The impact of the construction health and safety regulatory framework on construction costs.

Abstract

Historically, the construction industry has a poor health and safety (H&S) performance track record, and governments and industry bodies globally acknowledged that construction has an undesirable accident record and that persistently poor H&S records continue to hinder performance improvement. In response, H&S regulations have been introduced and subjected to major revisions during the last four decades as H&S regulations have been seen to be crucial to reducing construction accidents and improving H&S performance overall. Arguably, there has been resistance from the industry to fully implement the provisions of the legislation because of the perception particularly of contractors that the associated costs may result in noncompetitive bidding resulting in lost work opportunities and that there was still non-facilitation of equitable pricing of H&S within the construction industry. Since the introduction of very specific H&S regulations in the South African construction industry, there are, as far as the researcher is aware, very few, if any, studies which have quantified the cost of the implementation of the provisions of this legislation. The research was done to investigate the magnitude of the additional construction costs as a result of the implementation of the provisions of the current H&S regulatory framework in South Africa resulting in all construction project participants not being aware of how much would be adequate for the H&S provisions required. The purpose of the research was to determine whether the H&S framework had requirements that involve cost, whether contractors implemented the requirements of the H&S framework, whether implementation of the H&S framework increased the cost of construction, and to what extent did the implementation of the H&S framework increase the cost of construction. A blended research approach was adopted which included both quantitative and qualitative methods such as questionnaire surveys and case studies which were then triangulated. A sample of 30 contractors were surveyed and 3 organisations were interviewed to determine the impact of the construction health and safety regulatory framework on construction costs. The research was limited because the findings were based on a sample of contractors in the KwaZulu-Natal Province, South Africa, the study was conducted over a period of twelve months and the study focused on the impact of the H&S regulatory framework implementation by the contractor only. The study did not include H&S costs pertaining to sustainable building, impact on indirect costs related to construction H&S, impact of H&S regulations pertaining to design and build projects and impact of standard forms of contract on the costs related to construction H&S. The findings provide an indication of the trend in financial allowance by industry practitioners for construction health and safety on their projects. The study found that complying with the provisions of the legislative framework namely OHS Act, Construction Regulations and COID, had a moderate impact on the overall cost of construction. The impact had resulted in a reported 10% increase in construction costs. Further, in the absence of specifically accounting for all associated costs related to health and safety it is difficult to accurately determine what the financial provision is and whether the allowances are adequate. The findings indicated that a lack of knowledge of the industry of the necessary financial provision existed for effective management of construction H&S. The study found that many of the construction H&S cost requirements as extrapolated from the legislation were not tracked. The findings of this study have implications for the level of financial provision that is adequate for effective management of construction health and safety. The findings of the study will enable industry stakeholders to have a deeper understanding of the underpinning philosophy of the regulations derived from a combination of prescriptive and performance legislation which will have an impact on the calculation of the cost of compliance. Sustainability of the construction industry will be improved through the understanding and knowledge of the implementation costs of the H&S framework. From the findings of the study, it can be concluded that the H&S framework has requirements that involve cost. However, the knowledge and awareness deficiency results in possible inadequate financial provision for H&S in competitive bids or on projects. Further, clients are not in a position to comply with the framework that requires them to ensure that contractors have made adequate financial provision for H&S because of no uniform approach to allowing contractors to price for H&S.