Brian B. Bethel, CIH
This presentation contains no
Sikorsky Aircraft
technical data subject to EAR or ITAR
This presentation contains no
technical data subject to EAR or
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Management commitment - The TRICK
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Employee engagement - The ART
• Making employees agents of change not
change responders
Effective risk engineering - The SCIENCE
• Recognition
• Evaluation
• Control
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This presentation contains no
technical data subject to EAR or
This presentation contains no
technical data subject to EAR or
Why Are We Here?
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Decisions to move forward
with EHS projects are no
longer based solely on sound
technical judgment
This presentation contains no
technical data subject to EAR or
Their Language
This presentation contains no
technical data subject to EAR or
Our Language
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Decisions to move forward with
EHS projects are no longer
based solely on sound technical
judgment
What do we need to Change?
• It is time to start thinking
more like businessmen and less
like scientists
This presentation contains no
technical data subject to EAR or
This presentation contains no
technical data subject to EAR or
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A measure used to describe the efficiency of an
investment over a set period of time
• Often 7 or 10 years
• In may corporations the time frame is 3 years
A tool used to compare the relative efficiency of
investment choices
This presentation contains no
technical data subject to EAR or
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Every organization emphasized their own set of
financial metrics
Learn which financial metrics are important in
your corporation
Common financial metrics include:
• Return on Investment
• Net Present Value
• Internal Rate of Return
• (Discounted) Payback Period
Meet with Finance / Cost Accounting / IE
This presentation contains no
technical data subject to EAR or
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Ratio of money gained to money invested
An ROI of 100% would mean you recovered all
the money you invested
 An ROI >100% would mean you gained
MORE than you spent
This presentation contains no
technical data subject to EAR or
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Measures how long something takes to "pay for
itself"
For example a $1000 investment which returned
$500 per year would have a two year payback
period
The time value of money is not taken into
account
Payback period is widely used because of its
ease of use despite recognized limitations
This presentation contains no
technical data subject to EAR or
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Similar to payback period in that it measures how
long something takes to "pay for itself“… BUT:
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Takes into account:
• The time value of money (inflation)
• The cost to borrow the money to make the
investment
• The loss of income you would have had if you
invested in a very secure security (Think T bills)
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DPP is a VERY common financial metric
This presentation contains no
technical data subject to EAR or
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IRR is an indicator of the efficiency, quality and
yield of an investment
Used to measure and compare the profitability
of investments
An IRR of 100% would mean you recovered all
the money you invested
 An ROI >100% would mean you gained
MORE than you spent
IRR is a VERY common financial metric
This presentation contains no
technical data subject to EAR or
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NPV compares the value of a dollar today to the
value of the same dollar in the future
Takes into account inflation and the increased
revenue gained through the investment
Reduced by the financial benefit gained by
investing that same money in a stable
investment (like T Bills)
Reported in $
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technical data subject to EAR or
“Does your boss know those
numbers”
“Which one of us wouldn’t
invest in a 90% payback”
Jeff Pino
President, Sikorsky Aircraft
2008 AIHce - Minneapolis
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technical data subject to EAR or
“That’s the case you have to
make”
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Learn how to mine cost data
• Direct costs are important
But
• Indirect & hidden costs usually are the make
or break data
This presentation contains no
technical data subject to EAR or
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Cost that are easily identified
• Injury costs (work comp loss data)
• PPE Costs (Procurement)
• Cost to purchase and install controls
• Consultant fees
• On and on
This presentation contains no
technical data subject to EAR or
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Medical costs
• Medical Lab fees
Employee time
Medical screening
• Fit testing
• Training
IH sampling costs
• Labor (in house)
• Lab
This presentation contains no
technical data subject to EAR or
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Time to administer a program
Time to administer a medical program
Time for supervisors to schedule medical
monitoring / training / fit testing
Time of employee covering when employee is
undergoing medical screening
• Often at overtime rates - Hidden costs in spades!!!
• Cost to operate local exhaust ventilation costs
Power to run the fans
Energy to condition makeup and exhausted air
Labor for housekeeping
This presentation contains no
technical data subject to EAR or
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Quality & labor improvements? – Cost or benefit
• Review process with
Industrial engineering
Cost accounting
Quality engineering
 Time study data
 Monitor material costs
 Cost of Poor Quality (COPQ) data
 Indirect time charging (DOI)
Rework reduction (quality engineering)
This presentation contains no
technical data subject to EAR or
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Learn how to calculate the financial metrics that
are important to your organization
This presentation contains no
technical data subject to EAR or
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Incorporate a financial person on your teams
• Buy them coffee
• Order them plush “ergonomic” office chairs
….Go to the internet
This presentation contains no
technical data subject to EAR or
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Various IH / EHS specific tools are available
ROHSEI – ORC Product
AIHA Value Proposition Tool
Or not!
Chances are your organization has a
program or a tool to do these calculations for
you
Enlist financial or IE resources
This presentation contains no
technical data subject to EAR or
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Two hearing conservation cases
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Why hearing conservation case studies??
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Because hearing conservation programs don’t
work!
This presentation contains no
technical data subject to EAR or
This presentation contains no
technical data subject to EAR or
This presentation contains no
technical data subject to EAR or
This presentation contains no
technical data subject to EAR or
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Machine shop environment
Dosimetery Indicates That Exposures Ranged
From 84 – 87 dB(A) For A Majority Of The
Employees
• As A Result, This HEP Was Enrolled In The
Hearing Conservation Program
Sound Mapping Indicated That Most Point
Noise Sources Were < 83 dB(A)
This presentation contains no
technical data subject to EAR or
DO NOT UNDERESTIMATE
THE CONTRIBUTION OF
COMPRESSED AIR NOISE TO
THE NOISE PROFILE OF A
MACHINIST
This presentation contains no
technical data subject to EAR or
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Substitute low noise air nozzles where possible
Reductions ranged from 8 – 15 dB(A)
Average machinist used compressed air for 8 – 12 min a
day
Expect to remove 75 employees from the HCP
Expect an initial investment of $12K for nozzles
This presentation contains no
technical data subject to EAR or
$12K Cost
Vs
 Value
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This presentation contains no
technical data subject to EAR or
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Hearing testing service reduction
• $1,200
Hearing loss awards
• At risk of 2 cases @ $25K
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Direct cost savings expected - $1.2K
Cost avoidance - $50K
Total savings expected ≈ 52.2K
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?? Why no hearing protection costs savings??
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This presentation contains no
technical data subject to EAR or
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Program administration annual costs savings
• HCP Program Admin (IH) – 40 Hrs
• Medical Admin (Medical) – 20 Hrs
• Supervisors Time – 75 Hrs (1 Hr per employee )
• Employee Time – 131.25 Hrs (1.75 Hrs for exam)
• STS Retests Labor – 9 Hrs
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How do we convert hours saved into Dollars???
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Simple… multiply by the labor rate… Right?
This presentation contains no
technical data subject to EAR or
Hourly Rate That Includes Overhead Costs
 Burdened Rate Equals
Employee Salary
+ Cost Of Employee Benefits
+ Paid Time Off
+ Insurance Costs
+ Taxes On Labor
+ Employees Share Of The Infrastructure Costs
• Obtain From Your IE Or Cost Accounting Organization
• Not Uncommon That The Burdened Rate Is 3X Wage
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This presentation contains no
technical data subject to EAR or
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Program administration annual costs savings
• HCP Program Admin (IH) – 40 Hrs
• Medical Admin (Medical) – 20 Hrs
• Supervisors Time – 75 Hrs (1 Hr per employee )
• Employee Time – 131.25 Hrs (1.75 Hrs for exam)
• STS Retests Labor – 9 Hrs
• Energy Savings ≈ $7600
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Indirect Cost Savings Expected ≈ $40 K
This presentation contains no
technical data subject to EAR or
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Compressed air is the single highest cost
utility used in a manufacturing setting
• 7 – 1 energy ratio
7 HP of electrical power to produce 1 HP
of compressed air “work”
Reducing compressed air use will result in
• Lower noise levels
• Lower energy costs
Use this as part of your value justification for
noise control engineering
This presentation contains no
technical data subject to EAR or
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Annual saving
• $41.2 K - HCP
($1,200 Direct & 40,000 Indirect)
• $549 Per employee
Expected cost avoidance
• $50K - Hearing loss awards
• $666 Per employee
Total savings expected - $91.2K
• ($1,216 Per employee)
This presentation contains no
technical data subject to EAR or
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$12 K Initial Investment
ROI – 176%
DPP – 0.2 Months
NPV – $429K
IRR – 665%
This presentation contains no
technical data subject to EAR or
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Use Two Different Noise
Abatement Techniques To
Dampen Sound
• Engineering And
Installation Expected To
Be $47,970
Expect To Remove 150
Employees From The HCP
This presentation contains no
technical data subject to EAR or
$48K Cost
Vs
 Value
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This presentation contains no
technical data subject to EAR or
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Hearing Testing Service Reduction
• $7.5K
IH Support
• $10K
Hearing Loss Awards – No Savings
? Hearing Protection Costs
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Direct Cost Savings Expected - $17.5K
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This presentation contains no
technical data subject to EAR or
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Program Administration Costs Savings
• HCP Program Admin & Training (EHS) – 120 Hrs
• Training Admin (EHS) – 40 Hrs
• Supervisors Time – 150 Hrs
• Employee Time – Testing 225 Hrs
• Employee Time – Training 75 Hrs
• STS Retests Labor – 9 Hrs
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Indirect Cost Savings Expected - $62.9K
This presentation contains no
technical data subject to EAR or
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Annual Saving
• $70.5K - HCP & Supporting IH Costs
• $470 Per Employee
Expected Cost Avoidance
• $0 - Hearing Loss Awards
Total Savings Expected - $70.5K
• ($470 Per Employee)
This presentation contains no
technical data subject to EAR or
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$48 K Initial Investment
ROI – 131%
DPP – 1.6 Years
NPV – $327K
IRR – 78%
This presentation contains no
technical data subject to EAR or
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Two Different Scenarios
• High Capital – Low Expense (Enclosure)
• Lower Burdened Rate
• No History Of Hearing Loss Claims
• Low Capital – High Expense (Nozzles)
• Higher Burdened Rate
• Moderate Hearing Loss Claim Potential
This presentation contains no
technical data subject to EAR or
This presentation contains no
technical data subject to EAR or
Brian B. Bethel, CIH
Sikorsky Aircraft
brian.bethel@sikorsky.com
This presentation contains no
technical data subject to EAR or