Guide

What Is The ROI of Safety Management Software?

Safety Management Software or HSEQ software has become a necessary investment for any business in a high-risk industry, managing multiple contractors/onsite and remote workers and requiring a management system for compliance.

While traditional Health & Safety processes have previously been managed via pen and paper/spreadsheets and non-HSEQ specific software, there has been a significant shift over the last few years towards HSEQ software as businesses across the world look to simplify, automate and draw insights from their WHS processes.

As a result, businesses are starting to understand and unpack the true value of HSEQ software beyond a simple ROI calculation.

This document is created specifically for CFOs, Company Accountants and Senior Accounting/Financial Managers to showcase how implementing a HSEQ solution goes beyond a simple ROI calculation.

Section 1:

The TRUE cost of an unsafe workplace

Before calculating the ROI from implementing a safety management software solution, it’s important to understand the TRUE cost of an unsafe workplace.

Cost of workplace Accidents

the statitics have been 

Injuries

$61.8 million per year

120,355 serious claims

$13,200.00 on average per claim

On average, 6.6 weeks is lost per injured worker

Fatalities

The lump sum death benefit amount in the event of death as a result of a work-related injury/accident is $862,350 as of 1 April 2022.

1.5 fatalities per 100,000 workers

Personal Liability

Directors, owners, managers and senior workers can face seven-figure penalties and potential jail time for negligence. Furthermore, Boards are being held liable where the HSEQ processes they have in place are deemed to be insufficient/inappropriate

Cost of project delays and overrun

In high-risk industries such as Mining, Construction or Manufacturing, a project delay can be caused by an unwanted event such as a WHS incident, non-conformance or breach of compliance can be extremely costly. 

As a result, project delays and overruns can mean a business will lose out on some profits. With an unsafe and inefficient workplace, the following are examples of HSEQ-related project delays:

  • WHS Injuries/Incidents leading to site shutdown as WorkSafe investigates 
  • Non-conformance
  • Inefficient use of worker's time:
    • Slow and non-digitised induction processes
    • Accessibility of WHS policies, procedures and documentation such as SWMS, SDS, JSA's, etc.
    • Accessibility of worker documentation, licences and records
    • Access to data
  • Failure to Meet compliance and legislation requirements

Example cost of project delays:

$2.5 million project completed over 1 year (280 days working days in a year)

= $50,000/week in project delays

Loss of Reputation

Reputational damage is one of those grey areas of business that is not easily quantifiable until it starts to truly affect the bottom line. 

Reputational management is a larger element of overall business strategy but plays a significant role in winning and retaining client work.

An unsafe workplace that does not value a safety culture can have a direct impact not only its current employees but also attracting new ones. This is also true for attracting clients and working with partners. No one wants to work with or for a company that has a reputation for unsafe work practices.

WHS causes of reputational damage:

  • Workplace incidents and fatalities
  • Inefficient induction processes for employees and contractors
  • Compliance and legislation audit failures
Outcome of reputational damage:
  • Future Work - Struggle-winning work - most high-volume work is tender based
  • Margins - Margins decreased/less competitive
  • COGS - Cost of goods and labour increased
  • Talent - Talent retention/future recruitment struggles

Rise in Insurance Premiums

No one wants a recorded workplace incident or fatality. And to make matters worse, the aftermath of this unwanted event can have an extra hidden financial burden on your business. A rise in insurance premium

Every business, regardless of the level of risk, is required to have certain insurance. For example, in Australia, your business should have Workers’ Compensation Insurance and Public Liability Insurance.

 

How are premiums calculated?

Quite simply, an employer’s WorkCover premium is calculated according to their employee's occupation type and the employer’s claim history.

 How does a workplace claim affect your insurance premium?

After a workplace claim, regardless of negligence on employer or employee behalf, you face the reality of insurance premiums increasing year on year.

How to Reducing premiums with a proactive approach

Some Insurance agencies will offer up to 10% off Insurance if you take a proactive approach to minimising risks and if you have a good track record with no claims 

Section 2:

Measuring ROI from Safety Software

Measuring the return on investment (ROI) from any software implementation can be challenging.

HSEQ software provides immediate benefits, such as automating previously manual processes but also has significant indirect returns.

Direct ROI

Immediate return of reducing risk, automating processes and minimising resources.

The most important financial impact HSEQ software makes is automating manual and inefficient business processes.

Automating data entry, inductions, registrations, training, document scanning and reporting.

HSEQ Manager

The average HSEQ Manager’s Salary is $100,000+

Save 2 hours p/d

=$673.07 per week

$34,999.64 saved per year

Subcontractor

Average subcontractor salary = $37.68 p/h

Save 3 hour p/w

= $133.04 p/w

X 25 contractors

= $2,826.00 saved per week

Indirect ROI

Indirect ROI is a form of return that is not easily calculated. It's hard to put a monetary value on Indirect ROI as it varies per business and could be a long-term ROI. 

Indirect returns from minimising all areas set out in the previous section (project delays, reputational damage, etc.) 

 

Reputation:

Risk free partner of choice

this leads to the ability to win more jobs and becoming a preferred supplier

Talent retention

Retain and attract better talent as workers feel less worried about incidents and risk

Net Promoter Score (NPS)

NPS can be enhanced as your relationships with clients improves due to a less risker relationship 

Resources/processes:

Automating compliance

Automating third-party Audits and ISO compliance 

HR/Admin

Less time is required to recruit and train employees

Section 3:

The costs of getting it wrong

One of the most crucial elements to getting a positive ROI from software is ensuring that you choose the right solution. Unfortunately, there are hidden costs associated with choosing the wrong software provider. 

These can be hidden implementation costs that were not disclosed upon discovery or additional costs to bottom line performance.

 

 

Hidden Implementation Costs

Unfortunately, not all software vendors are transparent with their pricing. As a result, they might accidentally leave out valuable information that is required to get the solution up to scratch. 

Here's how Lucidity provides a transparent sales process compared to how others manage their pricing. 

Lucidity Other HSEQ Software






Additional costs outside of subscription/licencing
Add-ons
Add ons are disclosed in proposal
Sometimes hidden in after-sales pricing, such as integrations
Implementation
Added as an additional line item to every Lucidity implementation
Sometimes overlooked via “off-the-shelf” software
Upgrades
Upgrades are a part of every Lucidity instance
Some providers charge additional fees for upgrading versions
Usage and Users
Lucidity charges annually and does not charge usage
Usage and Users grow quickly making monthly budgeting challenging
 

Hidden Additional Costs

With any investment for a business, there is a chance that there will be indirect associated costs. Software is no different. However, if you choose the right provider with a proven track record of long-term clients, implementation and change management, you start to minimise these risks:

Re-Implementation:

Re-Implementation occurs when businesses choose a solution that wasn't the right fit or they will outgrow in the next few years.

Change management:

The hidden costs of change management could lead into the millions depending on your operations.

Staff training/learning:

If the HSEQ product doesn't have sufficient training and learning resources, this will fall upon your internal resources.

Ready to see how Lucidity can help you?

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