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Moneyball – Safety 

What do the numbers say regarding Safety as a value added proposition?

With regard to safety – this is an area of both Shifting Sand and Quicksand to our unions and our union contractors which has evolved over the past 20 plus years. Labor-Management have aggressively pursued safety and the culture of safety from the owner to the apprentice. This is and was a huge undertaking that we all are rightfully very proud of.

In the area of safety, both the moral and financial benefits have manifested themselves into a value added proposition that the Building Trades could advance, and that the end-users would hire us because.

Enter OCIP, Owners Controlled Insurance Program & CCIP, Contractors Controlled Insurance Programs.

These programs having been evolving over the last 10 – 15 years and really have made their presence felt in the more recent 5 – 7 years. They are usually on the larger projects, but now are also found on smaller jobs when they are grouped together.

In the older traditional model of insurance our individual contractor would carry their own insurance. A well run safety program could make our union contractors competitive in many markets with the savings on insurance because of excellent safety.

Now this is an overly simplified description, but it holds true that these OCIP’s & CCIP’s are now benefiting tremendously from the decades of hard work improving the on the job safety, all done by Union Labor/Management.

How they do it, the OCIP/CCIP sponsors wrap up all the trades on the job under 1 Master policy which they totally control?
However the OCIP & CCIP make the real hard dollars from these programs, and not our contractors.

OCIP & CCIP programs are run to provide economies of scale but as importantly to maximize profits on the job.

The largest Construction Managers may make as much, if not MORE $$ from their insurance activities than what they may make from the construction side of the company.

How they make those profits is the Owner and/or Construction Manager is allowed to use a blended rate for insurance. So for example a sub-contractor may pay X for insurance in the traditional manner. Let’s call X $20 per $100 dollars in payroll, on the check wages. In the traditional way of insurance the lower the overall cost of insurance the more the competitive our union contractors could be because of a great safety program, a true value added proposition.

Now with the OCIP & CCIP programs the numbers of all the contractors can be blended. It can usually be reduced even more because of how the Owners and CM are classified in the insurance world. That number is Y – Y’s value may be $5 per $100. So do the math and it is probably no surprise who gets to pocket the difference between X and Y!

The holder of the OCIP or CCIP does, and not the union contractors who made safety better, now the owners and CM’s have found a way to make big money on safety.

Also depending on the programs design, the sponsors of the OCIP’s or CCIP’s can gain significant cash flow by providing collateral (typically a Letter of Credit) and only paying losses as they occur.

These are just some of the Shifting Sands our unions and our contractors face today in how insurance is run on the job.

The Quicksand which is different than the Shifting Sand is that disproportionately, union contractors have all sorts of very tough and additional huddles that they have to contend with. The Owners and CM see them as money – period, and hey if they go out of business, we will get another contractor!

• Items like the quality and levels of the coverage of the Master Insurance Policy.

• Credits with are “given” to them, our contractors, as offsets by the sponsoring OCIP/CCIP.

• Fines that are imposed on them for each incident, yes incident. So a cut on a finger for example would be a fine, and that range of the fine typically may be $5,000 to $10,000 per incident. These fines are “Hard Dollar” fines that are usually taken right off the top of the contract.

• Keeping a worker on the union contractor’s direct payroll, so it is not an incident against the sponsors insurance. Helps big time the OCIP/CCIP sponsor and is dictated to the union contractor, which kills the Union contractor. This is where “light duty” and keeping an injured worker on the job comes from. Our union contractors are not the problem here, it is the OCIP or CCIP program in this instance.

• What’s happens if the sub performs the job under hours or over the hours in the bid can be their own can of worms. Our union contractors get it on both sides of that equation.

• No amount of safety is enough it appears anymore. Example – 100% tie-off used to be sufficient for compliance. Increasingly not any longer. They want floors, nets etc… Try to factor that ever moving boogie into man hours on the bid, not to mention potentially paralyzing the job. And do it on the fly.

• Many other types of constantly moving Quick Sand beneath our collective union and managements feet.

So the great amount of fabulous Labor/Management co-operation with regard to safety and which should be absolutely a value added proposition has been degraded into an opportunity to enhance profits for the Owners and Construction Managers!

In closing – keep this in mind, these profits are accruing very disproportionately to the benefit of the end-users who use some of this money to advance anti-worker legislation behind the scenes against the very entity that has gotten them these big time profits.

Got to be a junk yard dog to run with these junk yard dogs.

In Solidarity,
Danny L Caliendo
Labor Rising Group

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