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Benchmark Your Leading Indicators to Manage Jobsite Risk

Barry Nelson DBO2 Inc. 11 April 2007 www.dbo2.com

Agenda

Why we need new leading indicators

Defining a "normal" safety observation

The relationship between safety observations and claims

The next generation of safety observation metrics

Suggested actions from this presentation www.dbo2.com

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Why We Need New Leading Indicators

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Why We Need New Leading Indicators

"The problem is, so many managers are tied to accident numbers because OSHA requires them to be. It’s a lousy measure. You’re measuring stuff over which you have damn little control.

Many of the things OSHA requires flies in the face of what really improves a safety system."

--Dan Petersen

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Why We Need New Leading Indicators Lagging indicators present significant disadvantages for most organizations Challenges relative to lagging indicators: Time: information is months in arrears Frequency: often there are far too few incidents to see a pattern Relevance: falling off a ladder does not necessarily mean I have a ladder problem

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Leading Indicators Help Us Get Ahead of the Problem

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Defining a Leading Indicator Leading indicators: Precede a future event Are condition- or behavior-based Are reasonably reliable, but more valuable when combined and validated with other leading indicators Provide cumulative insight: more observations are generally considered a leading indicator of reduced loss Enable us to pinpoint metrics that are out of the “norm," such as an unusually high number of unsafe observations

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Why We Need New Leading Indicators As metrics, percentage safe and unsafe have significant limitations: They do not consider: The size of the project The severity of the observation The perceptions, bias and competency of the observer How quickly open issues are resolved The correlation between observations and claims They are too easily manipulated by observers www.dbo2.com

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Defining a "Normal" Safety Observation

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Defining “Normal” Observations Research background and methodology Over 13 million safe and unsafe/at risk observations analyzed Over 4684 contractors on 3241 projects March 2006 to February 2007 period Safety professionals and non-safety professionals collecting observations

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Monthly Benchmarks: Inspections, Inspectors, Unsafe/Safe Observations

Safety Metric

Total Monthly Averages

Number of Inspections Number of Inspectors

31.4 2.2

Number of Observations Number of Unsafe Observations Number of Safe Observations

2211 62.7 2149

Number of Unsafe Observations Per Inspection Number of Safe Observations Per Inspection

2.7 67.1 Š DBO2 Inc. 2007

Monthly Benchmarks: Fall Protection, Housekeeping, PPE Safety Metric Safe Fall Protection Observations Unsafe Fall Protection Observations Safe Housekeeping Observations Unsafe Housekeeping Observations Safe PPE Observations Unsafe PPE Observations PPE Issues Needing Follow Up Fall Protection Issues Needing Follow Up Housekeeping Issues Needing Follow Up

Total Monthly Averages 81.0 19.0 87.3 12.7 884.8 6.3 0.2 3.4 3.6 Š DBO2 Inc. 2007

Monthly Benchmarks: Severity of Observations/Subcategories

Safety Metric

Total Monthly Averages

Number of Low Severity Items Observed Number of Medium Severity Items Observed Number of High Severity Items Observed

37.2 16.3 6.4

Percentage of Subcategories Inspected

24.4

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Defining “Normal” Observations On average, companies should expect to see the following distribution for severity of unsafe observations:

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Average Number of Inspections

By Project

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Average Number of Inspections

By Company

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Average Number of Inspectors

By Project

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Average Monthly Unsafe Observations

By Project

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Average Monthly Safe Observations

By Project

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Average Safe Observations Per Inspection

By Project

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Average Unsafe Observations Per Inspection

By Project

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Severity of Observations Per Inspection

By Project

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High Severity Observations Per Inspection

By Project

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Percentage of Subcategories Inspected

By Project

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Comparison of Fall Protection, PPE, and Housekeeping Unsafe Observations

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The Relationship between Safety Observations and Claims

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How Number of Inspectors Correlates to Loss Increasing Inspector Count Decreases Total Claims

% Records

40 30 20 10 0 0.03

0.09

1.06

1.09

1.53

Company Ave. Total Claims 1 Insp Count

3-23 Insp Count

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The Relationship Between Safety Observations and Claims How Single Safety Metrics Correlate to Loss

*Correlation is the degree to which two or more attributes or measurements on the same group of elements show a tendency to vary together. www.dbo2.com

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The Relationship Between Safety Observations and Claims

How Safety Metrics Correlate to Unsafe Observations

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Tying Safety Observations to Loss Summary Results for Site Scoring System Top 333 Sites 92% of all loss 1 in 4 sites will have loss

Top 100 Sites 1 in 2 sites will have loss

Bottom 667 Sites 8% of all loss 1 in 75 sites will have loss

Margin of Error - + 4%

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The Next Generation of Safety Observation Metrics

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The Next Generation of Safety Observation Metrics Easily rank projects by: Severity Unsafe Safe Safety and Non-Safety Professional Observations

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The Next Generation of Safety Observation Metrics Risk Index Components

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Combining Leading and Lagging Indicators Leading Indicator Lagging Indicator

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Suggested Actions From this Presentation

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Suggested Actions From this Presentation Focus on increasing observers, which leads to:

Identification of more unsafe observations Identification of more high severity issues Development of focused action and intervention plans

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Suggested Actions From this Presentation Set specific internal goals according to minimum expectations, for example:

1 inspection per week per observer >1.5 unsafe observations per inspection .20 housekeeping unsafe observations per inspection .13 fall protection unsafe observations per inspection

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Suggested Actions From this Presentation Monitor the following metrics most closely, because they are shown to correlate with each other:

Falls: expected increase in claims Unsafe observations: expected increase in high severity items Housekeeping: expected increase in falls and claims Medium severity items: an expected increase in more unsafe observations PPE: early indicators of housekeeping and fall issues www.dbo2.com

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Conclusion

Continue to shift your focus from lagging to leading indicators.

Complement your percentage safe/unsafe metrics with more specific, targeted observation metrics.

A single safety metric may be a poor risk indicator.

Consider a combination of safety observation metrics.

Pay close attention to the real correlation between observations and claims. www.dbo2.com

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Questions/Comments?

Contact: Barry Nelson Phone: 650-248-1458 Email: barryn@dbo2.com

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