Business Case for Safety Inspections

safety inspectionsWe’ve talked about how our software can improve the quality of your safety inspections, but why should that be important to you? Let’s put our software’s features aside for the duration of this article and focus on just the numbers. What is the business case for Inspection Software?


How Can Inspection Software Save Money?

There are four main ways that you can save money by implementing an inspection software. You can save by reducing your rate of injury and illness, reducing the costs of your already existent EHS programs, and by keeping your lines running a higher proportion of the time. Let’s look at the numbers.

  1. Better Inspections Mean Fewer Injuries

Whenever a worker is injured, their employer face the direct cost of workers’ compensation. The Bureau of Labor Statistics estimates American employers pay about $960 per employee per year in workers’ compensation.

The academic literature gives a variety of estimates of the impact of inspection programs. The most pessimistic research says inspections can reduce the injury rate by around 5%. The most optimistic say 25%.

If you apply those values to our earlier estimate of the costs, we see that inspections can save employers $48-$240 per employee per year

  1. Fewer Injuries Mean Lower Premiums

One of the main factors that goes into calculating the cost of your insurance is your “experience modifier”. This modifier represents the insurance companies’ estimate of how much it will cost them to ensure your workers. The higher your experience modifier, the higher your insurance premiums.

The best ways to lower your Experience Modifier are by implementing a proactive safety program and reducing your incident rate.It is possible to do both at the same time by adopting a systematic and comprehensive inspection program.

These measures will make your workplace safer and thus safer to insure, resulting in lower premiums.

  1. Automating Your Inspections Reduces Costs of All EHS Programs

Another way that inspection software can save you money is by reducing the costs of all of your EHS programs. By ensuring that problems are caught before an incident occurs, an inspection program can reduce the overall workload of your EHS staff.

According to OSHA, adopting a systematic approach to safety inspections can reduce the costs of most company’s EHS programs by 20%-40%. The BLS estimates that American companies spend $1,172 per employee per year on EHS. Put those numbers together and we find that companies can save $235-$470 per employee per year just by reducing EHS costs.

  1. Fewer Incidents Mean Fewer Indirect Costs

There are a variety of indirect costs associated with injuries and illnesses. These indirect costs include work stoppage, decreased productivity due to time spent on leave, damaged equipment, and many other factors. Since this category includes such a wide variety of causes, it can be difficult to quantify.

Nonetheless, OSHA has made a credible attempt to estimate these indirect costs. They found that indirect costs vary depending on the type of incident. The average value they give for these indirect costs is about 50% of the direct costs.

If we plug OSHA’s estimate of indirect costs into the BLS number we found earlier, we find that companies can save between $24-$120 per employee per year in indirect costs by implementing safety inspections.

What’s the Net Effect?

If we combine the three sources of cost savings we can find the total possible savings to be found in improving your inspection program. Put together, an inspection program can save the average company $307-$830 per employee per year.

Let’s assume that adopting a software solution increases the effectiveness and efficiency of your inspections by just 10%. In that case, you would save $30.70-$83.00 per employee per year by implementing an inspection software solution.

In Conclusion…

The upshot of all this is that you’re probably leaving money on the table by not implementing safety inspection software. By improving your inspection system, you can save money by:

  • Preventing injuries
  • Bringing down premiums
  • Reducing EH&S costs
  • Increasing Efficiency

With that in mind, Quantum would like to recommend our inspection software as an opportunity for you to save money while promoting sustainable business practices.

Thank you for reading! Do you have an opinions, comments, or criticisms? Feel free to comment and let us know!



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