Ergonomics and the Economic Payoff in the Construction Sector

Heather Grob and Xiuwen Dong

The Center to Protect Worker's Rights

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Washington DC 20001

ABSTRACT

This paper gives a brief synopsis of the economic issues in the ergonomics literature with special attention to productivity, and other measurements of economic payoff. It will address problems in measurement of costs and benefits, as well as definitions of cost-effectiveness. The construction industry is especially concerned with the costs of workers' compensation and lost work time due to musculoskeletal disorders, particularly back injuries. Some contractors are improving work processes in order to preserve profits and market share. The present skills shortage also makes retention of workers in construction a primary issue in safety and health. Despite these Amarket based incentives, cultural and competitive barriers to investment in ergonomics exist. The paper will discuss some reasons for these market failures. These considerations are designed to assist decision makers in making informed decisions and to carefully consider issues of methodology and application of economics to policy.

INTRODUCTION

Literature Review

A review of 80 articles in the economics of ergonomics is provided and is deemed sufficient to show that a reduction of musculoskeletal disorders is of utmost importance in construction, and is expected to be cost-effective. We reviewed articles from a search using the key words productivity or economics or costs and ergonomics.

Among the articles 68 case studies evaluated the financial returns to ergonomic improvements. Of the 24 cases that measured productivity, all reported improved productivity as a result of ergonomic interventions. Fifty-three found ergonomics to be effective in improving the economic position of the firm while reducing injuries and illness. Most of the case studies also had a very short pay off time. Pay off time of investments in ergonomics equipment, safety programs, training, and other elements ranged from one month to two years, with 14 out of 16 cases providing economic benefits within one year. Ten of the cases saw financial returns within six months. (See especially Kemmlert, 1996, 1995; Narayan and Rudolf, 1993; Oxenburgh, 1991; Francis, 1994.)

Costs and Attributes of the Construction Sector of the Economy

The special case of the construction sector is examined, where musculoskeletal injuries and disorders are a major problem. Schneider and Susi (1994) review the hazards associated with construction work that could be remedied with ergonomic solutions. We estimate that the lost time injuries in construction due to sprains, strains, carpel tunnel syndrome, and tendinitis (numbering over 76,500 a year) result in almost a half million lost work days and 4 million direct hours, representing $56 million lost wages in one year, 1994. Claims costs are also formidable, estimated to be at least $400 million each year. Indirect costs are estimated to be several times that amount. In an industry that depends upon skilled and consistent labor power and very careful management of financial resources, this represents a significant loss.

Construction is a very diverse industry of mainly small employers, where sites of production and personnel employed on these projects vary daily, if not hourly. Responsibility for safety is not clearly established, and it is an especially difficult industry to regulate. But the industry also echoes concerns common to other industries: increased outsourcing, increased subcontracting, temporary work sites and temporary workers. The unique aspects of this industry make a site specific ergonomics standard important because it is expected to encourage safety investment that requires some longer term views about safety that the industry does not normally have. An ergonomics standard is expected to provide better compliance with general industry standards and to encourage better investment in training and safety resources. If well written and enforced, a standard might also overcome barriers to investments by advocating longer term views, incremental improvements, and allowances for return on those investments. The five major factors mentioned in this paper--training autonomous workers, work site planning for multi-employer production sites, training of new entrants and project and materials design and investment incentives are all important considerations for forging a good ergonomics standard.

The literature does not address the construction ergonomics standard issue directly, but provides some indication that ergonomic interventions would be cost-effective. Oxenburgh (1991) reported that a rehabilitation program in Swedish construction initiated health and safety prevention and productivity gains at the same time. In another case, a building site reduced absenteeism by 28% and productivity increased by 5%, also providing a significant reduction in cost overruns--an element of cost benefit analysis that is often excluded by economists. Suprenant (1990) reported that the use of adjustable scaffolding increased masonry productivity by 20%. However, no author measured payoff time in construction, which is expected to be an important factor in a contractor's willingness to invest in ergonomic protections, and ultimate success of a proposed standard.

Interpretations of Results

Most articles reviewed found significant economic benefits (savings in hours worked, speedy completion of tasks, efficiency, returns to investment, financial rewards or increased revenues) to ergonomics interventions. Still there is some clarification of methodology needed so that future studies may improve upon the existing science.

Four areas needing special attention and full disclosure in any cost benefit or cost effectiveness analysis are discussed.

1. Time is the most important consideration in the analysis because it determines the extent to which various elements of cost and benefits will be included in the analysis. Consider the graph depicted in Figure 1, where the costs and benefits measured will depend upon the point in time, the amount of time, or the total time, in which interventions are evaluated.

2. Full accounting of costs and benefits reviewed, including analysis of who pays for what costs. Were the costs to workers and their families included? Why or why not? We provide a comprehensive list of costs and benefits to consider.

3. Assumptions made about choice of technology, which impact the type of methods used in the economic analysis.

4. Consideration of Productivity, as opposed to work time. Economists define productivity as the output per unit of input employed, attributed to the increase in efficiency from capital or labor. In construction, there is much debate about how to measure productivity.

5. Allocative Efficiency, as opposed to productive efficiency. Economists refer to allocative efficiency as the optimal combination of outputs by means of the most efficient combination of inputs. That is, what could have been done with the resources? These carry subjective views and ethical considerations of what is important to owners, customers, and employees.

Conclusions

Most studies of economic issues in ergonomics used case studies which found ergonomic interventions to be cost-beneficial in improving safety, productivity, or both. While the costs of interventions are minimal, benefits to ergonomic interventions could be large, but researchers must allow enough time in the observation to account for those returns on investment. While the authors argue that the scientific evidence is convincing that there are positive economic returns from ergonomic interventions, the paper argues for the special concerns of construction, with its highly variable and site specific production, to be addressed in the proposed ergonomic standard.

Note This study was made possible by grants numbers U02/CCU310982 and U02/CCU312014 from the National Institute of Occupational Safety and Health (NIOSH) to The Center to Protect Workers' Rights. The report's contents are solely the responsibility of the authors and do not necessarily represent the official views of NIOSH or CPWR.

References

1.Kemmlert, K.: Economic impact of ergonomic intervention--four case studies. Journal of Occupational Rehabilitation 6(1) 1-90 (1996).

2. Kemmlert, K: Economic aspects of prevention. Paper presented at Second International Scientific Conference on Prevention of Work-related Musculoskeletal Disorders, pp 459-41 (PREMUS95), 1995.

3..Narayan, Mukund & Rudolph, Linda: Ergonomic improvements in a medical device assembly plant: a field study. Paper presented at Proceedings of the Human Factors and Ergonomics Society 37^th Annual Meeting, pp 812-816, 1993.

4. Oxenburgh, Maurice S.: Increasing Productivity and Profit through Health & Safety (case studies). CCH International, 1991.

5. Francis, Joellen: Workspace influence on workers performance and satisfaction: An experimental field study in Physical Interventions and Job/task Redesign, pp 3-15, 1994.

6. Schneider, Scott, and Susi, Pamela.: Ergonomics and construction: A review of potential hazards in new construction. AIHA Journal, 55(7): 635-649 (1994).

7. Suprenant, Bruce A.: New scaffolding increases productivity by 20%. The Magazine of Masonry Construction. pp19-23, Jan. 1990.