Contractor Safety Programs Yield Financial Benefits
Safety management practices are of particular importance to today's construction industry. The U.S. Bureau of Labor Statistics reported that construction worker fatalities declined 23% from 2008 to 2011, representing 235 fewer fatalities. However, with McGraw Hill Construction Dodge construction starts showing a 21% decrease during this same time, it's unclear whether the industry is making true strides toward improved safety.
The good news is that the industry is reporting significant benefits resulting from safety management programs. Research shows that safety programs are improving contractors' bottom line. New research published in the "Safety Management in the Construction Industry" SmartMarket Report by McGraw Hill Construction (MHC) with support by ClickSafety, CPWR - The Center for Construction Research and Training and United Rentals reveals the types of safety programs being implemented by contractors and the benefits from those efforts. Yet the research also reveals that there are uneven benefits being reaped across the industry. The largest contractors are benefiting the most.
Current State of Safety Programs
The MHC research asked contractors to evaluate 15 specific safety practices, with firms reporting their use of the practices as well as rating the one they deemed most effective for increasing project safety. There was some agreement among contractors as to the top five practices—79% of contractors report that one of these five is most effective compared with the other 10. The levels were universal, with no statistical difference between the opinions of general contractors and specialty contractors nor of firms by size (based on number of employees).
However, in assessing the use of these practices, a notable trend emerges with general contractors—typically larger firms—exceeding their smaller specialty subcontractor counterparts in adoption. The differences in adoption rates are compounded when aggregated into a holistic program—more than nine in 10 large firms with more than 500 employees report having fully inclusive and widely observed safety management programs, compared with only 48% of firms with less than 50 employees.
In the context of this study, a fully inclusive and widely observed program is defined as one where a safety program includes both an overall company safety policy and a specific safety plan for each project. It is also fully integrated into all of a firm's functions and is fully inclusive, widely observed and highly valued across all staff. It has also demonstrated effectiveness at lowering the number of incidents in a company.
Admittedly, the risks are more pronounced for larger contractors supporting their investments in safety management. However, because they have that additional impetus to institute strong safety programs, the implication is that all the benefits yielded from safety programs are also concentrated among these larger firms.
The industry perceives that safety programs cost firms time and money. However, the MHC research reveals the opposite—43% of contractors report decreases in project schedules due to safety programs, with only 13% reporting a negative impact on schedules. Similarly, 39% report decreases in project budgets due to safety programs, with only 15% reporting that safety programs have negative budget impacts. Project return on investment has an even more dramatic impact from safety programs. More than half of the contractors report improvements in project ROI from safety management programs, compared with only 5% reporting a lower ROI. The following are some key observations from the research:
Project Schedule Reductions: Firms with fully integrated safety programs are more likely to report positive schedule changes—46% compared with 37% for firms without an integrated program. Nearly a fifth (19%) report schedule reductions of two weeks or more regardless of a firm's size or safety program.
Lower Project Budgets: The industry also reports notable decreases in budgets due to safety practices. Overall, nearly a quarter (24%) report budgets lowering by more than 5%. Some notable differences arise when looking at the savings for firms that have integrated programs compared with those that do not. The average savings are higher, with 26% of firms with integrated programs reporting savings of more than 5%, compared with 16% of firms without integrated programs.
Improvements in ROI: Differences exist in the benefits being enjoyed by firms that have fully integrated safety programs—a significantly higher number are seeing ROI benefits of over 5% compared with those with less stringent programs.
Other Benefits: Firms are also reporting the following benefits from safety that should help make the case for investing in safety programs: