Analysis and review of the economics of HSE

  1. First phase: calculation and estimation of the costs imposed on the HSE-MS management system
  2. Second phase: Calculation and estimation of the amount of investment in order to implement the HSE-MS management system
  3. The third phase: forming the flow of the final financial process resulting from the implementation of the HSE-MS management system and calculating the amount of profit obtained using the internal rate of return method
  4. The fourth phase: forming the financial process flow of the project before and after the implementation of the HSE-MS management system
  5. The fifth phase: evaluation of the impact of the implementation of the HSE-MS management system on the profitability of the project
  6. The sixth phase: Formulating and presenting a new and final approach

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If ethanol is used instead of methanol in biodiesel production, the resulting molecules will be fatty acid ethyl esters. The chemical differences in the structure of these two types of fuel also cause differences in physical properties, which are mentioned below in the form of advantages and disadvantages.

Table of Contents

Introduction to HSE-MS Management

The development of industries and the advancement of technology, along with its positive and valuable effects, have also been accompanied by unfortunate effects and side effects. Complications such as increasing the quantity and quality of pollution in the working and living environment, accidents caused by work and diseases caused by work, including with the development of industries and technology, have threatened human life, especially employees.

This is more true in developing countries that, in order to increase production, put a lot of pressure on workers without considering the principles of prevention safety, working hours, training workers, and using appropriate personal protective equipment.

Occupational accidents are one of the most important problems in developed and developing countries. The most important part of the costs of these incidents are their human costs. Deaths caused by occupational accidents cause loss of life, working years and related costs. Every year, millions of occupational accidents occur all over the world, some of these accidents lead to death and others lead to temporary and permanent disability.

Contemporary human history has recorded the occurrence of several major accidents with financial losses of several billion dollars and many human casualties, including the explosion of the Challenger shuttle (1986), the explosion of the Chernobyl nuclear reactor (1986), the accident in Mexico City (1985), the accident at the Bhopal plant in India. (1981) can be mentioned.

It is estimated that about 120 million occupational accidents and more than 200,000 accident-related deaths occur worldwide each year. There are 120 million workers in India, and 7.7 million occupational accidents are reported among them every year, which indicates the loss of 3.25 working days for each incident.

Various industries, especially the construction industry, are very important in the economy of the countries of the world, including in England, where this industry plays an important role with 10% of the GDP and more than 1.5 million people.

In the United States, occupational accidents leading to death in the construction industry were about 17.29 cases per 100,000 workers between 1980 and 1992. Accidents in the transportation industry are the biggest cause of death and the number of young people around the world, and also in developing countries such as Iran, the high rate of deaths due to accidents in the transportation sector is 25.8 deaths per 100,000 of the population. but in developed countries 9/19 is death. Iran, which is taking steps towards development and industrialization, is not an exception to this rule. According to the statistics published by the Social Security Organization in 2012, 286 people died due to 14,114 incidents in the covered workshops. These incidents have caused a lot of waste for the society, the organization, and also the worker, and the related costs, along with the negative impact on the economic indicators at the national level and the household level, are considered an obstacle in the direction of achieving the predetermined goals.

to be Currently, the most unfortunate consequence of occupational accidents is the premature death of the workforce. Occupational accidents leading to death in Tehran province destroyed more than 7552 years of life and 3656 years of economic participation, and its human cost was more than 777 billion Rials. The per capita human cost for each death is 3.36 billion Rials and the total human cost of occupational accidents resulting in annual death is equivalent to 3% of the total GDP.

Occupational accidents leading to death in Tehran province destroyed more than 7552 years of life and 3656 years of economic participation, and its human cost was more than 777 billion Rials. The per capita human cost for each death is 3.36 billion Rials and the total human cost of occupational accidents resulting in annual death is equivalent to 3% of the total GDP.

The necessity of implementing HSE-MS management

Following the compilation of HSE-MS management systems in different years and the success of the establishment of these management systems in different organizations, due to the approach of the importance of health, safety and environment issues, the development of specialized standards for high-risk industries has emerged and in this direction Large organizations and reputable companies, etc., developed a guide for the establishment and development of the Health, Safety and Environment Management System (HSE-MS).

According to the above material, it can be concluded that the need to implement the HSE-MS management system in various projects is absolutely necessary and should be an integral part of the project implementation stages. The noteworthy point is that the implementation of the HSE-MS management system requires spending time and money, so some project managers or decision makers abandon the implementation of the safety system or completely ignore it due to cost savings. They don’t use it. In fact, the challenge in the subject is to prove to this category of project managers that, in general, the implementation of the HSE-MS management system will not only incur additional costs for them, but will also increase the profitability of the projects.

Assumptions of HSE-MS management

In the management approach of a safety-health system, it is a basic belief that more than one factor is often effective in the occurrence of accidents. An attitude that can examine the root causes of accidents from all aspects will definitely guarantee the achievement of Tehran Municipality’s goals, which are sustainable urban development and the creation of work environments without damage and environmental pollution. But for many years, a traditional look at the costs of the HSE-MS management system has been seen as overhead and non-returnable costs. But by studying the costs caused by accidents, financial transactions and the amount of investment in this sector, we can conclude that there is a return on investment. With the establishment of the HSE-MS management system, in addition to reducing accidents and as a result, reducing the payment of compensations caused by accidents and reducing the costs imposed, it can be said that there is more productivity and efficiency due to the increase in the satisfaction of employees and workers and the quality of work.

So far, many studies have been conducted in this regard, but perhaps one of the best is a study conducted in 2010 by the International Social Security Association (ISSA) in collaboration with the German Social Security Insurance (DGUV) regarding the costs and benefits of investing in safety. and health in 39 German economic institutions operating in various fields such as energy, textile, electricity, etc.

The main purpose of this study was to determine the role of occupational health and safety in the amount of economic benefits of organizations and to determine its effects on the microeconomics of the organization.

In this research, there is a quantitative ruler from 0 to 6, where zero indicates no effect and six indicates the highest effect.

Objectives of the HSE Economics Project

The goals of design and implementation are as follows:

 The positive impact of investing in HSE management on the profitability of projects, reducing side costs, including compensation and medical costs due to accidents and work disruptions.

 Increasing safety culture, reducing risks and safe behaviors of workers

Increasing the awareness and decision support of managers

 Reduction of accidents and compensations, reduction of imposed costs and reduction of potential risks

 Increasing employee satisfaction and increasing work quality

 Reducing health and environmental risks

 Reducing rework and reducing waste

 Reduction of maintenance costs and reduction of operation costs

 Reducing the return rate of goods and services and reducing customer dissatisfaction

 Creating more stability in the organization and reducing work violations

 The economic justification of the HSE-MS management system in determining the desirability of economic plans

Work steps

In this project, with a fuzzy approach and under the environment of uncertainty, we evaluate the impact of the implementation of the HSE-MS management system on the profitability of the projects.

In general, the implementation stages consist of 6 phases.

First phase: calculation and estimation of the costs imposed on the HSE-MS management system.

At this stage, we have to show the expenses caused by the incidents in the form of a flow of the financial process. A financial process flow is actually a representation of income and expenses over different time periods (time periods can be days, weeks, months, seasons, years, and any other desired time period). It should be noted that the smaller the time period of the financial process flow, the higher the calculation accuracy, but the volume of calculations will also increase.

In order to calculate and estimate the costs caused by accidents in both steps of this stage, we first categorize the costs as follows:

The first category: estimating the direct costs of accidents

The second category: estimating the indirect costs of accidents

In fact, in order to calculate the costs caused by accidents using the ASCC2009 standard, first all accidents were divided into two parts: direct accidents (direct = D) and indirect (indirect = I), then the cost on the employer, worker or society. It is imposed and analyzed.

To calculate the cost group of accidents, the following costs are used:

  • Production Disruption Costs (PCD)
  • Human Capital Costs (HCC)
  • Medical expenses (MEDC)
  • Administrative expenses (ADMINC)
  • Transfer fees (TRANC)
  • Other Costs (OTC)

Second phase: Calculation and estimation of the amount of investment in order to implement the HSE-MS management system in the project

At this stage, we have to show the amount of investment required to apply the HSE-MS management system in the form of a financial process flow.

In order to estimate and predict the amounts of the above financial process, we act as follows:

Investment in the HSE-MS system includes 6 main parts, including 1- administrative costs, 2- training costs, 3- facilities and equipment costs, 4- committee costs, 5- promotion costs and incentives 6- The costs of new technology, methods or design of tools are 7- the cost of identifying, measuring and controlling health and environmental hazards and 8- the cost of inspection, documentation and certification in the HSE-MS management system.

The third phase: forming the flow of the final financial process resulting from the implementation of the HSE-MS management system and calculating the amount of profit obtained using the internal rate of return method

At this stage, we must first calculate the flow of the financial process of the income from the implementation of the HSE-MS management system. In fact, the difference in the amounts of the two financial processes of the costs caused by the accidents before and after the implementation of the safety management system represents the income obtained.

Next, we have to calculate the final financial process resulting from the implementation of the HSE-MS management system. For this, we add together the values ​​of the financial process of income and investment.

In the last part of this step, we calculate the amount of profit from the implementation in the HSE-MS system using the IIR method.

The fourth phase: forming the financial process flow of the project before and after the implementation of the HSE-MS management system

We show all the financial transactions of the project without considering the financial effects of implementing the HSE-MS management system in the form of a financial process flow.

To estimate the values ​​of the financial process of the project, we should use the information of similar projects, the opinions of experts and project managers.

Next, let’s calculate the financial process of the project after the implementation in the HSE-MS system. For this purpose, the values ​​of the financial process of the project are calculated with the values ​​of the final financial process (the result of implementation in the HSE-MS system). For this purpose, the values ​​of the financial process of the project are calculated with the values ​​of the final financial process (the result of implementation in the HSE-MS system). We collect

The fifth phase: evaluation of the impact of the implementation of the HSE-MS management system on the profitability of the project

Using the IIR method, we measure the rate of return on investment of both project financial processes before and after the implementation of the HSE-MS management system. In fact, the difference in the IIR value of the two mentioned financial processes shows the effectiveness of the implementation of the HSE-MS management system. We use the best and most recent introduced method, namely the average internal rate of return (AIRR) or average economic internal rate of return (EAIRR). In fact, both AIRR and EAIRR indicators indicate the exact and correct value of the project’s return on investment rate.

It is worth mentioning that in the implementation steps of the method, we should estimate and predict the financial process flow values. Estimating financial process flow values ​​in terms of definite numbers increases the risk and prediction error. In fact, one of the most important reasons that leads to wrong decisions by experts and decision makers in determining the rate of return on investment of projects is that the amounts of the flow of the financial process are not definitively known and must be estimated by experts and experts. and predicted them.

The sixth phase: Formulating and presenting a new and final approach

Evaluation of the impact of the implementation of the HSE-MS management system on the cost of human accidents and the profitability of projects using the internal rate of return method

By using the previous five steps, the final structure for calculating the human costs of accidents and calculating the investment in the HSE-MS management system and calculating the profit obtained in the HSE-MS management system in the whole project is presented.

Conclusion

With the advent of the competitive era, relying on one-dimensional financial measurement systems to compete and gain sustainable advantages is not enough, and in order to improve performance, organizations must change their management style and can no longer rely only on measuring financial aspects. to do The category of HSE management system in Iran is a new discussion. For this reason, its identity structure and the implementation of HSE laws, as well as the implementation of other laws, require the provision of appropriate tools, resources and infrastructure. Therefore, it is necessary to manage the use of these resources and facilities in order to reduce costs.

The main purpose of this study was to determine the role of occupational health and safety in the amount of economic benefits of organizations and to determine its effects on the organization’s microeconomics. In this project, we decided that using fuzzy sets is one of the most effective tools available in uncertainty environments, it reduces the risk and correctness errors of the final decisions to the minimum possible amount.

This study shows that despite the increase in the number of employees and the increase in the number of projects and working hours in organizations, with the implementation of the HSE system, in addition to indicators related to health, safety and the environment, such as the number of injuries leading to time loss per million person-hours, the number of people who died per 100 million person-hours, and air pollution to SO, etc. have been improved during the implementation of the system, it leads to an increase in productivity, and considering that the increase in productivity also causes economic growth Therefore, it should be emphasized that the better the safety, health and environment situation, the productivity of the organization will increase and subsequently, the organization will have the same amount of economic prosperity.

By presenting the annual performance report on the implementation of the HSE-MS preventive management system, this collection will help managers to inform, guide them correctly and choose the best model for decision-making, control and monitoring, and at the organization level, an integrated approach away from the application of taste. And he will build a scattering of pawns.

Frequently Asked Questions

This company stands for hse ms, the English words health safety and environment management system. This term means health and environmental safety management system. Taking advantage of the agile transportation fleet and the most up-to-date software systems in all provinces and cities of the country, with experienced human resources, it is trying to provide the best and most desirable services to its customers.

  • Setting annual HSE targets that extend across the entire organization and managing progress towards them
  • Co-implementation of HSE emergency response exercises and consulting on points for improvement
  • Sharing HSE statistical data and incident reports and advising on points for improvement by analyzing incidents.
  • Conducting HSE audits and advising on points for improvement
  • Reviewing performance in line with HSE goals and advising on the necessary points for improvement.
  • Providing HSE training and fostering HSE culture
  • Recognition of branches with outstanding achievements in HSE

Many organizations around the world use HSE MS and consider it as an essential part of their activities. This management system helps organizations to identify, evaluate and control safety, health and environmental risks.

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