A Framework for the Calculation of Direct and Indirect Costs of Accidents and Its Application to Incidents Occurring in Iran’s Construction Industry in 2013




Background: Occupational accidents represent one of the major problems in developing and developed countries. Deaths caused by occupational accidents result in loss of life, lost working hours, and related costs. These accidents create a lot of waste for the community and labor organizations. Moreover, they result in socioeconomic losses such as disability, loss of work time, and increased medical care expenses. Objectives: Despite the existence of extensive studies, a practical method for calculating the cost of accidents is still not clear; consequently, the aim of the present study is to provide a new framework for the calculation of the (direct and indirect) costs of accidents in construction. Materials and Methods: In this paper, the cost of accidents in the construction industry in Tehran, Iran in 2013 were calculated using a new, structured, six-step approach. First, the results were classified into five groups according to the intensity of accident, as follows: 1, short-term absences; 2, long-term absence; 3, small inability; 4, total disability; and 5, death. Moreover, the six following groups of imposed costs were identified: 1, production disturbance costs; 2, human capital costs; 3, medical costs; 4, administrative costs; 5, transfer costs; and 6. other costs. These groups were classified according to the direct or indirect costs resulting from the incident and the costs imposed on workers, employers, and society. Finally, the data were analyzed using statistical tests. Results: Significant proportions of the cost of construction accidents involve production disturbance costs, human capital costs, medical costs, administrative costs, transfer costs, and other costs. The highest cost is imposed on the community and employee, with the least being imposed on employers. Much of the cost of accidents relates to total disability ($ 4,260,000) and partial disability ($ 3,270,000); meanwhile, the lowest costs are associated with death ($ 1,800,000), long-term absences ($ 1,960,000), and short-term absences ($ 840,000). A significant difference was seen between the type of cost (e.g., production disturbance cost, human capital costs; P = 0.0001). Statistical analysis of the direct and indirect costs of accidents indicated a significant difference (P = 0.019). Moreover, a significant difference was seen between the cost of accidents resulting (P = 0.005). Conclusions: Accidents resulting in death, total disability, and partial disability impose a huge cost burden on society, whereas the employer will bear a relatively low cost. This is because of society’s health, treatment, and welfare systems available for treatment and rehabilitation of injured employees and their families.