Evaluating the economic impact of site accidents in hcmc domestic construction companies

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iP we

HOCHIMINH CITY OPEN UNIVERSITY

Evaluating the economic impact of site accidents in HCMC domestic construction companies

Submitted in partial fulfilment of the requirement for the Degree Master of Industrial Business Management of

ECOLE SUPRIEURE DE COMMERCE ET TECHNOLOGIE DE TOULON (EUROMED MANAGEMENT GROUP) and HO CHI MINH CITY OPEN UNIVERSITY TRUGNG DAI HOC MG TP.HCM THU VIEN Name of reporter : NGUYEN BAO MANH Year of completion : 2011

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Dissertation of Master of Industry Business Management

Mm RED ENT Reported by Nguyen Bao Manh

Statement of Authorship

| certify that this thesis entitled “Evaluating the economic impact of site accidents in HCMC domestic construction companies” is my own work

Except where reference is made in the text of the thesis, this thesis contain material published elsewhere or extracted in whole or in part from a thesis by which I qualified for or been awarded another degree or diploma

No other person’s work has been used without due acknowledgement in the main text of the thesis

This thesis has not been submitted for the award of any degree or diploma in any other tertiary institution

Ho Chi Minh City, 2011

Nguyen Bao Manh

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mM TIÊN ENT Reported by Nguyen Bao Manh

Dedication

This Master Project is dedicated to all the people who help me through this Master of

Industry Business Management My especial gratitude to Ms Hilary Collins, Mr

Jacques Martin for showing me a new way of thinking and for helping me discover my especial interest in business

I would like to thank my parents, my wife, my daughters and friends who believed in my dreams and helped me follow them Thanks to Buddha for giving me the strength to bet on myself and continue even during hard times

| am proud of this practical project, | am sure it can help many construction companies if correctly applied

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-Dissertation of Master of Industry Business Management

E ED Reported by Neuyen Bao Manh

MANAGEMENT _— =

Abstract

Construction is one of the largest industries in the world with activities covering almost

all fields Although it has been mechanized, the construction industry is labor-intensive industries, up from 9 to 12%, sometimes up to 20% labor force in each country

To implement well the Health and Safety of labors will bring significant economic benefits In production, if the workers are well protected, working condition is comfortable, they would feel secure, be encouraged in production, strive to increase productivity and improve product quality, and contribute to fulfill the production plan Hence their income is increased, the living standard of workers is gone up Companies get reputation, attract employees and customers, take advantage competitive, increase

returns and profits On the contrary, they lose a lot because compensation cost is very

large and involve high costs for repair of machinery, plant,-materials, stop-working, lose good image, make noise

Therefore, Safety is necessary in production, happiness of the employees, a prerequisite to ensure the development and bring high economic efficiency

In this project, I only research impact of economic of company Trying to find out cost

of an accident, cost of preventing accident Next, I research the opportunity to apply HS Regulation, OHSAS to companies in Ho Chi Minh City However, I don’t mention social impact of victim’s family Victims are often main labor that earn money to bring up their family, thus, social impact is terrible The reason why I don’t mention that

haven’t enough time and ability to research It should be researched further in other one

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Dissertation of Master of Industry Business Management EUROMED EMENT Reported by Nguyen Bao Manh TABLES OF CONTENTS Statement of AuthorshIp 0-21 211221121112 11x nàn nh Ha 02 SG S0 in áaa 03 19225 || iiaaaa 04 ID Xbá® x ậE 10 List Of Abbr€VIafÏOTS c2 22021211 21211211 111221101151 52 nh He II Chapters: I Introducfion 222222022 ccc sec 12 2 Purpose and Objectives of Project 14 2.1 ProJect Purpose c2 c2 22 nh nen esese 4 2.2 Learning ObJectives cu cu 2c uessss.14

2.2.1 Personal learmng obJectives 4 2.2.2 Reasons for choosing 1t 14

3 Lifterature Review 2222222222 TŠ 3.1 The Costs Of Industrial Accidents lŠ

3.1.1 An Economic Model Of Industrial Accidents 17

3.1.2 The costs of accident prevention 17 3.1.3 The costs ofindustrial accidents L7

3.1.4 The Optimal Accident Rate I§ 3.1.5 Costs Of Accidents And Injuries To The Construction Industry 19

Page 5/89

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Reported by Nguyen Bao Manh

Dissertation of Master of Industry Business Management EUROMED

EMENT

3.2 _ Factors Infuence Site Accident 20

3.2.1 Generosity and structure of compensation benefits 20

3.2.2 Government prevention poÌIcIes 22

3.3 Worker And Firm Character1sfics 22 3.3.1 Worker characferistIcs 22 " ằắaắa — ằằằẮ< B Sex and educational attainmert 23 3.3.2 Firm charactertstics 23 3.3.3 Firm

4 Methodology QC cuc cuc cá cv các các cc „2Ơ Š.1 EWEfafGH NIGIHGIÌN rss sess oy wea wa gaa ee bố hở ï 4 V3 3 bố 3 B3 3 Gế LE 3 hở 1546 5 4Ø kởới nành) l2 EfboBiich TORII IOS, tài nem nh SH om vm concen ows G25 ws wes seu ba cna 8 938 l3 8š S3 s4 6 R2200) 4.3 Research Question 2 2n c cnn ke cu c7 4.4 Methods cà cn cọ n1 22 THn ch n TH nà ky HH sc ky sec các v42 7 4.5 Research DrOC€SS c2 cá cà c2 nh khe kh se se se các s29 4.5.1 Identify type of accident-ranking by seriousness 29

4.5.1.1 Occupational Accidents in the locals in Vietnam in 2010 29

4.5.1.2 Comparing the work-related accidents situation in 2009 and 2010 4.5.1.3 The frequency of fatal occupational accidents in 2010 33

4.5.1.4 The reason of the occupational accidents 4.5.2 Cause Analysis-Using FIshbone Diagram 40

4.5.3 FOCuS ØTOUD ằ cuc cà cà se se cscs.se.c 14

4.5.3.1 Describe the tool 44

45.32, Content OF CisQus8tOits sisi sicsaciccarescncce tne snascdate seenca nee saan’ 4.5.4 Semi-sfTUCfure InIf€TVIEW đỗ

4.5.4.1 Describe the tool c.c AS

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4.5.4.2 Question type to be answered in semi-structure interview 46

4.5.4.3, Interview methodology « 2.002520 c00 1.00 van cam torsae sanseaavaaeaes 49 4.5.5 Questionnatre c.c 48

4.5.5.1 Describe the tool 48

4.5.5.2 The list of questlons 48

4.5.6 The Analyzed Trend After Collecting Data 50

4.5.6.1 Data from statics of government about the site accidenI 50

4.5.6.2 By focus group and semi-structure interview 50

4.5.6.3 Questionnaire 0.0.0.0 oe ccc cece eee ec ete teers eee eee DI 4.5.6.4, Analyze case 2 ic ee ee ee ee ee eee teeter eee SI 5 Results And Eindings 52

S.1 PHlOt research cà co c2 c2 nh nàn hy Thy nh kh in cát các V52 3.I.I For workKer ØTOUD c.c cà cà c2 kn SH Sàn nh khe khn ki ki xà sv2Ð2 5.1.2 For manager ĐTOUD c.c c0 cn cuc nh nhn nhn nhà kh cuc cĩ 5.2 Comparing the two kinds oŸ €oSf 54

5.2.1 Cost ofevery accIdent 54

5.2.2 Cost of prevent accident 95

5.3 Perception ofworkers about safety in production 5Ĩ 5.3.1 Assessing the behavior of workers for safe implementation in site WOFKING iiiiiẳăẳăắiảáaăaiá te est ese eee se 56 5.3.1.1 Cognitive, psychology of workers to dangerous work, risk 56

5.3.1.2 The voluntariness of workers with problems related to Safety 58

5.3.2 Evaluation ofworkers about safe performance 58

5.3.3 The intensity of safe supervision in site working 59

5.4 Benchmarking: analyze Dubai case ĨÏ

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Š.5.I Favorable pomt and obstacles 02 5.5.2 Occupational Safety Culture: the urgent requirements for each Enterprise.63 6 CONCLUSION 20.0000 ee kh kh ke ke co các cĩc cĩ OỐ 0U) 90)) ;::adđiiiẳiiiiiiiiiiiẳaắáaaẠỪặỤŨ 66 Limitation of the prOJ€CẨ 22.22222212 2 2n HH hy nh nhe 67 P008 nổ ẻẽố(adaốăăăă e - 68 Appendix 1 Interviews 2.000.000.0000 69

Appendix 2 Quesftionnaires nrưthtttrttrrtrrrrrrriee 81 Appendix 3 Case sfudies con nnnnHnnnnnnnnn n1 1 k1 x ket 84

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EUROMED Reported by Nguyen Bao Manh

MANAGEMENT m

LIST OF TABLES

Table 3.1 Comparison of calculations between Business Roundable/Stanford

Study and Oresent Paper 20

Table 4.1: 10 towns have most work-related accidents occur and deadly 30

Table 4.2: Comparison of Occupational Accidents in 2009 and 2010 3Ï Table 4.3: Comparison of Occupational Accidents in 2009 and 2010 in Ho Chi Minh Table 4.4: Some of career have the highest rates of occupational fatal accidents(Statistics from the reports of local 43/63) 34

Table 4.5: Occupational accidents causing by factors (Statistics from the reports of local) eee ee eee ee bee cee cee ee ee ce bee ee tbe bed tee tee teeter erste teeeee trees DO Table 4.5a: Dead accidents causing by factors 37

Table 4.6: The reason of occupational accidents by the employer 38

Table 4.7: The reason of occupational accidents by the employee 39

Table 5.1 Psychology of workers when entering to do the job with a high degree of Table 5.2 Perceptions of workers on dangerous levels of work 57

Table 5.3: The self-awareness of workers with the use of safe equipment 58

Table 5.4: evaluation of employees on the safe performance of the company i

Table 5.5 Workers assess the monitoring of management projects 60

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II DA NHEN ENT Reported by Nguyen Bao Manh

LIST OF CHARTS

Chart 1.1 FDI capital invested to construction industry in recent years 13

Figure 3.1: An Economic Model of Industrial Accidents .0 00.00 00 18

Chart 4.1: 10 towns have most work-related accidents occur and deadly 3]

Chart 4.2: Comparison of Occupational Accidents in 2009 and 2010 32

Chart 4.3: Comparison of Occupational Accidents in 2009 and 2010 in Ho Chi Minh City cc cee tee eee eee tee eee tee eee settee teste tet tettee tees od Chart 4.4: Some of careers have the highest rates of occupational fatal accidents (Statistics _ from the reports of local 43/63) 35

Chart 4.5: Occupational accidents causing by factors (Statistics from the reports of local) 00.00.00 ooo occ eee eee ee cee cette ee eee ere 36 Chart 4.5a: Dead accidents causing by factors 37

Chart 4.6: The reason of occupational accidents by the employer 38

Chart 4.7: The reason of occupational accidents by the employee 39 Figure 4.8: Can Tho Bridge accident 41-43

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ED Re, v0rted by Ne zi guven Bao Manh 1 1 EMENT ⁄ ee On’ MCA MCAP OHSAS HS UAE NEBOSH CHSS IOSH HCMC LIST OF ABBREVIATIONS

Margin cost of accident

Margin cost of accident prevent

Occupational Health and Safety Advisory Services Heath and Safety

United Arab Emirates

National Examination Board in Occupational Safety and Health

Corporate Health and Safety Solutions

Institution of Occupational Safety and Health

Ho Chi Minh City

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Dissertation of Master of Industry Business Management Reported by Nguyen Bao Manh

CHAPTER 1 INTRODUCTION

In current business environment, competition is strong and violent Every company always looks for new way to take advantage competitive itself such as: innovation, applying new technology, diversifying portfolio, increasing capital, reducing

cost Reducing site accidents, take care employees’ health, make buzz are also good way to take advantage competitive

Up to now, many companies in Vietnam have not been interested in that thing yet, because production condition is still limited, equipments are privation, technology is backward Companies only tried to get maximum benefit, forgot employees’ Heath and

Safety issue Moreover, speed of economic development of Vietnam is quickly, so Law sometime doesn’t change timely, in particular HS Regulation Therefore, site accidents

in Vietnam increase every year, special in construction industry Following the Government’s statistic, Ho Chi Minh City always got the highest rate That’s why I

choose this industry in Ho Chi Minh City

In developed countries such as Great Britain, the United State of America or UAE, people have a high opinion of Health and Safety of employees in production In UAE, 20 years ago, the construction industry environment is like Vietnam in current In recent years, they perform very well this thing called “no defect’, “no accident” Vietnam will

also follow this trend when the economy is more and more development Government

will quickly change regulation to meet objective of human’s development

Return Vietnam case, according to the Ministry of Planning and Investment on the

economic development of the country, looking at key economic sectors, production

sector and construction industry is still led growth In the first six months in 2011, this

sector GDP increased highest: 6.6%, along with the industrial production value increased over ten percent

Ministry of Planning and Investment estimates the value of industrial production in

2011 first six months reached about 419 trillion, up 14.2% over the same period in 2010 and higher targets this year

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i TP HENT Reported by Nguyen Bao Manh c3 a c 2004 2005 2006 2007 2008 2009 2010

was No ofnew project ——— New registered capital (USD) Source \/Ð/&GSO

Chart 1.1 FDI capital invested to construction industry in recent years

Not discussing about the quality of registered capital in the industries, $ 1.7 billion figure can be viewed as an indicator for the development of construction industry in

Vietnam in 2011 Construction has a workforce of over 2 million people across 170-

200.000 firms Nearly 90% of these companies employ ten workers or fewer Thus, the potential of construction industry is very big, that mean safe issue in

production is more urgent than whenever

I hope that this project will contribute efficiently in changing of perception of construction companies about Health and Safety of employees in production

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CHAPTER 2

PURPOSE & OBJECTIVES OF PROJECT

2.1 PROJECT PURPOSE

Project learning objectives

The purpose of this project is to evaluate the economic impact of accidents in the domestic construction industry by calculating cost of accident through the interviews to people in the construction field and questionnaire survey, then, to assess potential, viability of introducing international health and safety regulation

to reduce accident level: and to assess the impact of the introduction of these

regulation on the local domestic construction company

2.2 LEARNING OBJECTIVES 2.2.1 Personal learning objectives

I hope that after this research, I will understand how to research business topic by

professional tools, percept how can the safety contribute to take competitive

advantage in construction market by learned theories, understand labors’

perception about safety in production and support my business in future

2.2.2 Reasons for choosing it

As in introduction part, the reasons why | want to research this problem because | think that analyzing labor accident costs resources of companies and cost of accidents affects economic performance of company negatively Reducing them is also the way that save cost, take a competitive advantage However, companies often disregard the issue of protecting human health to build good image And I hope that it is useful for Vietnamese Construction Association because they also

need a surveying and evaluation about this issue to check the efficiency of safety

laws

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MANAGEMENT oO

CHAPTER 3

LITERATURE REVIEW

3.1 THE COSTS OF INDUSTRIAL ACCIDENTS

Early research into fatalities and injuries in the Kuwaiti construction industry by

Kartam and Bouz (1998) identified that poor accident records and reporting system hide the extent of the construction safety problem in Kuwait In addition, many people at management level are unaware of accident-related costs and the effectiveness of a

safety program in reducing project costs This case is similar to Vietnam context at

present

In the report: “An Analysis of Temporal and National Variations in Reported Workplace

Injury Rates” researched by Rhys Davies and Peter Elias, April 2000 (A Report

prepared on behalf of the Health and Safety Executive) identified how the incidence of workplace injuries may be expected to vary over the course of the economic cycle and

considered the influence of structural changes within the economy that may correlate both with trends and geographical variations in injury rates

The early literature on the relationship between the economic cycle and industrial accidents dates back to the 1930s and 1940s Kossoris (1938) provided 3 explanations

for the observed pro-cyclical relationship:

Recruitment, redundancy and work experience

During a period of economic downturn, redundancies tend to be concentrated amongst

the most recent hires Such workers will naturally be less experienced in their current job and may be less familiar with equipment and machinery, with the work system and

the signals of system failure, and with the work habits and routines of fellow workers

The average job tenure of those remaining in employment will increase leaving a relatively more experienced workforce who are less prone to accidents Conversely, periods of economic expansion will lead to an increase in the recruitment and

employment of less experienced workers

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Dissertation of Master of Industry Business Management Reported by Nguyen Bao Manh EURO

MANA a= rnrn =œ ENT

This will reduce the average tenure of those in employment and increase the risks of workplace accidents

Working hours and work intensity

During a period of economic downturn, redundancies tend to lag behind reductions in

the level of production During such periods, the level of hours worked will exceed those required to meet production demand The level of work intensity will decline

until the size of the workforce is reduced in line with demand The decline in work intensity may reduce the likelihood of workplace accidents due to fatigue and stress Alternatively, firms may adjust the level of hours downwards in line with demand Despite the level of work intensity remaining unchanged, the level of industrial injuries

associated with the fatigue of working long hours may fall Conversely, during periods

of economic expansion, increases in work intensity or the hours worked to meet

increases in demand may increase the risk of workplace accidents

Vintage capital hypothesis

During a period of economic downturn, firms operating beneath full capacity are likely

to use their most efficient operating machinery first As a rule, such machinery is likely to be the most modern and embody the latest safety measures The increased utilization

of modern machinery in periods of economic decline will therefore reduce the

likelihood of workplace accidents During periods of increased economic activity, the

utilization of older, less efficient machinery to meet demand will be expected to increase the level of workplace injuries

The above hypotheses point to the existence of a pro-cyclical relationship between

industrial injuries and the economic cycle However, Nichols (1986) considers the possibility of counter-cyclical relationship between the business cycle and industrial injury rate due to changes in the balance of power between employees and employers over the economic cycle The increased probability of losing employment and the lack of employment opportunities elsewhere in the labor market reduces job security and

increases the vulnerability of labor during downturns in economic activity During such periods, labor may become less resistant to attempts by management to introduce unsafe

working practices or to increase the intensification of the production process to

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II Seed, Reported by Nguyen Bao Manh

periods of high or rising unemployment suggests that workers may have little choice but

to accept working practices which might increase the likelihood of injury This

suggests that a counter-cyclical relationship may emerge between the business cycle and industrial injury rates

3.1.1 AN ECONOMIC MODEL OF INDUSTRIAL ACCIDENTS

The business cycle approaches to workplace injuries provide intuitively plausible

explanations as to how injury rates may be expected to vary over the course of the

economic cycle However, these approaches do not explicitly consider the view that the workplace accident rates are determined by decisions made by employers and

employees in response to economic incentives The risk of an accident is determined by the interaction of choices made by employers between safety and profits and the choices of employees between safety and wages This market orientated approach to workplace accidents has been developed by Oi (1979), Smith (1973), Thaler and Rosen (1975) and

Sider (1985) A simplified representation of this approach is outlined in figure 3.1

3.1.2 THE COSTS OF ACCIDENT PREVENTION

The costs associated with accident prevention include the costs of obtaining information about the workplace risk, the purchase of protective clothing and safety equipment, providing occupational health and medical facilities at the workplace, the costs of removing hazards from the workplace, initiating practices designed to motivate safe behavior and the indirect costs of foregone production which result from operating machinery more slowly The marginal cost of accident prevention is illustrated in figure 1.1 by the downward sloping curve MCAP (marginal cost of accident

prevention) The shape of this curve assumes that within establishments with high rates

of workplace injuries, it is relatively inexpensive to make a small improvement in workplace safety and reduce workplace accident rates As accident rates decline, further improvements in workplace safety become increasingly costly

3.1.3 THE COSTS OF INDUSTRIAL ACCIDENTS

Even in the absence of government intervention, firms have an incentive to improve

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Mm EMENT :

and the associated costs of hiring new workers to replace injured members of staff

Furthermore, the skills and knowledge of the injured employees will be lost leading to a

reduction in output and increased expenditure on training Accidents are often accompanied by the destruction of machinery and materials, and disruptions in

production schedules Fewer accidents may mean a reduced likelihood of legal action against the firm and lower legal costs The marginal cost of an accident to a firm is

represented in figure 1.1 by the upward sloping curve MCA (marginal cost of an

accident) This assumes that the cost of an industrial accident increases with the injury rate Firms with higher levels of risk will have to induce employees to accept the increased risk exposure through the payment of a wage premium Safer working conditions enable the firm to attract employees at a lower wage rate

Figure 3.1: An Economic Model of Industrial Accidents Cost MCAP MCAP MCA

A* A2* Accident Rate

3.1.4 THE OPTIMAL ACCIDENT RATE

A firm will minimize accident costs by taking care up to the point where the marginal

cost of an industrial accident is equal to the marginal cost of accident prevention Adopting this approach suggests that there is an “optimal” rate of accidents given by A* At accident rates greater than A*, additional expenditure on accident prevention

brings returns which exceed these expenditures (MCA>MCAP) Ata rate of accidents

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less than A*, the cost of investment in accident prevention measures is not off-set by the amount gained from any reduction in accidents (MCAP>MCA) An important point

to note from this discussion is that the optimal rate of accidents is unlikely to be zero

The optimal accident rate will also vary between industries The MCAP curve will be higher for more hazardous industries where firms have to allocate more to safety

expenditures to achieve a given injury rate The higher costs of accident prevention in

such industries lead to higher rates of workplace accidents

3.1.5 COSTS OF ACCIDENTS AND INJURIES TO THE CONSTRUCTION INDUSTRY

(By John G.Everett, member, ASCE, and Peter B.Frank Jr., Associate Member,

ASCE)

In 1979, the Business Roundtable (BR) commissioned a study to determine the true

costs of accident and injuries in the US construction industry At this time, BR concluded that accidents and injuries account for 6.5% of the total cost industrial,

commercial, and utility construction Since the time of the original study, much has changed in the construction industry Most importantly, the cost of workers’ compensation insurance has skyrocketed and there has been a rash of third-party lawsuits as a result of accidents on construction sites In 1996, G Everett, P B Frank JR in Journal of Construction Engineering and Management reexamined the total costs of accidents and injuries to the construction industry updating the original inputs, and,

where necessary, modify methods This paper shows that the total cost of accidents

have risen to somewhere between 7.9% and 15.0% of the total cost of nonresidential, new construction

The BR study team identified three types of cost relevant to owners in terms of

evaluating the costs of jobsite accidents, injuries, and fatalities: direct cost of injuries

and fatalities; indirect costs of injuries and fatalities; and costs of safety programs

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NIÊN ENT Reported by Nguyen Bao Manh

Table 3.1 Comparison of calculations between Business Roundable/Stanford Study and Oresent Paper

1879 Business Roundable/Stanford 1996 Michigan Row Formula Description Value Row Formula Description Value (1) (2) (3) (4) (5) (6) (7) (8)

Value of typical project $100} 1b Value of typical project $100 1a Percent of project to direct labor(DL) 25% | 2b Percent of project to direct

2a =1aX2ax3ax4a Weighted average manual rate 7.03% labor(DL) 25% 3a Median EMR 88% | 3b WCI mean 28 66% 4a Average job WCI standard premium $155] 4b Median EMR 96 3%

5a =2ax(6a+7a)x8a = Assumed WCI as percent of DL 7.0% | 5b =1Dx2bx3bx4b Average job WC! standard

6a =9a+10a Assumed _ insurance as percent of DL 10% premium $6.90 7a Industry volume(industrial commercial 6b =5b/(1bx2b) WCI(as percent of DL) 27 60% 8a utility) $137.000 | 7b Industry volume $268.600 9a =11ax(1.0+12a) WCI costto construction industry $2740| 8b =2bx6bx7b WCI cost construction industry $18.533 10a Insurance split 65% | 9b Insurance split 65% 11a =13a/3a Direct costs 81.781} 10b =8bx9b Direct costs $12,047

12a Assumed indirect multiplier 40] 11D =(10-90)x8Ð Indirect(WC! OH&P) costs $6.487

12b Indirect(other multiplier $268.6 13b = =10bx12b indirect(other) costs $6 867 14D Claims(percent volume) 1.55% 15b =7bx14b Indirect(claims insured) $4 163 16b =12bx1ãb Indirect(claims uninsured) costs $2.373 17b =15b+16b Indirect claims costs $6 536 18 =11b+13b+17b Totalindirect costs $19.889 13a Total accidentcosts $8,905 | 19b =10b+18b Total accidentcosts $31,936 14a Percent of costs due to accidents 6.5% | 20D =19b/7b Per of costs due to accidents 11.9%

21b =198/10b Calculated indirect multiplier 1.65

Dollar amounts x 700,000

32 FACTORS INFLUENCE SITE ACCIDENT

The preceding section considered the importance of the economic cycle in determining the incidence of industrial injuries Such cyclical factors however cannot be considered in isolation of structural influences acting independently of the economic cycle (Rhys Davies and Peter Elias, April 2000) There have been a number of structural changes in the economy that are likely to have had an influence on occupational health and safety These include a shift in the industrial mix from the manufacturing to the service sectors, a decline in union density and changes in the pattern of employment Government polices relating to regulatory enforcement and compensatory benefits will also

influence the rate of industrial injuries

Government policy and industrial accident:

3.2.1 Generosity and structure of compensation benefits:

There are two mechanisms through which the level of compensation paid to victims of industrial accidents may increase the reported incidence of workplace injuries

Firstly, an increase in the level of benefits reduces the costs to employees associated with the industrial accidents in terms of foregone earnings during the period where an

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MANAGEMENT :

employee is unable to return to work The effective reduction in the cost of workplace injuries reduces the incentive of workers to avoid workplace accidents and encourages

less cautious behavior at the workplace

Secondly, given that leisure is preferred to work, a reduction in the cost of leisure in terms of foregone earnings following an increase in compensation benefits will be

accompanied by a rise in the demand for leisure and a reduction in the supply working hours Therefore, under circumstances where the responsibility to report workplace

accidents lies with the employee, employees may be encouraged to make fraudulent claims for compensation or report injuries that previously they would not have

Therefore, a rise in the level of workers’ compensation benefits (relative to earnings) will be associated with an increase in reported accident rates

Lanoie (1992) however notes that an increase in the level of compensation benefits may have a depressing effect on accident rates under systems of self insurance as found in Canada and Australia Under such arrangements, firms are liable for workplace accidents and pay insurance premiums that in turn pay compensation benefits to accident victims Via an experience rating system, these premiums are adjusted to reflect the firms own claim experience An increase in premiums associated with benefit levels and claims made by employees will increase the costs of accidents to firms This may encourage employers to devote more resources towards health and

safety The net effect of changes in benefits on the risk of accident depends upon

whether employer responses dominate employee responses

Wooden (1989) however suggests that self-insurance schemes are unlikely to encourage

employers to adopt health and safety measures as insurance premiums will not

accurately reflect the safety records of firms Firstly, it is impracticable to adjust premiums in the case of small employers and so typically premiums reflect the claims

experience of large employers

Secondly, many claims are outside the control of the employer such as fraudulent

claims Thirdly, insurance premiums are likely to constitute only a small proportion of variable costs and are unlikely to induce changes in behavior Employee responses are

therefore likely to dominate employer responses

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EUROMED eported by Nguyen Bao Ma

MANAGEMENT Reported by Nguyen Bao Manh

3.2.2 Government prevention policies

Intensification of government prevention policies should lead to a reduction in the risk

of accident by encouraging employers to devote more resources to health and safety Enforcement measures may include fines, improvement notices or immediate prohibitions to prevent further activity in the unsafe area of work Firms may incur substantial costs as a result of inspections that detect non-compliance with health and safety regulations Lanoie (1992) however suggests that intensification of such enforcement measures could have an adverse impact upon the incidence of industrial

accidents The improved working environment could lead to more careless behavior

amongst employees Viscusi (1986) also notes that the impact of any intensification of safety enforcement measures can occur with a lag due to the time involved in making the capital investments or organizational changes required for compliance with safety

standards

3.3 WORKER AND FIRM CHARACTERISTICS 3.3.1 Worker characteristics

A number of principal worker characteristics may be correlated with the likelihood of industrial injury Work experience and union membership have been considered above

in the context of cyclical and structural changes within the economy Other

characteristics that may be correlated with workplace injuries include age, sex and

educational attainment

A Age

A comprehensive review of ageing and occupational accidents literature is provided in Laflame and Menckel (1995) The relationship between age and accident frequency is debatable Because of the hypothesized relationship between work injury frequency and experience, most research has typically found that young workers are at most risk of injury at the workplace Nevertheless it is widely believed that, independent of experience, the risk of injury should rise with age as a result of the deterioration in both

physical and mental capacities This view is supported by studies which estimate a U

shaped relationship between age and the incidence of workplace injuries Laflame and

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MANAGEMENT — ee

Menckel (1995) also suggest that the severity of workplace injuries increases with age

This may reflect changes in the causes of injuries with age

B Sex and educational attainment:

Studies of industrial injury rates commonly consider the influence of gender and the educational attainment of the employees upon industrial injuries Significant results are

usually explained as reflecting differences in the distribution of safe jobs, between men

and women, and between workers with different levels of educational attainment For

example, industries with a higher proportion of female employees may be expected to

involve less physical strain and pose a lower risk of injury The inclusion of such variables is therefore justified on the grounds that they may be correlated with

unobserved differences in exposure to work hazards and not because workers of

different sex and educational attainment behave differently 3.3.2 Firm characteristics

A variety of firm characteristics may be expected to have an effect on the incidence of

workplace injuries These factors may be divided into workplace factors and

management practice systems Workplace factors relate to issues such as the size of the

firm and the capital intensiveness of the production process Management practice systems relate to issues as payment systems, the utilization of atypical employment, the

presence of consultation committees at the workplace and patterns of work Issues of atypical employment and payment systems have been considered above

Capital intensity of the production process: Currington (1986) suggests that among the major non-wage injury costs are the costs of damage to physical capital and lost

production time which may accompany an injury It can be expected that in more

capital intensive firms there is a greater probability that an injury will be accompanied by damage to equipment Similarly, firms with interdependent production processes (e.g assembly line operations) are more likely to experience lost production time when an injury occurs Such firms are likely to be more capital intensive Marginal non-wage injury costs are therefore likely to be higher in more capital intensive firms, thus

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MANAGEMENT

increasing the incentive of firms to invest in safety inputs in an attempt to reduce the

incidence of workplace injuries

3.3.3 Firm size

Currington (1986) notes that for most injuries, injury rates tend to be low for very large and very small firms and highest for medium sized firms Furthermore, industries with

higher average firm size have lower injury rates This pattern provides evidence to support the common assumption that expenditure on health and safety measures is subject to returns to scale The average cost of health and safety measures per employee will be lower in larger firms, increasing the incentive of firms to invest in

these areas It is worth noting that direct measures of employer commitment to safety

management, such as expenditure on health and safety measures, are likely to be positively correlated with industrial injuries This does not mean that higher expenditure causes accidents but rather that the direction of causality runs in the opposite direction, 1.e high injury rates lead to expenditures on health and safety

This chapter has reviewed the theoretical literature regarding the relationship between

the incidence of industrial injuries and the economic cycle, structural changes within the economy and a variety of workplace and individual characteristics The early business cycle approach to industrial injuries developed by Kossoris (1938) suggests that

movements in industrial injuries are pro-cyclical This approach is based upon the

movement of certain labor market related variables over the economic cycle that are of continued relevance within the modern labor market However, the development of market orientated models of industrial injuries casts doubt upon the predictive power of simple business cycle approaches The movement of industrial injuries over the

business cycle becomes an empirical issue

Following above existing research, I will deploy this issue in Ho Chi Minh City context (also like Vietnam context) where development is later than EU, US or UAE Vietnam has opened the economy since 1986 Now, the economy is developing quickly,

especially construction industry which contributes 7.03 % in GDP in 2010 (6.63 billion USD - http://hudland.com.vn) However, we face many problems such as social, human, education, security issue Solving the conflicts between developing economic

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SUR OMED ENT Reported by Nguyen Bao Manh

and stabilizing society, developing human is always a difficult thing to Government

Reducing site accident, improving working condition while developing economic are

urgent problems of not only Government but also enterprises However, if we want to

convince companies to recognize this issue, we need to interpret them, in particular in term of benefit This is my objective in this research

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CHAPTER 4 METHODOLOGY

4.1 RESEARCH METHODOLOGY

This project will be focused on subjective, conflictive ontology, because the research bases on analyzing of individual perception

I will use Action paradigm as Epistemology, this field of knowledge allows me to understand and propose improvements/changes According to Collins (2010), action paradigm is concerned with bringing up new theory and it is

good way of bridging theory and practice

This paradigm can be useful for exploring or testing new ideas; to analyze

and/or improve results having feedback from other people or participants and

finally to come up with better solutions, new approaches to correct or improve

a certain way of doing things

The methodology will be inductive, because I will be trying to build a new

proposal useful for safety starting with already existing data The information |

will find will be qualitative and my aim is to find ways of improvement This kind of methodology will allow me to understand the pros and cons of

application of safe standards in relation to construction and afterwards I will be

able to propose solutions

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ll Reported by Nguyen Bao Manh

4.2 Research techniques:

How can evaluate the economic impacts of accidents involving workers within domestic construction industry in Ho Chi Minh City - Vi nam?

Indicators

Value as a noun Research areas s The cost that

The importance or company has to pay The industry has most

worth of something for differ siziiBlBnE accident happening, someone happens most dangerous How useful or i i - ¬ The industry is important something is The intangible impacts đồigJbpfrintsHff

as noise, loose time, ep contributing most in a bad image of company emerging economy as Vietnam The cost of insurance, 4.3 Research Question Evaluating the economic impact of site accidents in Ho Chi Minh City domestic construction companies

The research will clear up three objectives:

Q) To evaluate the impact of accidents involving workers in the domestic construction industry in HCMC

Q) To assess potential/viability of introducing international health and safety

regulation to reduce accident level and

UI To assess the impact of the introduction of these regulation on the local domestic construction company (Ho Chi minh City-Vietnam)

4.4 Methods

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MAI ENT Reported by Nguyen Bao Manh

MAN œ Bz mm ==

Conduct a review of the literatures on international research about worker perception, impact factors, and cost of accident

For the first objective, I will perform to statistic accidents from Associate and labor

department proving figures, interview construction workers to understand what their experience about site accidents(face to face), and interview managers and H&S supervisors to know how it costs of every accident and training course(face to face or skype)

For the second and thirdly objective, I will perform to critically analyze H&S regulation international , interview expert (Dubai case), and interview experts from insurant

companies to know insurance cost

To statistic from Associate and labor department helps me clearly overview the level and ratios of accident in construction industry in Ho Chi Minh City and Vietnam The particular ratios illustrate the alert level of accident, thus we must percept and change what we have been doing

To interview construction workers helps understand their perception about the danger of accident on site which they often forget or ignore because of desiring to have a job or

low education level

To interview managers and H&S supervisors helps to know how it costs of every

accident and training course which they are always afraid of mentioning and avoid

obligation

To interview OHSAS expert helps know how it costs of every application, and benefit of this standard

The interviews are expected to explain the reason why accidents on site increasing

recent year by direct actors’ point of view

Critically analyze H&S international regulation, cite Dubai case and interview experts from insurance companies help me show that we can avoid accident if we do well as

UAE did(in Vietnam context)

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EUROMED Reported by Nguyen Bao Manh MANAGEMENT 4.5 Research process: The order of research steps will be performed as below chart: Literature Review ACCIDENT-RANK BY IDENTIFY TYPE OF Research Objectives SERIOUSNESS, USING PARETOCHART CAUSE ANALYSIS: Pilot by focus group using fishbone diagram Semi-structured interview & questionnaire Data analysis and Findings Analyze: Can we Benchmarking transfer to HCM City? Conclusion and Recommendation

4.5.7 Identify type of accident-ranking by seriousness

Using statistic of Ministry of Labor - Invalids and Social Affairs in “Report 2010 occupational accident situation “, “Occupational Safety and Health”, I will illustrate serious situation in Ho Chi Minh City

4.5.7.1 Occupational Accidents in the locals in Vietnam in 2010

These localities occur in many cases fatal occupational accidents in 2010 According to reports, in 2010, 10 locals have many accidents occurring most deadly Ho Chi Minh City, Quang Ninh, Hanoi, Binh Duong, Hai Phong, Dong Nai, Ba Ria-Vung Tau, Long An, Hai Duong and Quang

Binh (see details in Table 4.1)

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m SOOM ENT Reported by Nguyen Bao Manh 1400 1200 1000 800 @ Number of case 600 ®@ Number of fatal case ® Number of victim 400 Number of death 200 | Number of seriousness 5 L Ỉ lu LÍ LÍ gì s S KP et RS SSF CK FY OC YF 9 ấy PP Fgh Ss ow SQ e$- « vờ vị wv ` về VS Kw Ÿ es œ > ee xe SY

Chart 4.1: 10 towns have most work-related accidents occur and deadly 4.5.7.2 Comparing the work-related accidents situation in 2009 and 2010:

Analysis of basic statistics on the status of work-related accidents in 2010 compared to 2009 showed that: The number of occupational accidents and reduce the number of victims, but the number of occupational accidents with deaths and the death toll

5 | Number of serious injury 1221 1260 39 (3,19%)

6 | Number of femal victim 1152 944 | -208 (18,05%)

7 |Number of 2-victim case (and 88 105 17(19,3%)

more)

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m KP NT Reported by Nguyen Bao Manh Number of death ee Number of fatal case gi 2010 ø 2009 BS" 0 200 400 600 800 1000 1200 1400 Chart 4.3: Comparison of Occupational Accidents in 2009 and 2010 in Ho Chi Minh City

4.5.7.3 The frequency of fatal occupational accidents in 2010

The frequency of fatal occupational accidents (based on 46 local statistics

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EUROMED MANAGEMENT Dissertation of Master of Industry Business Management Reported by Nguyen Bao Manh

Number | Number of Number Number of

Career Total | of fatal 2-more- Number of female ae serious of victim a of death ¬ case victim case victim injury Mining and construction worker 390 103 22 429 18 122 15] Unskilled labor in mining, construction, industrial 924 103 10 948 121 115 135 Metal workers, mechanics and other work related 312 43 16 299 49 41 72 Fitter and operator machine and equipment 597 41 12 609 66 4] 97 Mid-level technical expertise in the field of natural science, science and technology 32 15 3 33 1 15 II Food processing 1143 9 2 1146 363 9 216

Table 4.4: Some of career have the highest rates of occupational fatal accidents (Statistics from the reports of local 43/63)

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Dissertation of Master of Industry Business Management EUROMED R eported by Nguyen Bao Manh MANAGEMENT ko vn, 1400 1200 B® Mining and construction worker 1000 @ Unskilled labor in mining, 800 : 2 - construction, industrial

600 ® Metal workers, mechanics and

other work related

400

B Fitter and operator machine and

equipment

200

i 3 i ba! > @ Mid-level technical expertise in the

0 "em field of natural science, science and technology để để : & & = s N ` le fe ; > S ie ẻ ` re sy ° ` v2 S = Food processing ¿` aw & < xế we & yd < PA s ca FS FF SK gS FF Oo ¥ * ~ v w 4 ~

Chart 4.4: Some of careers have the highest rates of occupational fatal accidents (Statistics from the reports of local 43/63)

B Highest rate factors cause fatal and serious injury (for details see Table 4.5): - Falls make 134 deaths, account for 22.29% of people die of occupational accidents - Electric shock with 98 deaths, account for 16.3% of people die of occupational accidents

- Due to falling objects, be buried cause 75 people died, accounting for 12.47% rate of occupational accidents deaths

- Stuck between objects with 46 deaths, accounting for 7.65% rate on the total

number of deaths due to occupational accidents

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Reported by Nguyen Bao Manh Number Number Number Number of 2- Number of Number of Total | of fatal more-

Factors of victim | female | of death | serious case victim

victim injury

case

Fall 463 121 16 500 52 134 165 Electric shock E73 98 10 178 9 98 44 Due to falling object 490 63 20 22 67 75 173

Stuck between objects 1209 46 13 1231 164 46 226 Traffic accident 312 42 7 318 96 44 114 Drowning 16 16 1 19 18 Table 4.5: Occupational accidents causing by factors (Statistics from the reports of local 63/63) 1400 1200 1000 800 ® Number of fatal case 600 400 #ø Number of victim Number of female victim 200 1 Number of death 0 _— Number of serious injury â t* oS & @đ eT XS Sổ KS «* x£ we ee ° S ° + lo ‹« © eS ‹© ee Ra _ ee ve Ox S «

8 Number of 2-more-victim case

Chart 4.5: Occupational accidents causing by factors (Statistics from the reports of local 63/63)

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FOOD ENT Reported by Nguyen Bao Manh

Factors Number of death Percent Cumulation

Fall 134 32% 32%

Electric shock 98 24% 56%

Due to falling object 75 18% 74%

Stuck between objects 46 11% 85%

Traffic accident at 11% 96%

Drowning 18 4% 100%

Table 4.5a: Dead accidents causing by factors

@aam Numberofdeath —@§Cumulation 320 100% 270 kh 80% 220 70% 170 60% 50% a 40% 70 30% i or lớn 20 mã MEN 10% 3 ral Flecric Dueto Stuk Trấfc Drowning Ủ%

shock falling between — accident object objects

Chart 4.5a: Dead accidents causing by factors

4.5.7.4 The reason of the occupational accidents A On the employer side (see details in Table 4.6):

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Equipment_ Notraining Thereisno Thereisno

not safety on process, safety

28.7% occupational occupational equipment

safety for safety 11.9% workers measures 22.2% 18.5% Due to the way organizing to work 9.4% Not equipped with personal protective equipment for workers 9.1% Chart 4.6: The causes of occupational accidents by the employer EUROMED N B i MANAGEMENT Reported by Nguyen Bao Man Number Percent/ No Cause Cumulation

of case | reported case

1 Equipment not safety 28.7% 349 28.7% 28.7%

No training on occupational safety 2 for workers 22.2% 270 2202 1Ĩ 51.0% There is no process, occupational 3 225 18.5% 69.5% safety measures 18.5% here i i 9%

4 There is no safety equipment 11.9% 145 11.9% 81.5%

Due to the way organizing to work

- 114 9.4% 90.9%

9.4%

Not equipped with personal

6 protective equipment for workers IIT 9.1% 100.0%

9.1%

Table 4.6: The causes of occupational accidents by the employer

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EUROMED MANAGEMENT

Reported by Nguyen Bao Manh B On the employee side (see details in Table 4.7): Percent/ Number of No Cause reported Cumulation case case Violation of procedures and measures for safe I 1514 77.7% work on occupational safety 77.7% 77.7% Do not use the equipment, ersonal 2 ap ' 258 13.2% protective | equipment 13.2% 90.9% Due to others to violate the regulations on 3 ; 177 9.1% occupational safety 9.1% 100.0% Table 4.7: The causes of occupational accidents by the employee | | 2000 | 1800 1600 1400 1000 | | | 800 | | | 600 | | 400 200

Violation of procedures and | measures for safe work on

occupational safety 77.7%

gam Number of case

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POO wT Reported by Nguyen Bao Manh

4.5.8 CAUSE ANALYSIS: USING FISHBONE DIAGRAM

See above charts, we recognize the causes of accidents at site are often: fall,

electric shock, material fall, non-safe equipment, fire, toxic gas Three causes ranking

most serious level: (take 74% all accident cause) Q) Fall from height: 32%

Q) Electric shock: 24% Q) Due to falling object: 18%

ELECTRIC Me ACCIDENT ON SITE

Based on this result, I will suggest the way to prevent accident, and calculate the cost

For example, we must build safe fence, use safe belts, boots, and helmet, and assign one

or few safe supervisors, training 3 months 1 time

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