Safety Pays!
Take a look and download OSHA's Safety Pays software program that can be helpful in determining direct and indirect cost.
Annual Return on Investment (ROI) in Percent
Management may ask you what the Return on Investment (ROI) will be for an investment in safety. Let's say you recommend a $1,000 investment in taking corrective action to eliminate a hazard that could cause an injury resulting in accident costs of $28,000. To determine the ROI, divide $28,000 by $1,000 which gives you 28. To express it as a percentage, multiply 28 by 100 and you discover that the ROI is 2800 percent.
Payback Period in Months
Management may also want to know how quickly the $1,000 investment will be paid back: what the Payback Period is. To determine the payback period, divide the accident cost of $28,000 by 12 months (1 year) and you arrive at $2,333 per month in potential accident costs. Divide the investment of $1,000 by monthly accident cost of $2,333 and you'll see that the $1,000 investment will be paid back in only .43 months. After that, the investment is actually saving the company money.
If you want, take a closer look at some key elements of an effective recommendation.
Knowledge Check Choose the best answer for the question.
1-12. What is the return on investment (ROI) if a company invests $1,000 to install a machine guard to prevent an estimated $28,000 accident?
You forgot to answer the question!