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- Recent changes to EMR calculations are not expected to have a major impact on individual ratings.
- Looking at multiple years of OSHA data can help identify a pattern of non-comlpiance or injuries; however, experts say the numbers may be inaccurate due to underreporting.
- Public construction contracts often must go to the "lowest responsible bidder," which may not be the safest contractor.
When an employer hires a contractor for a construction project, the employer expects quality work, on schedule and at a competitive price. The contractor’s safety performance plays a key role in meeting that objective – unsafe behavior can result in worker injuries, project delays and lawsuits.
One way to help avoid choosing an unsafe contractor is to consider safety during the prequalification process. Prequalification involves assessing contractors in certain areas, such as experience, to make sure they meet basic criteria to bid on the project.
The process helps screen out unqualified candidates before the selection round. Plenty of criteria options exist, such as the experience modification rate or injury and illness rates, but which ones accurately convey the contractor’s capability to safely perform the job?
Michael Wood, Oregon OSHA administrator, cautions against simply giving contractors a pass/fail grade based on one number. “I think one of the things that folks consistently struggle with is that they try to do safety and health as a ‘yes/no’ checklist element – that either you have it or you don’t – and the reality is that effective workplace safety and health is a relative issue,” he said.
Using the experience rating
One measure frequently considered during prequalification is the experience rating, also known as the experience modification rate, or mod factor. The EMR reflects the contractor’s workers’ compensation loss history compared to other employers in the same industry. A rating of 1.0 represents the industry average. A rating above 1.0 indicates the contractor’s losses are higher than average, which could mean an increase in the contractor’s workers’ comp insurance premium. When choosing contractors, employers typically require an EMR below 1.0.
EMR has become the standard for determining a contractor’s safety record because people can easily look at it and make their decision based on whether it falls above or below 1.0, according to Bill Stricker, vice president of professional development and advisory councils at the Carolinas AGC in Charlotte, NC. CAGC is a chapter of the trade association Associated General Contractors of America.
In most states, EMRs are calculated by the Boca Raton, FL-based National Council on Compensation Insurance. NCCI recently adjusted the rate formula but said the changes are not expected to have a major impact on employers’ ratings.
However, Stricker said some contractors are concerned that changing the formula may cause their mod rate to increase and that people awarding contracts will not understand what happened. “They will simply see that a company’s mod rate went from 1.1 to 1.5 or vice versa and will not understand why the change took place,” he said. That point aside, Stricker described EMRs as not perfect but a “good measure” of a company’s overall safety record over a period of time.
Wood also supports using EMRs. “One of the reasons I like using the experience factor as one element is it takes into account the typical risk within that industry as well as the employer’s particular experience,” he said.
Although he hesitated to set an absolute bar for automatic disqualification, Wood said an EMR greater than 1.25 or 1.5 should raise a red flag. When evaluating EMRs, he said, owners may want to consider the nature of the work and the risks involved. Wood used roofing as an example. All types of roofers may be in the same classification, but installing a steep-pitch roof is more dangerous than working on a flat one, so an owner might be more tolerant of a higher EMR among steep-roof contractors, he said.
Value and limitations of OSHA data
OSHA information, including injury and illness data and citations, also comes into play during prequalification. Wood said willful and repeat violations should require an explanation from the contractor. He recommended reviewing at least three to five years of OSHA records.
In addition to looking at injury rates, employers should ask to see the contractor’s OSHA 300 log, Stricker said. The log can show whether the contractor has a pattern of problems or a single incident that spiked the injury rate, he added.
“If you have a poor driving record and you’re getting tickets every two years, then obviously that’s showing a pattern, and the same thing with OSHA logs and OSHA citations,” Stricker said. “That’s going to show up, and if that’s your pattern, then obviously owners are going to take that into consideration – and they should – in awarding contracts.”
Peter Philips, labor economist and professor at the University of Utah in Salt Lake City, offered a word of caution about injury and illness figures. The reporting process is infused with bias, Philips said, because injuries affect workers’ comp rates and eligibility for bidding on projects – providing an incentive to underreport.
Michael Wright, head of the Health, Safety and Environment Department for the United Steelworkers in Pittsburgh, agreed, saying injuries and illness rates are “much too easy to play games with.” Wright said employers may fail to report injuries on OSHA logs, punish workers who report injuries or reward workers for going so long without an injury. In the latter case, he said employees may hide injuries because they do not want co-workers to lose out on the reward. “Programs like that don’t cut injuries, they just cut injury reporting,” Wright added.
In his opinion, the company hiring a contractor should take a close look at the contractor’s safety program. Doing so does not have to be burdensome. As Wright put it, “If they care about the work that they’re paying for, they will evaluate the contractor’s ability to do the work. They just have to add to that the contractor’s ability to do that work safely.”
Measuring present capability
Although EMRs, injury data and enforcement records may be useful, Philips points out that those factors measure past performance. What employers really want to know, he said, is how safely the contractor can perform the specific task at hand. Philips said it may help to ask if the contractor has a safety plan and a safety officer who conducts inspections. However, he added, “One problem is that these are proxies for capabilities; they’re not actual measures of capabilities.”
Philips said it is easier to tie past performance to present capabilities when the structure of the subcontracting relationship is what he describes as “simple” – the owner and contractor have worked together before and not many subcontractors are working on the project.
In his opinion, contractors providing quality training programs is one of the most important components of prequalification, and it needs to go beyond narrow safety training. He used the example of an ironworker erecting structural steel to build a skyscraper. If the worker chooses a bolt that cannot sustain the weight of the girder it has to carry, the bolt is going to shear. That is more of a construction issue than a safety issue – the worker may not have learned about bolt specifications in safety training. Yet safety implications exist as well. If the bolt breaks, workers who tied off correctly are nonetheless going to be dangling from a partially collapsed structure.
“So the worker needs to understand the production process as well as the safety process and be able to marry those two,” Philips said.