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Too good to be true?

The HSE claims that CDM 2007 will benefit the industry to the tune of £5.9bn. But critics and supporters alike say its analysis is flawed.

In the turbulent pool that is CDM 2007 all eyes are on the costs and benefits of the controversial revisions. The Health & Safety Executive (HSE) claims that the new regulations, in the best instance, will save the industry £2.7bn through reduced bureaucracy and benefit the industry to the tune of £3.2bn through reduced loss of working time. Although it admits that in the worst case scenerio the new regulations will cost the industry £660M.

Consultant homasons principal engineer Alasdair Beal says: 'The figures are based on the higher [Engineering Construction Industry Association (ECIA)] estimate of safety benefits, that is that CDM 2007 will reduce deaths and injuries by half. It is also assumed that CDM 2007 will reduce construction costs by 3% across the board and drastically reduce the cost of competence assessments for co-ordinators, designers and contractors. These are all highly optimistic assumptions that are unlikely to be realised in practice.

'On top of this, the costs of training and recruiting coordinators to meet the new requirements and the cost of coordinators' fees have both been seriously underestimated.' Beal explains: 'If the assumed effi ciency benefits and reduction in competence assessment costs do not happen, then the cost increases to £1.1bn? £2.6bn. If co-ordinator fees are 25% higher than existing planning supervisor fees to reflect their increased duties and if the cost of retraining and recruiting coordinators is typically £5,000 each, rather than the assumed £400?£800 each, then the total cost becomes £1.2bn?£2.8bn.

'This compares with the estimated benefit from reduced accidents of £740M?£3.2bn.

However, this is also based on assumptions about safety benefits that are unlikely to occur in practice. Therefore we are faced with estimated costs over 10 years of up to £2.8bn, but there may be no benefits at all.

The HSE stands by its figures, but even some ardent supporters of the new regulations doubt their validity.

BBC principal risk manager Mark Poole is a great believer in the regulation revisions but he warns that the HSE's figures 'do not reveal the full cost'. He adds that clients' cost increases could be as much as 30%.

The debate over benefits stems from the HSE's use of ECIA accident data. Accidents in general construction were compared with those in sites run by the ECIA, which is dominated by large companies from petrochemical and pharmaceutical industries. The accident rate on their projects averages less than half that of construction in general.

'It is assumed that if CDM is fully applied, this will reduce accidents on general construction sites to the same level as on ECIA sites - a 55% reduction in deaths and injuries.

'This remarkable assumption is made without any specific analysis to show why this should happen, even though the report acknowledges that 'ECIA projects are not a representative sample of all construction projects'.

'It is assumed that compliance with CDM 1994 is achieving 45%?50% of this and that CDM 2007 will increase compliance to 55%?60% - a 10%?33% increase in compliance. The study then goes on to estimate the benefits of CDM 2007 by assuming that it will achieve 10%?35% of the full 55% accident reduction. That is a reduction in deaths and injuries of 6%?18%, which equates to a benefit of £700M?£3.2bn over 10 years.

'The problem with this 'estimate' is that it is based on an assumption multiplied by an assumption.

'This is easily demonstrated by looking at the figures for CDM 1994. If the analysis is correct, then CDM 1994 should have reduced site deaths and injuries by 0.45-0.5 times 55%, which equals 25%?28%. In fact CDM 1994 produced no reduction in site deaths and injuries at all.

'Therefore this analysis gives no reason to expect any reduction in deaths and injuries at all, in which case the assumed £700M?£3.2bn benefit over 10 years will not occur.

'A second analysis was based on the Influence Network Approach, which involved holding a forum held at the HSE.

'The participants in the forum estimated that 100% compliance with CDM would reduce site risks by 34%.

'As in the first estimate, it is assumed that the new regulations will be easier to understand and this will increase compliance by 10%-33%. Then, 'assuming that this represents an increase in overall safety and multiplying these figures by the overall benefits. . .' they calculated the estimated benefits which would be produced by the new regulations to be £0.5bn?£2bn over 10 years.

'However, it is also fundamentally flawed. On the figures quoted in the RIA, CDM 1994 should have reduced deaths and injuries by 0.45-0.5 times 34%, which equals15%? 17%, but in fact there was no reduction at all.

'Second, as in the first case, CDM 2007 is not signifi cantly clearer than CDM 1994, so there is no reason to assume that compliance will increase. Putting these facts together, it can be seen that the £500M?£2bn over 10 years predicted by this method is also unlikely to occur.

'The quoted benefits of CDM 2007 are based on the assumption that it will greatly reduce site deaths and injuries.

However, the evidence suggests that this is unlikely to occur.'

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