Firstly, in order to understand the view point that "The measurement of safety performance is, I believe, industry's most serious problem" we need to examine the current business case put forward by regulators for the introduction of new health and safety legislation. In conjunction with this we also need to clear understanding of the barriers which need to be overcome for safety to be viewed as a "bottom line" contributor to business success.
The basis of this paper was derived from concerns raised within a U.S. based, multi-national organization due to the costs of compliance with machinery based legislation and the potential for negative effects on production output. These concerns were raised during the process of compliance with the European Machinery Directive 98/39/EC (modified by 98/79/EC [1998-12-07 OJ No L 331/1]). Practical objections had been expressed by both experienced machine operators and production planners regarding continued efficient operation of the machines after the safety upgrades had been applied. A drop off in production output from the machines and increased downtime had already been observed where this guarding had been introduced. This observation reinforced a viewpoint within the organization that while safety was a "good thing" to practice, outside of cost avoidance derived from accident reduction; it would never be able to show a return on investment (ROI) for capital projects.
Various cost impact studies (Regulatory Impact Assessments) are developed by many regulators such as the United Kingdom's Health & Safety Executive (2) – Work safe Australia (3) and the United States Occupational Safety & Health Act (4)
These impact studies are primarily based on the direct cost of implementing regulations (Cost Benefit Analysis). Costs are primarily derived from the additional administration burden that a business could reasonably be expected to incur as a result. This includes initial risk assessment of the issues in the workplace, development of supporting documentation, development and delivery of training, additional personnel (including consultants) who may be required to implement the legislation. However, the indirect cost analysis associated with production output is not included. Direct cost estimates are then balanced against the reported and estimated cost impact (total losses) to society from incidents associated with the area to be legislated.
This data while valuable to governments and regulators to support their case for the introduction of new or improved legislation is of very little real benefit to individual business in terms of estimating the actual impact on productivity. In the area of machine safety, real costs to business are associated with the physical installation of mechanical and electrical systems, the down time related to the non production of the equipment while it is "off line" for retrofits to take place and the period for the operator and mechanics while they become familiar with new controls, switches or barriers. While these costs associated with hardware replacement and upgrades are quantifiable.
