France: Risk prevention in construction sector

A French study into risk prevention in the construction sector set out to assess the link between prevention and performance. It looked at preventive measures in 101 companies introduced in an effort to improve safety for workers. The findings demonstrate to managers and employees that pro-active measures, far from hampering competitiveness, can in fact lead to an increase in economic performance.

Background

The Organisme Professionnel de Prévention du Bâtiment et des Travaux Publics (OPPBTP) is a professional French agency specialising in risk prevention on building and civil engineering sites. OPPBTP has 180 agents who are tasked with assessing the working conditions of over 8,000 companies in France. It carried out a study (in French) involving 101 pro-active risk prevention cases, aimed at demonstrating how risk prevention contributes to improving the economic performances of companies. However, in most cases, the cost of risk-preventive actions has made companies reluctant to invest in it. Furthermore, the current economic climate, the uncertainty of attaining positive results and the lack of methods and tools to analyse the effects of prevention are obstacles preventing such actions being undertaken. Although the primary objective of OPPBTP is to improve the safety of workers, this study shows managers and employees that pro-active measures, far from hampering competitiveness, can in fact lead to an increase in performance.

Methodology

Two institutes were involved in this research: OPPBTP which 'advises, trains and informs building and civil engineering companies on the prevention of work-related accidents and occupational safety', and consultancy company Avyso which 'offers a methodology for companies wishing to economically assess their risk preventive policies'.

The study was launched in 2010 with a brief to find a link between prevention and performance. The approach aimed to find examples in businesses, to measure this link and to establish a method which could be understood and replicated, as well as being able to convince companies of the benefits. The study focused on 27 companies and looked at 101 preventive actions in detail. In parallel, a methodological tool was designed to identify preventive actions and assess the economic impacts.

Three categories of companies were included in the research: those with less than 20 employees, with between 20 and 50 employees and with 50 or more employees. The sample was chosen in order to achieve 80% coverage, both in terms of employees and companies used in the risk prevention cases studied.

Prevention

Prevention cases are evaluated according to five criteria:

  • Level of prevention of physical security: ability to prevent an accident that could alter the physical fitness of an employee.
  • Level of health prevention: ability to prevent deterioration of the health of an employee.
  • Health problems due to the level of exposure to occupational disease.
  • Prevention level of hard-working conditions.
  • Level of employee development.

Financial assessment

For each risk prevention case, the number of employees affected by the action was determined, and the period during which the action would be implemented. A financial assessment was then drawn up by comparing the situation before and after the action was implemented. The difference between gains and costs (G-C) was called 'economic balance', and their ratio (G/C) was called 'efficiency of the action'. An action is considered to be effective if the financial result is positive or if the efficiency ratio is greater than 1.

Costs

To determine the costs, the researchers compiled a list of all the expenses incurred in risk preventive actions:

  • Investments: the purchase costs of additional equipment.
  • Training: whether preventive action requires additional training for employees.
  • Operating costs: during the course of the action, expenses related to energy consumption for equipment, additional supplies, etc.
  • Maintenance: usually associated with the investment.
  • HR: under this heading are the estimated labour costs related to the time spent by staff on preventive activities (design, studies, etc). These are measured at an hourly rate according to the time devoted to prevention.

Benefits

To establish the gains, the research listed all the positive impacts on a firm's income: these are generally positive differences arising during business operations. Production is the item where the difference before/after is seen to be greatest. With regard to purchases, the replacement of a product by a cheaper product that consumes less or the removal of certain goods or services can also lead to financial advantages. In addition, measurable improvements related to higher quality have been gathered, such as reductions in warranty, however, many improvements such as the increased motivation and commitment of workers arising from greater security at work cannot be quantified and have therefore not been taken into account. Finally, some risk preventive actions have allowed the company, through skills development, to tap into new markets and extend the number of projects achieved, thus adding a greater margin on sales and increasing the company's turnover.

Main results

Overall, the data gathered points to a strong reduction in (55% to 73%) or the complete removal of hard work and the risks involved for the health of workers.

Productivity

With regard to productivity, risk preventive actions with non-zero impact on staff development generate on average higher productivity per employee per action taken.

Environment

Furthermore, 58% of the risk preventive actions studied in the sample, regardless of any corporate social responsibility factor, have a non-zero impact for the environment. Indeed, products that are less harmful to workers are often also less harmful for the environment. This was found in terms of both the operational and waste disposal level.

Economic costs

While the cost of an investment to improve the prevention of a given risk is easily measurable, it is more difficult to measure the quality impact. When the results of each action are computed into a global sheet, it shows a gain-to-cost performance of 2.19, meaning that for every €100 spent in risk preventive actions the return was €219, or a net income of €119. The average payback period covering the initial investment is a year and a half for preventive actions. Meanwhile, the average duration of actions is 5.2 years. This relates to the average time needed by workers to master a new technique and to the length of effectiveness of a preventive action or awareness campaign.

Overall, 71% of the benefits are seen in production gains. Such benefits are usually linked to an improved production time, meaning companies produce the same amount in a shorter period of time and can use spare hours to improve other sectors. Also, higher production leads to increased revenue and a good profit margin.

Other benefits have been identified, such as the reduction or elimination of purchases. For instance, equipping employees with ventilation masks avoids the need to constantly buy disposable masks and improves the quality of the product. The least expensive risk preventive actions are usually the most successful. Indeed, of the 101 cases studied, 24 actions (one quarter) which cost less than €5,000 have had a return 20 times higher than the initial investment. Furthermore, the best performing actions are changes in products and methods: these are the ones which often represent a very small initial investment compared to the overall return.

The sample highlights that small companies (less than 20 employees), with a high level of flexibility, benefited from a return equal to 3.11 times than the initial cost of investment. Furthermore, such companies also have the best ratio regarding expenses, revenue and earnings per employee. Meanwhile, companies with more than 50 employees have the best ratio per risk preventive action taken, and have seen their returns double from the initial cost of investment.

Conclusion

Facts and figures worth noting:

  • Risk prevention generates performance benefits. For €1 invested, the return averaged €2.19.
  • For non-profitable actions, two-thirds of the costs of investment are covered.
  • Companies with less than 20 workers have a return 3.11 times greater than the investment.
  • A quarter of the actions cost less than €5,000 and have an efficiency ten times higher than the average.
  • Payback averages 1.5 year (1.2 for small businesses).

Risk prevention should not be viewed from an economic angle because this is obviously not its primary aim. However, this study provides evidence that it cannot be considered as an obstacle to the competitiveness of enterprises.

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