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The Cost of Mishaps (Sort Of)

 



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Posted March 26, 2013

A non-stop, high-vis task here at the Naval Safety Center is tracking and totaling mishaps. We take incidents of pain, trauma and destruction and turn them into crisp statistics: fatalities, lost days, costs. They make impressive pie charts.

So if you ask, for example, how much mishaps cost the Department of the Navy last year, it was $1.02B, of which the Navy’s share was $692M. Those are the official figures on our web site. But there’s more to the story.

The total cost was higher, much higher. No one knows how much. Such is the complexity of regulations and the mishap-reporting process that there’s no easy (or even difficult) way to figure it out. We do the best we can, but our hands are tied by factors that reach far beyond mere definitions (which both clarify and muddle).

Most of the costs are set in OPNAV 5102, which relays DoD guidance. In the case of fatalities, the numbers are obviously estimates, which results in higher costs for aviators and submariners (because of the higher costs of training these specialized personnel), but not higher costs for medical specialists.

Totaling the bill from damaged equipment is more straight-forward, except when it comes to the question of whether you are going to replace something that was totaled. Do you depreciate the old piece of equipment, like you would a used car? Should you cost a replacement at the original price (which is what we do for destroyed aircraft, adding in the cost of upgrades), or convert to modern dollars?

What if the Navy or Marine Corps isn’t going to replace the damaged asset? For mishaps that aren’t aviation, the rules say that if you don’t know the exact cost to repair, you chalk the damage up at 15% of the original cost. Whether that’s right or wrong, it is certainly inconsistent and sometimes extremely low.

Once you get down below Class A and Class B mishaps, there’s a fair amount of underreporting, a fact that should put a big asterisk on some mishap stats and trends. This isn’t a new issue, and the reasons why people don’t report mishaps (too hard, embarrassing, don’t care) are grist for a whole different blog.

I remember twenty years ago talking to a safety officer on a carrier who told me he regularly found unreported mishaps by perusing the ship’s medical logs. These days, macro data is available for DoD. For medical visits by Navy personnel, if you total up the medical codes associated with injury and occupational illness, these visits to hospitals, ERs and clinics add up to about $500M. One study showed that only about a quarter of the resulting in-patient hospitalizations (and 2% of outpatient treatments) had been reported as mishaps.

Then there are casualty reports (CASREPs) about events that were obviously mishaps but that weren’t reported as such. For a Naval Audit Service study, we once sorted through hundreds of CASREPs and provided 30 that were clearly mishaps. The auditors found that two of these had been reported.

New workers-compensation cases appear every year that lack associated mishap reports. Most would seem to be reportable, because the only reason to not report them would be if they didn’t require treatment beyond first aid or lost time beyond a day.

My data-expert running buddy once read a message from a naval base that warned readers about the upcoming tornado season. The article said to take precautions because these previous several tornado seasons had done about $250K worth of damage to the base. He called the base safety office to ask why none of this damage had been reported. The person he talked to said that the damage hadn’t been reportable—a statement based on a misinterpretation of an obsolete instruction.

A large batch on costs that aren’t included in the billion dollars mentioned above are post-mishap benefits that don’t drain out of the DoD budget, such as Social Security and Dependency and Indemnity Compensation. For the spouse of a junior enlisted who dies in a traffic wreck, these benefits can easily mount up into hundreds of thousands of dollars.

So if someone asks how much mishaps cost the Department of the Navy last year, maybe the best answer is “More than you think.” A billion dollars in mishap costs is probably the largest chunk, since it includes those multi-million-dollar aircraft that became smoking holes or that are sitting in 10,000 feet of water. A billion dollars seems like a lot, but that’s still only the beginning.

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