The Indirect Costs of Construction-Related Injuries: A Hidden Burden in Construction

The Indirect Costs of Construction-Related Injuries: A Hidden Burden in Construction

Construction is widely recognized as one of the most hazardous industries, with a high incidence of workplace accidents and injuries.

According to the National Safety Council (NSC), the construction industry continues to experience the highest number of preventable fatal work injuries year-over-year compared to other industries. There were 957 construction-related fatalities in 2020, 946 in 2021, and 1,018 in 2022.

While the direct costs of construction-related injuries, such as medical expenses and workers' compensation, are often readily quantifiable, the indirect costs can be more elusive and, in many cases, significantly greater.

Understanding and addressing these indirect costs is crucial for the construction industry, not only from a financial perspective but also for enhancing worker safety and organizational efficiency.

The Tip of the Iceberg: Direct Costs

Direct costs are the immediate financial expenditures associated with construction-related injuries, including medical treatment, rehabilitation, and compensation for lost wages. These expenses are often covered by insurance, making them more visible and easier to quantify. However, they represent just the tip of the iceberg when it comes to the total cost of workplace accidents.

The Hidden Costs: Indirect Expenses

Indirect costs, on the other hand, are less obvious and more challenging to quantify. They encompass a wide range of financial impacts that are not directly related to medical expenses or compensation but are nonetheless a consequence of workplace accidents. These costs can include:

  1. Lost Productivity: When a worker is injured, their absence can lead to delays in project timelines, reduced efficiency, and the need for overtime work by other employees to compensate for the shortfall.
  2. Training and Replacement: Hiring and training new or temporary workers to fill in for injured employees can be a costly and time-consuming process.
  3. Equipment Damage: Accidents often involve damage to machinery or equipment, leading to repair or replacement costs and additional potential downtime.
  4. Administrative Burden: Managing the aftermath of an accident involves significant administrative work, including accident investigations, paperwork for insurance claims, and compliance with regulatory requirements.
  5. Impact on Morale: Workplace accidents can have a profound effect on the morale and mental well-being of employees, leading to decreased productivity and increased absenteeism.
  6. Reputation Damage: Frequent accidents can tarnish a company's reputation, potentially leading to lost business opportunities and difficulty in attracting skilled workers.
  7. Legal Costs: In some cases, accidents may result in legal action, leading to additional expenses for legal representation and potential settlements.

Estimating the True Cost

The indirect costs of construction-related injuries are often estimated to be several times higher than the direct costs. However, the exact ratio can vary depending on the nature and severity of the accidents, as well as the specific circumstances of the construction project.

According to the Workplace Safety and Insurance Board, the average cost of one lost-time construction injury on a job site is $35,000 – although many injuries cost much more due to litigation, medical expenses and compensation. Additionally, 6-9% of construction project costs are workplace injury related, leading to long-term increases in insurance costs and shrunken profit margins.

Two construction workers climbing up a structure.
Creating a workplace culture that prioritizes safety can encourage employees to take proactive measures to prevent accidents and report potential hazards.

Mitigating the Indirect Costs

Addressing the indirect costs of construction-related injuries requires a comprehensive approach that goes beyond simply adhering to safety regulations. Some strategies for mitigating these costs include:

  1. Investing in Safety Training: Regular and thorough safety training for all employees can help prevent accidents and reduce the severity of injuries when they do occur.
  2. Implementing Safety Technologies: Advances in technology, such as wearables that monitor worker fatigue and alert systems for hazardous conditions, can enhance safety on construction sites.
  3. Fostering a Safety Culture: Creating a workplace culture that prioritizes safety can encourage employees to take proactive measures to prevent accidents and report potential hazards.
  4. Engaging Early Return-to-Work Programs: Implementing programs that facilitate the early return of injured workers to light-duty or modified roles can help reduce the duration of lost productivity.
  5. Performing Regular Equipment Maintenance: Ensuring that all equipment and machinery are regularly maintained and in good working order can prevent accidents caused by malfunctions.

The indirect costs of construction-related injuries represent a significant financial burden on the industry, often exceeding the direct costs by a wide margin. By understanding and addressing these hidden costs, construction companies can not only improve their bottom line but also enhance the safety and well-being of their workforce. Investing in safety training, technology, and a culture of safety is not just a moral imperative but a sound business strategy that can lead to long-term success and sustainability in the construction industry.

GPRS’ Commitment to Construction Safety

At GPRS, safety is our top priority. To that end, we sponsor a series of construction safety-related initiatives designed to educate you and your team on the best practices to ensure everyone leaves the job site in the same condition they arrived to it.

During these initiatives, GPRS safety experts travel across the country meeting you and your team where they are to deliver vital safety information.

Concrete Sawing & Drilling Safety Week focuses on the dangers of cutting and coring concrete, and the best practices to mitigate these risks. From proper PPE use to avoiding kickback while cutting or coring concrete, you and your team will learn how to keep yourselves and each other safe.

Construction Safety Week takes a broader look at jobsite safety, as we advocate for improved safety processes, mental health resources, and equipment standards that can reduce the risk of injury and create a safer environment for workers.

Water & Sewer Damage Awareness Week sees us shift our focus to the buried water and wastewater pipes that service our homes and businesses. During this week, you’ll learn about the risks your systems face every day, and how routine water loss surveys, and proactive water, sewer, and stormwater system maintenance plans eliminate service interruptions and maintain your entity’s reputation.

Click here to learn more about GPRS’ commitment to safety.