Why should I run a costing study?

The costing methods and data values provided on this website are only an indication of what accidents and ill-health may be costing your organisation.

If you want more accurate costs, you need to carry out your own study. This will more accurately show where your losses are occurring and how much they cost. This information will give you baseline data to track how much your losses change over time.

Undertaking a cost study is not that difficult. But you need to make sure you don't miss anything out by mistake. The more rigorous your methodology, the more accurate your results will be. But a simpler and quicker study may provide you with adequate information, as long as you know its limitations.

It is important to involve your staff so all accidents are reported. Your study will not work if your staff feel they will be blamed for anything they report. Explain the aims of the study to everybody.

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Decisions you need to make before you start

There are three basic types of costing study. These are:

• A. a real-time study
• B. a retrospective study; and
• C. a combination of these two methods

They each have advantages and disadvantages.

In a real time study you cost all qualifying events that happen in the defined study period.

Advantages

• as all qualifying events are costed you get an unbiased dataset.
• it provides accurate accident costs.

Disadvantages

• it is unlikely to have any major or serious events occurring within a relatively short period.
• it needs the cooperation of all employees.
• it needs a reporting and recording system to be established.
• it is less likely to cover ill-health events.

This is where accidents or ill-health episodes that have already occurred in the company are costed.

Advantages

• the events have already been reported.
• you know the type of events that have occurred before you start.

Disadvantages

• it is likely to create a biased dataset - not all less serious accidents will have been recorded.
• it is likely to underestimate the losses of less serious accidents.
• it is more difficult to establish accurately all the costs involved with the accident.

A real-time costing study is undertaken, supplemented with data from historical accidents or ill-health events that are also costed. The latter are likely to be more serious events that may not occur during the real-time study.

Advantages

• as all real-time qualifying events are costed, you will get an unbiased dataset for these.
• the real-time study provides accurate cost information on accidents occurring.
• you know the more serious events that you can retrospectively cost.

Disadvantages

• it is more difficult to establish accurately all the costs that occurred for the retrospective costings.
• great care is needed when compiling average costs as different methods and degrees of accuracy may be used between the real-time study and retrospective costings.

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The longer you undertake the study, the more accurate the results will be. HSE recommends that it should be long enough to record at least three injury accidents and ten non-injury accidents.

Real-time studies undertaken by HSE have typically lasted 13 weeks. Even in these studies, undertaken in larger companies, no serious events were recorded and only limited information on ill-health was collected.

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Ensure the costs of all accidents fitting the accident definition are recorded. The definition used by HSE on this website is:

'any unplanned event that results in injury or ill-health to people, or damages
equipment, property or materials but where there was a risk of harm'.

Remember to include the costs of all injuries and ill-health. But to save time you can ignore some types of non-injury accidents, eg:

• those costing less than a certain amount (say £10) or its equivalent in lost time
• those where there was no risk to persons' health and safety (but be certain this is the case, as some have potential for harm).

Be careful over the events you exclude because you believe there was no risk to health and safety. A lot of incidents do have the potential to cause harm if the circumstances were slightly different.

The costs associated with an individual ill-health episode are likely to extend beyond the duration of the study. You will need to carefully consider how to include these. For ill-health events it is suggested you count only the costs which arise during the study period; these may be the initial costs of a new event or the continuing costs from an earlier ill health episode.

The above accident definition will not capture all the events that cost your organisation money. If you wish to know your total losses, you need to cost all events that cost money or cause loss irrespective of whether they caused or had the potential to cause injury, ill-health or damage. This type of costings study, with a wider scope, is called a 'total loss study'.

Lastly remember to include all the relevant hidden costs. These are set out in the Incident Cost Calculator. If you want to view these now, please click here.

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You should exclude

• all the non-injury events under the predetermined threshold (see above).
• accidents where the event was entirely outside your control or which you could not have prevented.

For the last bullet point, take care not to exclude those that may at first appear unavoidable. For example, accidents that seem to be a result of an employee's carelessness may be down to poor training or supervision.

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You may decide to restrict the scope of the study. For example:

• if you have more than one workplace, confining the study to one site.
• if there are a large number of incidents occurring you may only want to include certain types.
• you could concentrate on ill-health only if this was a particular issue.

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Recording the information

It is easier to analyse the results if the costs of each accident are written down. It is best if you or your supervisors and managers record the costs as soon as possible after the accident. You could even link it with your existing accident reporting and investigation procedure.

If you can, you should record the costs as soon as they occur, onto the recording form. Other bills for repairs or reinstatements may come in later.

It is important that costs are not double counted. This is particularly true for wage costs. You should ensure they are only identified against one of the cost headings used.

You may have a number of people who incur costs against the same item, for example, in an investigation. In this case you may wish to use an additional form to capture these costs. If you wish to see an example of an intermediate recording form please, click here.

It is also useful to record the types and causes of accidents. This will help you work out which ones are costing you the most. You can also identify ways to prevent recurrence.

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Sending costing study information to HSE

We would very much appreciate receiving the results of your completed costing study to include on this website. We want to increase our database, to provide more accurate data on incident costs. This will only happen with your cooperation.

Any material used will be strictly unattributable (unless you tell us that you wish to be named).

All information sent to us will be held in the strictest confidence and only used for updating the website. HSE will not use the information for any other purpose nor disclose it to any third party.

If you choose to share your information with us, we will need some contact details to check the case study is genuine. This information will not be used for any other purpose.

If you wish to know more about submitting information to us, please click here.

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