is advisable to make the estimations in close collaboration with the responsible management; they have easy access to data and are familiar with indices. This prevents the consultant from having to prove the data, and because management has taken part in validating the data, the outcomes are traceable and acceptable.
5. A specific example: glaziers Glazier is a good but physically straining job. The work results in discomfort and an unacceptable level of health hazards. In particular, double panes (which have become common) are heavy (often too heavy for manual handling) (Fig. 1). Over the past several years new tools and means for transport have been introduced. The tools and means were developed in a participatory ergonomics project (Urlings, Bronkhorst, & van der Grinten, 1998). Despite a lot of promotional activities, the implementation on the work floor goes slowly. Employers are reluctant, as they doubt if the investments pay back. In a costs and benefits evaluation, a set of tools was considered: a simple crane mounted on a van to help hoist the glass on and off. Next there are two carts, each of which has a specific application depending on the transport circumstances. For the vertical transport to the window frame an aluminummade hoisting unit of 10m tall was developed. For cutting out the old panes, a new electric hand tool was developed that prevents the straining involved in manual cutting of glass paste. All means together are always available in the van, so the workers themselves can choose which means they will use in each given situation.
Fig. 1. Glaziers using a glass cart.
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This investment lead to annual depreciation costs of Euro 640 (see Table 2). The time to learn to work with the means is short and can be depreciated over many years; so the annual costs will be very small and are not taken into account (these are stated as pro memoria). The annual exploitation costs consist of an inspection of the crane and some maintenance: Euro 200. So the total annual expenses amount to Euro 840 (see Table 1). For the benefits we look at the performances of the workforce. According to law, the maximum lifting weight is 25 kg per person. To handle and lift glass panes of more than 50 kg the regular team of two glaziers will need a third person, which indeed is practiced when needed. Together with management it was estimated that in total a third person spends 15% of his/her working time to travel and help a team of two glaziers. That represents 15% of his/her wages (Euro 26,000/year). With the new tools and lifting means, no third person is needed. The reduction of costs is 15% Euro 26,000 = Euro 3,900. The travel costs for that third person are included. Analysis of work has shown that the net productivity hardly differs when the glaziers use the means. But the time spent for rests was reduced by about 10%; presumably this is the result of the reduction of the musculoskeletal workload. It may be expected that part of that time will be used to perform more work. As a working day consists of many different tasks, including travel, management and consultants estimate that an increase of productivity with 3% is likely. This 3% has a value of 3% of the margin between the turn over of two persons minus their wages. The team’s annual turnover is 1,670 man-hours 2 persons Euro 35/hour = Euro 116,900. Their wages are: 2x Euro 26,000 = Euro 52,000. So the margin of their work is Euro 64,900. The new working methods lead to a gain in productivity of 3% of Euro 64,900 = Euro 1,947/year. The increased productivity does not mean that the workload and the discomfort will not decrease. Specifically, peak loads on the back, arms, and shoulders are reduced. As a result, the related health complaints are expected to decrease; so will the number of lost workdays. The absenteeism rate in this branch of industry is 7%. From previous projects (Koningsveld & The´, 1999), we know that 45% of absenteeism is caused by musculoskeletal disorders;
Table 2 The financial costs and benefits of new glaziers’ equipment Cash flow
Per year
Investments & Depreciation costs & Training in new working methods Operating costs & Inspection, maintenance & Reduction of lost working days Performance: & No third worker needed & Increased productivity Total cash flow
C 640 p.m. C 200 C 328 C 3.900 C 1.947 C 5.335
50% of these cases find their origin mostly or completely from work. So 7% 45% 50% = 1.58% of the workforce is lost by absenteeism as a result of manual handling. When workers use the available tools and means frequently, the most physically straining work is eliminated, though not all of it; so it is likely that only part of the work-related absenteeism by musculoskeletal disorders would decrease. Ergonomists have estimated a decrease by 40%. So the decrease in absenteeism is 40% of 1.58% = 0.63%, with a value of 0.63% 2 persons wages of Euro 26,000 = Euro 328/year. In Table 2 the usual presentation in a cash flow table is given. The benefits are given as negative amounts, the costs as positive. The benefits by productivity gains and reduced absenteeism are Euro 6,175. These benefits can be compared with the costs of Euro 840 per year. So we can conclude that the financial ratio is very positive. Besides these, several non-financial benefits can be seen. The work-related discomfort is decreased. The health of glaziers will be better preserved; on the long term it is more likely that they can stay active in their jobs. These points are important for employers, as recruitment of new young workers is a big problem. As the workload is lower, more people can perform the work, so recruitment can be directed at a larger target group. The risk of damage to the panes, to the frames, and to parts of the building is reduced, as the carts and hoists allow better control over the handling process. The risk of cutting and falling accidents is also reduced.
6. Evaluation at sector level Table 1 The total investment in tools and equipment per team of 2 glaziers and 1 van Equipment
Costs
Depreciation time
Annual costs
Crane mounted on the van Cart 1 Cart 2 Electric glass paste cutter Aluminium hoisting unit Annual inspection, maintenance Total annual costs
C C C C C C
5 years 5 years 5 years 5 years 5 years –
C C C C C C C
1.250 150 250 300 1.250 200
250 30 50 60 250 200 840
In the Netherlands, so-called covenants are agreed upon between the Ministry of Social Affairs and Employment, and employers_ organizations and unions in several sectors of Table 3 Health complaints amongst Dutch paviours (2000, including assistants) Workers with complaints (% of all) Wrist, hand, shoulder complaints Knee complaints Low back pain
40% 53% 69%
E.A.P. Koningsveld / Journal of Safety Research - ECON proceedings 36 (2005) 231 – 236
235
Based on long-term registration of health records at occupational health centers, 12 trades were allocated as highrisk groups. Paviours and their assistants are among these. Paving is physically straining work; typical work postures are kneeling, bending, and squatting. Continuous manual materials handling characterizes the work of both the paviour and the assistants. Assistants pull wheelbarrows over uneven ground surfaces, often consisting of loose sand. The work paces are high as cost prices are constantly under pressure. In Table 3 relevant health complaints among paviours are shown. Goals of the covenant on working conditions in the construction industry in general and specifically for paviours are: – 90% of all workers will have knowledge about health hazards and measures to reduce these; – a 10% reduction in the number of health complaints over 4 years; – a significant growth in the implementation of machines and equipment that reduce workloads, and in the application of lightweight materials.
Fig. 2. Machine to lay a square meter of blocks at a time.
industry or services. The collective goal is to reduce the health and safety hazards, including physical workloads. The building and construction industry is one of these sectors.
Paving company Mechanical paving compared to traditional manual work paving manually
Investments Purchase costs machine Depreciation term in years Interest rate Value after depreciation Depreciation costs (total) Investments rebate (tax reduction) Total interest of depreciation term Subsidy Fixed machine costs over depreciation term
paving mechanically € € € € € € € €
80.000 7 0 8.000 72.000 18.920 -
€
80.000
€
8.000
€ € €
18.920 -
€ 106.920
Annual machine costs Maintenance Insurance Expected effective machine days Costs of transport Fuel costs Total annual machine costs
€ € € €
1.600 800 70% 2.000 3.500
€ €
1.600 800
€ € €
2.000 3.500 7.900
€ € € € €
37,80 10,20 9,55 7,05 0,15-
Results Wages per hour Cost of temporary workers Fixed machine costs per hour Flexible machine costs per hour Reduction of lost working days
€
58,80
Total costs per hour
€
58,80
Cost price per m2
€
3,14
(excl. paving materials) Production in m2 per hour
€
64,45
€
2,15
19
30
© TNO Work and Employment, Hoofddorp, The Netherlands, 2004
Fig. 3. An interactive spreadsheet for the calculation of the cost effectiveness of mechanical paving.
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Generally paving companies are small (5– 15 workers) and the owner usually works as a member of one of the gangs. Traditional as they are, they tend to work manually; craftsmanship is highly appreciated. Only recently have employers considered investing in machinery and equipment as an alternative for manual work. Interviews with employers show that the decision to invest or not is made emotionally rather than rationally. Several types of machines are on the market that transport materials and lay small elements, curbs, or slabs. Using vacuum techniques, tens of blocks in the established pattern are handled in units of a square meter at a time without physical strain. We have searched for a simple method to convince management of small and traditional companies to make their decisions on factual considerations. We tried to help them to think rationally about the return on investment. Employers_ worries about machines include comments like ‘‘machines cost money when they stand still.’’ We wanted to support them in realizing that it is true that a still-standing machine is a cost, however, you must look at the overall cost of a team of workers plus the machine(s). In other words, the overall team’s performance to recover the cost of the machine must be determined. Many employers feel that the absence of a worker for a period of several months is a natural phenomenon that no one can affect. It is important that they understand that absence is a cost factor that needs to be repaid as well. The implementation of machines and equipment contributes to the reduction of the risk on such unpredictable costs, which makes them investments to reduce costs in the future. Spreadsheets were developed for cost effectiveness calculations for three types of work: (a) transport of paving materials, (b) laying blocks, and (c) laying curbs (Fig. 2). In all three spreadsheets the overall costs of mechanical work is compared to traditional manual work. Recently the spreadsheets were presented on the internet and on a CD-Rom (www.werkgoed.nl in Dutch). There are currently only a few experiences that show how these contribute to employers_ behavior. Nevertheless, we experienced some understanding in the test stage in which representatives of paving companies were involved. This resulted in adaptations:
– originally type of work only calculations were given as an example. Per request of the test persons, it is now possible to fill in a company’s own data and get a customized calculation. If data are missing, reference data are provided. – because employers are not used to thinking in terms of a payback period, the output is given as the cost price per square meter paved surface of manual work versus mechanical work (Fig. 3).
7. Conclusions Organizations who collaborate with someone with at least some skill in cost benefit evaluations will find that it is very well possible to establish the efforts and effects of interventions, or of a certain policy. The related costs and benefits can be stated on the basis of existing data, on measurements, or as collectively-made best guesses. The interaction results in a specific cost effectiveness calculation that is understood by all involved and that will have their support. On the other hand, it is considered impossible to draft a general model that can easily be filled out by anyone and that addresses all questions about all kinds of interventions or policies in the field of occupational health and safety.
References Koningsveld, E. A. P., & The´, K. (1999). Macro costs of poor working conditions in Dutch construction industry. Amsterdam’ Elsevier (in Dutch). Urlings, I. J. M., Bronkhorst, R. E., & van der Grinten, M. P. (1998). A participatory ergonomics approach to redesign working methods and tools of glaziers. In P. Vink, E. A. P. Koningsveld, & S. Dhondt (Eds.), Human factors in organizational design and management – IV (pp. 597 – 602). Amsterdam’ Elsevier. For more than two decades Ernst Koningsveld has been involved with the impact of health and safety programs and interventions. Cost effectiveness is an essential item, for which he has developed a practical approach and gathered many experiences.
www.nsc.org
Economic Evaluation Proceedings Paper
Participation for understanding: An interactive method Ernst A.P. Koningsveld TNO, Hoofddorp, The Netherlands
Abstract Introduction: There are many available models that help evaluate the effectiveness of safety and health measures, but many are complex and require input from many departments within an organization. There is a need to develop a more user-friendly model. Method: A participative model was developed that involves face-to-face interviewers with workers, maintenance department, purchasing department and health and safety experts. They were asked about costs, efforts, benefits, and effects of gauging the effects of prevention efforts. Results: Cost effectiveness analyses are essential in all cases and can include whatever the end-user requires, whether it is a small or lasting improvement. Having management participate helps validate the data. Conclusions: Organizations who collaborate with someone with at least some skill in cost-benefit evaluations will find that they will be able to establish policies and procedures from the data. The end result is a calculation that is understood by all involved. D 2005 National Safety Council and Elsevier Ltd. All rights reserved. Keywords: Economic evaluation tools; Safety; Costs; Evaluation models
1. Introduction
2. Goals
Over the past few decades many models have been developed to evaluate the cost effectiveness of health and safety measures. Many of these models are complex and require that data must meet the specifications defined by the model, which oftentimes requires data collection from different departments within an organization. Working with available and easily-accessed data would be more clientoriented and more efficient. The needs of the organization need to be addressed when developing an appropriate model, and questions need to be addressed. Why do they want cost benefit evaluations? Who will be the one to make them? What data will be available or can easily be produced? What level of details is necessary? And which level of reliability will be required? We developed a participatory approach to address these concerns that is efficient, quick, and gives the insight that is needed to make decisions.
Cost effectiveness evaluations can be made with several goals:
E-mail address: [email protected].
1. To convince people that investments in health and safety are useful. 2. To evaluate a proposed investment, or to evaluate the decision afterwards. 3. To benchmark to other companies. 4. To follow a trend in time. 5. To sell products, systems. As the goal is to decide what kind of tool or evaluation method one should use, we will explain what the impact is of each of the five goals. 1. Examples of cost benefit analyses can be so convincing that the outcomes will not only validate current investments, but they can be expanded to be used in other situations. The calculation for these analyses must be plausible and easy to understand. Data are sufficient if the input data are considered to be in the expected range, they do not need to have a high level of reliability. A practical example is a small computer program that calculates the cost
0022-4375/$ - see front matter D 2005 National Safety Council and Elsevier Ltd. All rights reserved. doi:10.1016/j.jsr.2005.06.004
232
E.A.P. Koningsveld / Journal of Safety Research - ECON proceedings 36 (2005) 231 – 236
of absenteeism, which we developed and is now available on the internet for several sectors in the Netherlands (e.g., www.keerpunt.nl, in Dutch). 2. Management will make a decision on the basis of several considerations. Financial considerations (e.g., the expected return on investment) are among these, but certainly not the only consideration. Next to quantitative parameters, qualitative pro’s and con’s count, sometimes even more so. Most of the company’s decisions are only partly based on financial terms; ‘‘abdominal feelings’’ are also important, although people don_t always admit this. Cost benefit analyses need to be accurate in proportion to the extent and consequences of the investment. For smaller investments, a quick analysis partly based on estimations may be good enough. 3. Benchmarking is a hobby for managers. Often the size of the differences gets more attention than the background of the differences. Of course this is not correct. In order to make benchmarks useful, it is highly recommended to use the same evaluation method, as well as the same assessment tools. This implicates that a well-balanced method should be developed, which is not easy. The method needs to be described in as much detail as possible in order to guarantee a use according to the specifications. Such methods will often be difficult to apply, resulting in little use. Many of the cost effectiveness methods in the field of health and safety suffer from this. In the Netherlands the national costs of poor working conditions were investigated for 1995 and for 2001. While the same method was used, after only six years many categories could not be compared due to changes in legislation and losses of data files. 4. To follow a trend in time is useful for management to evaluate the progress of the business. The only important qualification is a well-described method that at different moments in time will be applied in the exact same way. Estimations don_t fit in such methods. 5. Producers and retailers like to convince their potential clients of the benefits of their products. Of course there are honest companies and people, but it is likely that these groups are tempted to use invalid methods. While their published data and methods may look reliable, the opposite may be true. Always ask for the details of the model used, and ask by whom the data were collected. If you want to use cost benefits to sell your products, let the evaluation and calculation be made by an independent and reliable party.
3. Method development The Dutch method was developed on the basis of expertise built up over a period of about 10 years. Most of the work consisted of research. In early 2003, a project changed the view on cost effectiveness models radically. The Ministry of Social Affairs and Employment in the Netherlands promoted Design for All (D4A) as an approach to help reduce lost workdays and disability. D4A, also
known as Universal Design, aims to design and produce products that allow as many people as possible to use these products effectively, and without a health or safety hazard. The same principles can be used to design workplaces and work organization. In the project, 10 cases were evaluated with an emphasis on cost effectiveness. Given the budget and the access to data, all relevant data were collected in a conference-like way. The owner of the improvements (e.g., an employer or a producer) was invited, and a team of health and safety experts interviewed him/her. Items in the interviews were: – What belongs to the specific case? – What made you choose a D4A-solution? – Which investments in money and time did you spend, and what further efforts had been brought in? – Which effects can be seen as a result of the investments and efforts? Can these be specified in terms of money? If not in quantitative data? If not in qualitative statements? Five fairly different groups of experts did the interviews. The experts had no insight or knowledge about the cases beforehand. A list of potential categories for costs, efforts, benefits, and effects was drafted as a reference for the interviews. After the 10 cases, the list was slightly adapted. In the 12 years since the onset of the project, the list has been used about 30 times for different goals: health improvements, safety measures, and environmental projects. Very few adaptations have been necessary, so now this list is considered as a general means. Some general calculation rules can be defined, but the general rule is that each case has to be customized. Some cases deal largely with productivity aspects, others with absenteeism or accidents. A general model turned out to be impossible.
4. The method The method was developed mainly for goals 1 and 2, and under restrictions for goal 5. This choice implies that it is more a consultation method than a research method. The level of accuracy and reliability is not higher than what is expected by the owner of the question. Basically the model is a participative model. The cost benefit experts interview the one who wants to have a cost effectiveness evaluation. In many cases some other people take part in the interview as well: users, workers, maintenance departments, purchase departments, or health and safety experts. The list of potential items is used as a reference manual, not as a strict program. The consulting skills of the experts, in particular their skills to analyze deeply, is essential to
E.A.P. Koningsveld / Journal of Safety Research - ECON proceedings 36 (2005) 231 – 236
bring all relevant aspects up. An example illustrates this (see inserted text block).
Box 1 An example to illustrate the advantage of participation In a steel plant liquid iron is transported by rail wagons to the steel factory. The wagons have an inside ceramic covering to prevent hot iron to melt the wagon. The covering needs to be replaced regularly. The masons_ work is physically straining, resulting in a high percentage of absenteeism and cases of disability off and on. Besides the population gets older, so there is a need of urgency to improve. Many different solutions were evaluated, and the use of smaller blocks (less thick) was considered to be a good option. Blocks of a 30% reduced thickness met ergonomic standards. The logical expectation was that this measure would result in 30% more repairs. The calculation of management showed that the solution would result in extra costs of $ 300.000/year. In the cost effectiveness interview the expert heard about the thinner covering. He asked: ‘‘A thinner covering will result in a higher volume of melted iron on the wagon; will the axes and the track be strong enough to bear the extra load? Management answered enthusiastic: ‘‘Yes, that_s no problem. But: more iron in each wagon means less transports, so reduced costs!’’ The next question was: ‘‘Are you sure that a 30% thinner covering will have a 30% shorter life cycle?’’ The discussion turned into the question if a thinner ceramic block would have the same qualities as a thicker one. The blocks were tested and it showed that the hardness of the thinner block was evidently higher! In the cost benefit calculation the factor for the extra repairs (30%) turned out to be essential for the outcome: a break even was reached as this factor was 27%! So management decided to start a test in practice with one wagon, in order to examine the endurance of the thinner covering. The expert can also help in finding and processing data that are required for a cost effectiveness analysis. Next the expert makes a draft of the analysis. In a participative session the draft is discussed. Potential missing data can be added, either by comparing company records or by estimations. Critical factors can be discriminated. The outcomes are discussed. The result is an analysis that has a broad basis.
233
Depending on the goal of a cost and benefit evaluation, the method can be chosen. A quick scan is adequate for a relatively small investment to improve the work of one person or a small group. For long lasting improvements with a wide scope, a more thorough assessment of factors and parameters is more appropriate. In general, if estimations have to be made, it is advisable to make the estimations in close collaboration with the responsible management; they have easy access to data and are familiar with indices. This prevents the consultant from having to prove the data, and because management has taken part in validating the data, the outcomes are traceable and acceptable.
5. A specific example: glaziers Glazier is a good but physically straining job. The work results in discomfort and an unacceptable level of health hazards. In particular, double panes (which have become common) are heavy (often too heavy for manual handling) (Fig. 1). Over the past several years new tools and means for transport have been introduced. The tools and means were developed in a participatory ergonomics project (Urlings, Bronkhorst, & van der Grinten, 1998). Despite a lot of promotional activities, the implementation on the work floor goes slowly. Employers are reluctant, as they doubt if the investments pay back. In a costs and benefits evaluation, a set of tools was considered: a simple crane mounted on a van to help hoist the glass on and off. Next there are two carts, each of which has a specific application depending on the transport circumstances. For the vertical transport to the window frame an aluminummade hoisting unit of 10m tall was developed. For cutting out the old panes, a new electric hand tool was developed that prevents the straining involved in manual cutting of glass paste. All means together are always available in the van, so the workers themselves can choose which means they will use in each given situation.
Fig. 1. Glaziers using a glass cart.
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This investment lead to annual depreciation costs of Euro 640 (see Table 2). The time to learn to work with the means is short and can be depreciated over many years; so the annual costs will be very small and are not taken into account (these are stated as pro memoria). The annual exploitation costs consist of an inspection of the crane and some maintenance: Euro 200. So the total annual expenses amount to Euro 840 (see Table 1). For the benefits we look at the performances of the workforce. According to law, the maximum lifting weight is 25 kg per person. To handle and lift glass panes of more than 50 kg the regular team of two glaziers will need a third person, which indeed is practiced when needed. Together with management it was estimated that in total a third person spends 15% of his/her working time to travel and help a team of two glaziers. That represents 15% of his/her wages (Euro 26,000/year). With the new tools and lifting means, no third person is needed. The reduction of costs is 15% Euro 26,000 = Euro 3,900. The travel costs for that third person are included. Analysis of work has shown that the net productivity hardly differs when the glaziers use the means. But the time spent for rests was reduced by about 10%; presumably this is the result of the reduction of the musculoskeletal workload. It may be expected that part of that time will be used to perform more work. As a working day consists of many different tasks, including travel, management and consultants estimate that an increase of productivity with 3% is likely. This 3% has a value of 3% of the margin between the turn over of two persons minus their wages. The team’s annual turnover is 1,670 man-hours 2 persons Euro 35/hour = Euro 116,900. Their wages are: 2x Euro 26,000 = Euro 52,000. So the margin of their work is Euro 64,900. The new working methods lead to a gain in productivity of 3% of Euro 64,900 = Euro 1,947/year. The increased productivity does not mean that the workload and the discomfort will not decrease. Specifically, peak loads on the back, arms, and shoulders are reduced. As a result, the related health complaints are expected to decrease; so will the number of lost workdays. The absenteeism rate in this branch of industry is 7%. From previous projects (Koningsveld & The´, 1999), we know that 45% of absenteeism is caused by musculoskeletal disorders;
Table 2 The financial costs and benefits of new glaziers’ equipment Cash flow
Per year
Investments & Depreciation costs & Training in new working methods Operating costs & Inspection, maintenance & Reduction of lost working days Performance: & No third worker needed & Increased productivity Total cash flow
C 640 p.m. C 200 C 328 C 3.900 C 1.947 C 5.335
50% of these cases find their origin mostly or completely from work. So 7% 45% 50% = 1.58% of the workforce is lost by absenteeism as a result of manual handling. When workers use the available tools and means frequently, the most physically straining work is eliminated, though not all of it; so it is likely that only part of the work-related absenteeism by musculoskeletal disorders would decrease. Ergonomists have estimated a decrease by 40%. So the decrease in absenteeism is 40% of 1.58% = 0.63%, with a value of 0.63% 2 persons wages of Euro 26,000 = Euro 328/year. In Table 2 the usual presentation in a cash flow table is given. The benefits are given as negative amounts, the costs as positive. The benefits by productivity gains and reduced absenteeism are Euro 6,175. These benefits can be compared with the costs of Euro 840 per year. So we can conclude that the financial ratio is very positive. Besides these, several non-financial benefits can be seen. The work-related discomfort is decreased. The health of glaziers will be better preserved; on the long term it is more likely that they can stay active in their jobs. These points are important for employers, as recruitment of new young workers is a big problem. As the workload is lower, more people can perform the work, so recruitment can be directed at a larger target group. The risk of damage to the panes, to the frames, and to parts of the building is reduced, as the carts and hoists allow better control over the handling process. The risk of cutting and falling accidents is also reduced.
6. Evaluation at sector level Table 1 The total investment in tools and equipment per team of 2 glaziers and 1 van Equipment
Costs
Depreciation time
Annual costs
Crane mounted on the van Cart 1 Cart 2 Electric glass paste cutter Aluminium hoisting unit Annual inspection, maintenance Total annual costs
C C C C C C
5 years 5 years 5 years 5 years 5 years –
C C C C C C C
1.250 150 250 300 1.250 200
250 30 50 60 250 200 840
In the Netherlands, so-called covenants are agreed upon between the Ministry of Social Affairs and Employment, and employers_ organizations and unions in several sectors of Table 3 Health complaints amongst Dutch paviours (2000, including assistants) Workers with complaints (% of all) Wrist, hand, shoulder complaints Knee complaints Low back pain
40% 53% 69%
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Based on long-term registration of health records at occupational health centers, 12 trades were allocated as highrisk groups. Paviours and their assistants are among these. Paving is physically straining work; typical work postures are kneeling, bending, and squatting. Continuous manual materials handling characterizes the work of both the paviour and the assistants. Assistants pull wheelbarrows over uneven ground surfaces, often consisting of loose sand. The work paces are high as cost prices are constantly under pressure. In Table 3 relevant health complaints among paviours are shown. Goals of the covenant on working conditions in the construction industry in general and specifically for paviours are: – 90% of all workers will have knowledge about health hazards and measures to reduce these; – a 10% reduction in the number of health complaints over 4 years; – a significant growth in the implementation of machines and equipment that reduce workloads, and in the application of lightweight materials.
Fig. 2. Machine to lay a square meter of blocks at a time.
industry or services. The collective goal is to reduce the health and safety hazards, including physical workloads. The building and construction industry is one of these sectors.
Paving company Mechanical paving compared to traditional manual work paving manually
Investments Purchase costs machine Depreciation term in years Interest rate Value after depreciation Depreciation costs (total) Investments rebate (tax reduction) Total interest of depreciation term Subsidy Fixed machine costs over depreciation term
paving mechanically € € € € € € € €
80.000 7 0 8.000 72.000 18.920 -
€
80.000
€
8.000
€ € €
18.920 -
€ 106.920
Annual machine costs Maintenance Insurance Expected effective machine days Costs of transport Fuel costs Total annual machine costs
€ € € €
1.600 800 70% 2.000 3.500
€ €
1.600 800
€ € €
2.000 3.500 7.900
€ € € € €
37,80 10,20 9,55 7,05 0,15-
Results Wages per hour Cost of temporary workers Fixed machine costs per hour Flexible machine costs per hour Reduction of lost working days
€
58,80
Total costs per hour
€
58,80
Cost price per m2
€
3,14
(excl. paving materials) Production in m2 per hour
€
64,45
€
2,15
19
30
© TNO Work and Employment, Hoofddorp, The Netherlands, 2004
Fig. 3. An interactive spreadsheet for the calculation of the cost effectiveness of mechanical paving.
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Generally paving companies are small (5– 15 workers) and the owner usually works as a member of one of the gangs. Traditional as they are, they tend to work manually; craftsmanship is highly appreciated. Only recently have employers considered investing in machinery and equipment as an alternative for manual work. Interviews with employers show that the decision to invest or not is made emotionally rather than rationally. Several types of machines are on the market that transport materials and lay small elements, curbs, or slabs. Using vacuum techniques, tens of blocks in the established pattern are handled in units of a square meter at a time without physical strain. We have searched for a simple method to convince management of small and traditional companies to make their decisions on factual considerations. We tried to help them to think rationally about the return on investment. Employers_ worries about machines include comments like ‘‘machines cost money when they stand still.’’ We wanted to support them in realizing that it is true that a still-standing machine is a cost, however, you must look at the overall cost of a team of workers plus the machine(s). In other words, the overall team’s performance to recover the cost of the machine must be determined. Many employers feel that the absence of a worker for a period of several months is a natural phenomenon that no one can affect. It is important that they understand that absence is a cost factor that needs to be repaid as well. The implementation of machines and equipment contributes to the reduction of the risk on such unpredictable costs, which makes them investments to reduce costs in the future. Spreadsheets were developed for cost effectiveness calculations for three types of work: (a) transport of paving materials, (b) laying blocks, and (c) laying curbs (Fig. 2). In all three spreadsheets the overall costs of mechanical work is compared to traditional manual work. Recently the spreadsheets were presented on the internet and on a CD-Rom (www.werkgoed.nl in Dutch). There are currently only a few experiences that show how these contribute to employers_ behavior. Nevertheless, we experienced some understanding in the test stage in which representatives of paving companies were involved. This resulted in adaptations:
– originally type of work only calculations were given as an example. Per request of the test persons, it is now possible to fill in a company’s own data and get a customized calculation. If data are missing, reference data are provided. – because employers are not used to thinking in terms of a payback period, the output is given as the cost price per square meter paved surface of manual work versus mechanical work (Fig. 3).
7. Conclusions Organizations who collaborate with someone with at least some skill in cost benefit evaluations will find that it is very well possible to establish the efforts and effects of interventions, or of a certain policy. The related costs and benefits can be stated on the basis of existing data, on measurements, or as collectively-made best guesses. The interaction results in a specific cost effectiveness calculation that is understood by all involved and that will have their support. On the other hand, it is considered impossible to draft a general model that can easily be filled out by anyone and that addresses all questions about all kinds of interventions or policies in the field of occupational health and safety.
References Koningsveld, E. A. P., & The´, K. (1999). Macro costs of poor working conditions in Dutch construction industry. Amsterdam’ Elsevier (in Dutch). Urlings, I. J. M., Bronkhorst, R. E., & van der Grinten, M. P. (1998). A participatory ergonomics approach to redesign working methods and tools of glaziers. In P. Vink, E. A. P. Koningsveld, & S. Dhondt (Eds.), Human factors in organizational design and management – IV (pp. 597 – 602). Amsterdam’ Elsevier. For more than two decades Ernst Koningsveld has been involved with the impact of health and safety programs and interventions. Cost effectiveness is an essential item, for which he has developed a practical approach and gathered many experiences.