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In this chapter, there reviews some of literatures by pass which are related improvement and advance the construction safety in Hong Kong. Actually, Hong Kong has a good construction safety management system from government, developers, and contractors under the legislations, regulations. But the result showed that the rate of accidents, rate of injury and the rate of fatality still occur always in the life. As know as, the rates are dropping down continuously and slightly, but it compared with other countries such as Taiwan, Singapore, and Japan. The rates of Hong Kong are the highest while comparing with other countries in Asia.
Most of definitions and assumption will be apply on following chapters. Here will get the idea and definitions.
3.2 Social value of preventing fatality (VPF)
Hong Kong is a modern city and still has many of accidents occur in real life. As know as the human life is important and high value in it worth to protect and prevent. The value of preventing fatality and the value of statistical life applied for define the worth.
Jonathan (2007) gave the idea of the 'value of preventing fatality' (VPF) or, equivalently the 'value of a statistical life' in a technical team used in safety decision making. It gets its life from risk cost benefit analysis (RCBA). There was mentioned the safety measure designed to reduce the risk of death. And the major question of the analysis that is it worthwhile on the view of economic in a potential safety measure could be too expensive to be worth implementing it is necessary to find a way of giving some meaning to this idea, and to settle such questions. (Wolff, Jonathan (2007), "London Philosophy Papers", pp.1),
Orley (2006) mentioned that:
"â€¦a key issue to clarify at the outset is the precise meaning of the phrase "the value of a statistical life", which many no doubt find distasteful".
He said that there is no definition of the value of human life and no defined method to calculate exactly. By the way, he said the wealth allow to avoid fatal risk while expense money or time on it. The trade-off from wealth and probability of death is fair enough. The ratio of the human wealth is willing to accept in exchange for a small change in the probability of a fatality is expressed in units of "dollars per death", or the dollar value of a fatality. He figure out the trade-off terms called the value of a "statistical" life which is intended to make clearly in living life. Orley Ashenfelter (2006), "Measuring the value of a statistical life: Problems and prospects", NBER Working Series Paper, working paper 11916, pp.2)
The value of preventing fatality and the value of statistical life maybe less or huge in real life, but there is hard to get imagination in it. In the chapter one, there provided the statistic chart in mathematics.
3.3 Value of Statist Life (VSL) and application
Orley (2006) assumed the calculation method for VSL to make matter concrete, suppose involves an increase of at least a constant in wealth in return for an increase in the probability of a fatality. Then the constant divided by the probability of fatality, which is an acceptable trade-off for the VSL. It described by this particular fatality risk. VSL is not a constant and certainly be expected to depend on the level of person's wealth which is evaluated and perhaps many other factors, including personal preferences. (Orley Ashenfelter (2006), "Measuring the value of a statistical life: Problems and prospects", NBER Working Series Paper, working paper 11916, pp.3 - 6)
The VSL used for several conditions such as Traffic safety decision, benefit-cost analysis of environmental regulations and Medical interventions and technology.
In Traffic safety decision, Orley (2006) mentioned the earliest use of VSL estimates, and an area that remains of great practical importance, is in the design of highways. The government highway departments throughout the world engage in an analysis of two fundamental considerations virtually daily: (1) the best way to allocate resources to reduce traffic fatalities within a given budget; (2) budget sufficient used in the traffic safety and is there need pay more for traffic safety to reduce the fatalities.
In benefit-cost analysis of environmental regulations, Orley (2006) mentioned the Environmental Protection Agency commonly applies of the VSL concept in the evaluation of the costs of environmental health and safety risks. The basic idea is to estimate fatality risks in different environmental hazard and special conditions where the cost of an additional life saved is greater than VSL. The application method is same as use of the VSL as in the analysis of traffic safety, even though in different terms and it leads some of calculators into different conclusion about the merits of the approach.
In medical interventions and technology, Orley (2006) mentioned the use of VSL in medicine is much the same as in the areas discussed above, though measures of the value of life saved take their own special dimensions. In case, the adoption of a medical procedure is justified if its cost is low enough compared to the life years it saves.
It has been just thirty years during which economists have defined, quantified, and critiqued the operational definition of safety risks summarized as the value of a Statistical Life. (Orley Ashenfelter (2006), "Measuring the value of a statistical life: Problems and prospects", NBER Working Series Paper, working paper 11916, pp.6 - 9)
As above mentioned, the idea used in different scenarios such as traffic, environmental and medical. Here will apply into construction safety, the scenarios are similarly and suitable in cases.
3.4 Willingness to pay (WTP)
Willingness to pay surveys is one of measurement method, which is used to measure the benefit of health and life saving programs. However, the reliability and validity of survey responses to questions concerning the reduction of fatality or injury risks have been questioned.
Muller and Reutzel (1984) think that the WTP measure is appealing since it is intended to reflect qualities and quantities that are difficult if not impossible to measure.
"The measure incorporates the individual's preference for risk aversion, valuation of pain and suffering, preference of postponing death, and appreciation of reducing risks to life and health by small amounts."
Muller and Reutzel (1984) researched that there is no relationship was found between willingness to pay responses and variables reflecting respondent's rational considerations.
"The result seem to be due to the mistaken assumptions that people employ rational considerations when responding to willingness to pay questions and that they are capable of matching their responses with functional relationship underlying implied value of life calculation". (American Journal of Public Health (1984), Vol. 74, pp.808 - 810.)
Individuals' willingness to pay (WTP) that is dominant approach nowadays, this approach assumes that individuals' preferences are the basis for economic welfare.
Dreze (1962) think that the WTP-approach to value mortality risk reduction was introduced as following.
"Dreze's Paper was written in French and the concept became widely known only after Schelling (1968)'s seminal paper. The theoretical foundation of the concept was further developed within the expected utility framework by Mishan (1971) and Jones-Lee (1974). A key contributor to the empirical literature on VSL is Viscusi, in particular for his analysis of compensating wage differentialsâ€¦" (Viscusi, 1993; Viscusi and Aldy, 2003). (Henrik Andersson (2004), "The Value if a Statistical Life", Swedish National Road & Transport Research Institute, pp.2 - 3)
In economics, the willingness to pay (WTP) defined that most of people rather to pay, sacrifice or exchanging for goods.
The WTP will apply in the study.
3.5 Financial costs of construction accidents
Financial costs of construction accidents is a most concern items in a project, incurred by private investors, such as contractors, due to the occurrence of the accidents.
In financial analysis, Tang ( 2003) think that:
"â€¦there are markets prices are always used to represent benefits and cost a number of studies concerning accident costs (e.g., Heinrich et al., 1980; Lee, 1991; Levitt and Samelson, 1993)." The following financial losses are used in the research carried out by Tang, Lee and Wong (1997):
Loss due to the injury person
The compensation paid to the injured worker by the contractor is 4/5 of the wages of the injured person for each day of absence from work.
Disability compensation, which depends on the percentage of disability (determined by a registered doctor) that the injured worker suffers.
Loss due to inefficiency of the worker who has just recovered from injured and resumed work
When the injured worker returns to wok, he cannot initially work with 100% efficiency
A formula to calculate the loss is as follows, which is based on the absence from work.
Loss = Wages of injured worker x (Day loss x 1/20 + % of disability)
Loss due to medical expenses
Medical expenses of the injured worker, including the cost of transport to and from hospital
Loss due to fines and legal expenses
If the contractor faces prosecution, he may have to pay the solicitor's fees and fines imposed by the court
Loss of productivity of other employees
The safety officer, site agent, site engineer and the foreman may be involved in assisting the injured and carrying out work relating to the accident such as accident investigation and accident report writing
Other workers may have to stop work immediately after the occurrence of the accident
Loss assumptions (based on the experience of site safety staff interviewed):
Site agent: 0.05 day
Site engineer: 0.05 day
Foreman: 0.25 day
Other workers: 0.25 day for each worker and on average 4 other workers are involved in each accident
Loss due to damaged equipment or plant
Loss due to damaged materials or finished work
Loss due to idle machinery or equipment
After the accident has occurred, the workers may stop work temporarily and hence there will be idle machinery or equipment
Loss formula is based on the assumption that 20% of the contract of the contract sum is attributable to plant and equipment and that 2% of the plant and equipment will be idle on the day of accident:
Loss = Contract sum x 20% x 2% / Number of working days of the contract
Figure 2 the questionnaire used in the research to acquire data on the financial costs of accidents. Readers should note that insurance premium, particularly the additional premium paid to an insurance company by a contractor when his safety record is poor, represents financial cost. This is, however, extremely difficult to quantify and therefore is not considered in the research, which is inevitably a drawback. On the other hand, the insurance payment is the financial costs and not social costs. Social costs will be discussed as below. (S.W. Poon, S.L.Tang, Francis K.W.Wong (2008), "Management and economics of construction safety in Hong Kong", Hong Kong University Press, pp.120-121)
According the above assumptions, they will be using in the calculation in Chapter 5.
3.6 Financial costs versus social costs
This is the basic definition of social costs.
Ngai and Tang (1999) have attempted to compare the differences between financial costs and social costs, and to discover what the social costs of construction accidents are.
"Social costs are reckoned as the cost incurred by the society because additional resources are required to be utilized when construction accidents occur. If there were no accidents, the utilization of these society's resources could have been saved".
The objectives are to report on a study carried out in 2002 to 2004 (Tang et al., 2004), and include the following:
Identify from a list of contractors' financial losses, based on the previous work of Tang et al. (1997), what financial losses are also social costs and what are not
Identify other social costs borne by the society that are not contractors' losses
Identify social safety investment in the construction industry
Gather cost data on those identified in objectives 1, 2, and 3 in Hong Kong for 1999, 2000, 2001
Analyze the data gathered and establish a relationship between the social safety investment and the social costs of accidents for the construction industry in Hong Kong
(S.W. Poon, S.L.Tang, Francis K.W.Wong (2008), "Management and economics of construction safety in Hong Kong", Hong Kong University Press, pp.131-132)
According above ideas, this study set and figures out the cost of financial and social, the cost of preventing accident to define the Cost-benefit Analysis and willingness to pay.
3.7 Cost-benefit analysis (CBA or BCA)
Cost-benefit analysis is a term that refers both to assist and showings appraise, or assess, the case for a project, programme or policy proposal. It used an approach to making economic decision of any kind mainly.
The definitions of the process involved explicitly or implicitly, weighting the total expected costs against the total expected benefits of one or more actions in order to choose the best or most profitable option. The formal process is often referred to as either CBA (Cost-Benefit Analysis) or BCA (Benefit-Cost Analysis).
"Benefits and costs are often expressed in money terms, and are adjusted for the time value of money, so that all flows of benefits and flows of project costs over time (which tend to occur at different points in time) are expressed on a common basis in terms of their "present value". Closely related, but slightly different, formal techniques include cost-effectiveness analysis, economic impact analysis, fiscal impact analysis and Social Return on Investment (SROI) analysis. The latter builds upon the logic of cost- benefit analysis, but differs in that it is explicitly designed to inform the practical decision-making of enterprise managers and investors focused on optimizing their social and environmental impacts. Cost-benefit Analysis is also used in Decision Architecture to justify investment decisions." (http://en.wikipedia.org/wiki/Cost-benefit_anaylsis)
The concept of Cost-benefit analysis will apply in the objective and calculation.
3.8 Non-fatal accident cases
Non-fatal accident cases defined as injury cases or otherwise by Tang (2008) as following:
3.8.1 Material damages
Judges based on below information to calculate some of monetary values, rates or prices. The awards are clearly meant to compensate for monetary losses or expenses incurred as a result of the accident injury.
3.8.2 Loss of earnings
Loss of earnings reflects the losses suffered by the victim because of incapacity resulting from the accident. Many such claims arise from the fact that the accident victim could only return to sedentary jobs. Courts would award damages at the pre-trial rate of earnings for and Tang (2008) defined as following:
The period of sick leave
Some reasonable period of time to solicit and find a sedentary job, provided that the victim has made reasonable effort to find work
Then for the period of partial incapacity where the victim may be carrying out sedentary employment, the court would award the difference between the pre-trial rate of earnings and the income from the sedentary employment. Where documentary proof of employment and earnings are not available, judges have often worked on the basis of national incomes according to figures published by Census and Statistics Department in Hong Kong. Judges would also make allowance for inflation, gradual increases in salaries, promotions and so on.
3.8.3 Loss of earning capacity
This is an award made on the basis that, in the future, the victim may lose his job and, because of the injury, he may be at a disadvantage in the job market. To a person suffering from permanent partial incapacity, it is typical for judges to make an award equivalent to several months pay at the rate of national monthly income.
3.8.4 Losses of personal property
The victim may lose the clothes worn at the time of the accident and other personal belongings. This is usually a very nominal sum often awarded without being contested by the defendant.
3.8.5 Medical expenses and miscellaneous expenses
These include items such as hospitalization, travelling, expenses, wheel chairs, walking aids, diapers, bedpans, care giver salaries, physiotherapy treatment, exercising aids, tonics and nutrition products, traditional herbal medicines, and so on.
Often immediate family members may have to give up their employment or take up part-time work in lieu of full-time work, so as to be able to take care of injured person. Such losses are also paid under this heading. (S.W. Poon, S.L.Tang, Francis K.W.Wong (2008), "Management and economics of construction safety in Hong Kong", Hong Kong University Press, pp.153-154)
Above idea defined the terms in the chapter 5 and application.
3.9 Non-material damages in non-fatal accident cases
The following non-material damages are not calculated by judges based on any monetary values, rate of prices. The awards are clearly meant to compensate for damages that cannot be easily estimated in monetary terms.
3.9.1 Pain, suffering and loss of amenities (PSLA)
An accident victim may undergo pain and suffering as a result of the injury. Loss of amenities refers to inability to engage in and enjoy family and social life due to the injury, e.g., carrying one's children and playing with them, engaging in sport and recreational activities and so on. The authors, in the process of studying the cases, have observed some claimants supporting their claims by stating that they used to swim, play basketball and so on.
There is no easy way that PSLA damages could be calculated. Nevertheless, judges have to maintain the consistency of awards made by the courts. Therefore, they refer to judgments of cases decided in the past, compare the severity of the mental and physical conditions of the victim resulting from injuries, compare the ages and family situations of the cases (i.e., whether there are young children), consider changes in the monetary values in the society (i.e., inflation or deflection), and so on to deliver a value to be awarded. It is considered in Every v Miles (1964).
Hence, victim of different categories of injuries receive different PSLA (pain, suffering and loss of amenities) awards from the court. And this part is lack of information and just for information only.
3.9.2 Loss of society
This is an award made (under Law Amendment and Reform (Consolidation) Ordinance (LARCO), Cap 23 Clause 20C) to immediate family members (especially the spouse) of seriously injured persons (usually in the Disaster category given above), who suffer loss of companionship, for example, due to brain damage sustained by the victim (LARCO, 1998). To be eligible to receive such award, the recipient should survive 30 days after the cause of the loss of society (i.e., the date of the accident). The value so awarded is subject to a maximum of HK$150,000 at present (although the maximum used to be HK$100,000 before 4 September 1998). Non-fatal accident cases Nos.7 and 27 presented are examples of this award made. (S.W. Poon, S.L.Tang, Francis K.W.Wong (2008), "Management and economics of construction safety in Hong Kong", Hong Kong University Press, pp.155-156)
3.10 Fatal accident cases
Similar to the non-fatal cases, all of the following material damages are calculated by judges based on some monetary values, rates and prices. The awards are clearly meant to compensate for monetary losses or expenses incurred as result of the death.
3.10.1 Loss of dependency
By this award, the dependents are remedied for the loss of financial support they would receive had the victim lived until natural death. Dependents may include spouse, unmarried children, aged parents and in some cases even siblings who need to depend on the victim. Judges would consider contributions to household expenses, likely increase in expenses as the children grow up (e.g., need for education), and so on. The number of years of dependency for each dependent would be adjudged based upon the age of the individual. The authors have observed that claimants, at times, would present documents to prove children's good performance at school to indicate that they are promising individual who, had the victim lived, are likely to be supported through tertiary education. Judges would also make all allowances for inflation, gradual increases in salaries and promotions the victim may receive, and so on.
3.10.2 Loss of accumulation of wealth
This award attempted to remedy losses to the deceased's estate due to the untimely death. In deciding the value of this award, judges would check whether the decreased has a pattern of saving and investing, had responsible attitudes towards life such as taking insurance policies, being free from gambling and alcoholism, and so on. Further, judges may discount these figure by an amount say 5% to 22% (value being higher for higher estimates of wealth accumulation) on the basis that a person may spend some of the wealth accumulated to live out the retirement, and the more a person ha in retirement funds, the more that person is likely to be spending during retirement years while enjoying sufficient financial security.
3.10.3 Loss of earning of the immediate family members
Due to the death of a prominent contributor to the family, immediate family members at the times may have to give up their employment or take up part-time work in lieu of full-time work so as to be able to take care of the children or elderly parents. Such losses are paid under this heading.
3.10.4 Loss of personal property
The victim may lose the clothes worn at the time of the accident and other personal belongings. This is usually a very nominal sum often awarded without being contested by the defendant.
3.10.5 Funeral expenses
The actual full value of the funeral expenses is paid to the family. Court decision becomes easy when receipts of the expenses are submitted as documentary support.
3.10.6 Loss of services
On the death of a husband, a wife loses the handy man at home who would attend to all the repairs, anything heavy to be moved and so on, requiring her to employ outsiders for that purpose. On the death of a father, children lose the person who would take them to school safely, take them to see places, etc., and the mother may need to employ outsiders to attend to such needs. On the death of a wife, a husband would need to employ outsiders to attend to housekeeping, child minding, cooking and so on. Such losses are remedied by the award for the Loss of Services as provided in the LARCO (1998), Cap 23, Clause 20C. (S.W. Poon, S.L.Tang, Francis K.W.Wong (2008), "Management and economics of construction safety in Hong Kong", Hong Kong University Press, pp.156-157)
3.11 Non-material damages in fatal accident cases
This non-material damage is not calculated by the judges based on any monetary value. The award, stipulated in the Fatal Accidents Ordinance (1997) (FAO), Cap 22, Section 4, is clearly meant to compensate the grief suffered by the family members who survive the decreased for not less than 30 days. The value of compensation to be awarded is also stipulated in the FAO, being HK$150,000 at present, although it used to be only HK$70,000 before 30 June 1997 (at the time of death of almost all the victims in the fatal cases studied under this research). (S.W. Poon, S.L.Tang, Francis K.W.Wong (2008), "Management and economics of construction safety in Hong Kong", Hong Kong University Press, pp.158)