Introduction
Ensuring safety in the construction industry has long been perceived as a cost of doing business, an essential but non-revenue generating necessity. However, what if we reframe this perspective? What if we view safety not just as a moral and legal obligation, but as an opportunity for financial return?
This is where Scratchie comes in. As a safety rewards platform, Scratchie not only boosts safety attitudes and culture but also delivers a tangible return on investment (ROI) across a variety of project sizes. In this post, we will delve into an analysis of Scratchie's ROI on a representative $50 million construction project.
While we've chosen this project value for the purpose of this analysis, it's important to note that Scratchie's benefits extend across a wide range of project values, with larger projects offering even greater returns as the cost of Scratchie becomes a smaller proportion of the total project cost.
The Cost of Accidents in Construction Projects
Before we can appreciate the value Scratchie brings, we need to understand the potential costs it helps mitigate. Every construction project, regardless of its size or nature, carries the risk of accidents. According to a study by Ryan W. Allison, Carol K.H. Hon, Bo Xia, the average accident rate for construction projects is around 3.1 accidents per 100 workers per year.
For our hypothetical $50 million project employing 500 workers over the course of a year, we can use this rate to estimate that we could anticipate around 15-16 accidents.
The average cost of construction accidents, as mentioned in the same study, ranges from $2,040 for a short absence to $6,024,517 for an accident resulting in full incapacitation.
For our analysis, let's assume that most accidents result in short absences or minor injuries, putting the average cost per accident around $15,000, the midpoint between $10,000 and $20,000.
Based on these figures, the total cost for construction accidents during a twelve-month period for our $50 million project would be approximately $225,000 - $240,000 (15-16 accidents x $15,000). These are significant numbers, and this is where Scratchie starts to demonstrate its value.
But before we delve into the direct financial implications of Scratchie, let's first understand what Scratchie is all about and how it impacts the culture and attitudes towards safety.
Scratchie: A Catalyst for Positive Safety Attitudes
Scratchie is an innovative safety rewards platform that revolutionises the way safety is perceived on construction sites. By rewarding safe behaviour and promoting positive safety attitudes, Scratchie fundamentally transforms safety culture in the workplace. It is not just another safety system; instead, it complements existing safety systems, enhancing their effectiveness.
Scratchie operates on a simple, yet powerful, premise: rewarding safe behaviour encourages more of the same. Its function is to motivate workers to be more safety-conscious, and it does this by issuing on-the-spot rewards for specific safety activities. The net effect is a more engaged, safety-conscious workforce, which leads to fewer accidents and a safer, more productive work environment.
How Scratchie Reduces Construction Accidents and Associated Costs
One of the key benefits of Scratchie is its ability to reduce the number of accidents on a construction site. In an industry where the average accident rate is 3.1 accidents per 100 workers per year, Scratchie has shown to improve safety attitudes by an impressive 28%.
Applying this improvement to our $50 million project, a 28% reduction in the number of accidents translates into a significant cost saving. This reduction means a decrease in the anticipated number of accidents from 15-16 down to around 11, leading to savings of approximately $60,000 to $75,000 per annum, or roughly $5,000 per month.
Enhancing Labour Productivity: The Morale-Productivity Connection
The morale boost from rewards and recognition can also have a substantial impact on labour productivity. Onsite labour is typically estimated to be around 30-40% of the total construction cost. For our $50 million project running over 18 months, with an average monthly turnover of $2.77 million, this amounts to a labour component of $831K per month.
If we consider a conservative 2.5% improvement in labour productivity due to the morale boost from Scratchie's rewards and recognition, this translates into a substantial return of $20,775 per month. This figure alone is over four times the average wallet size for a $50 million project, further highlighting Scratchie's significant ROI potential.
Dealflow Improvement: Winning More Bids with Scratchie
When it comes to bidding for new projects, demonstrating a strong commitment to safety can significantly increase your chances of success. Large clients and government agencies are increasingly asking for information about builders' safety methods and factoring these into their bid evaluations.
An average tender costs around $100K to submit, with builders typically winning one in six bids, or 17%. If Scratchie can improve the chance of winning a bid by just 5%, this results in a savings of $133,689.84 per project won. Amortised over the 18-month duration of our hypothetical $50 million project, this represents a monthly saving of approximately $7,427.
The additional savings contribute to the expected net profit of 2.5% for the project, further enhancing Scratchie's return on investment. The compelling safety data provided by Scratchie can make your bid stand out from the competition, leading to improved dealflow and profitability.
Scratchie's ROI: A Winning Proposition
With all these savings taken into account, Scratchie's ROI becomes crystal clear. Between time savings for site managers, accident reduction, productivity improvement, and dealflow enhancement, your investment in Scratchie can pay off many times over.
Let's consider the cumulative savings per month:
- Time savings: $8,000
- Accident reduction: $5,000
- Labour productivity improvement: $20,775
- Dealflow improvement: $7,427
These savings amount to $41,202 per month. On a project of $50 million running over 18 months, with an average wallet size of $5,000 per month, this represents an 8.24X return on your Scratchie investment.
But the financial benefits are only part of the story. The true value of Scratchie lies in the creation of a safer, more motivated workforce, which in turn leads to a stronger, more resilient company. By reinforcing positive safety behaviours, Scratchie helps you build a culture of safety that benefits everyone involved — from the workers on the ground to the project managers and company executives.
Furthermore, as the project size increases, the cost of Scratchie decreases relative to the project size, resulting in an even greater ROI. Scratchie isn't just a safety rewards program — it's a strategic investment in your company's future.
Whether you're running a $1 million or a $1 billion project, if you're serious about safety and productivity, Scratchie is a solution that pays for itself — and then some. It's time to rethink safety, productivity, and morale in construction.
So, when planning your next project, remember, Scratchie doesn't cost - it pays.
FAQ
How can a rewards program like Scratchie improve safety in construction?
Scratchie is designed to encourage positive safety behaviour on construction sites by offering on-the-spot rewards. By incentivising and recognising safe practices, Scratchie not only enhances adherence to safety protocols but also helps foster a stronger safety culture within teams.
Can Scratchie integrate with our existing safety management systems?
Yes, Scratchie can integrate with many existing safety management systems like Procore and Hammertech. This integration allows for the seamless issuance of rewards through your existing platform, augmenting your current safety strategies without requiring you to replace them.
What is the return on investment (ROI) for implementing Scratchie in a construction project?
The ROI for Scratchie can be substantial. For an example $50 million project, the ROI can be as high as 8 times the cost of implementing Scratchie. This is derived from savings in managerial time, accident reduction, productivity improvements, and enhanced dealflow.
Can Scratchie help us win more construction bids?
Yes, Scratchie can improve your chances of winning bids. Large clients and government bodies increasingly ask for evidence of strong safety practices when awarding contracts. Having Scratchie in your safety arsenal can demonstrate your commitment to safety, potentially increasing your success rate in tenders.
Does Scratchie offer rewards based on specific safety activities or behaviours?
Yes, Scratchie issues rewards based on specific safety behaviours or activities. This targeted approach allows you to promote specific safety behaviours within your team, such as fall prevention or tidiness, and adapt the reward categories to your unique safety needs and regulations.
