Cost of Error Calculator

Part I: Annual Cost of Human Error

A. Unplanned Downtime / Lost Productivity

	YRLY COST / WORKER		# OF EMPLOYEES
LANDMINES ? LANDMINES When “human error” occurs within an organization, 84 and 94 percent of the time some aspect of the associated processes, programs, and/or organizational structures directly contributes to the occurrence. These “setups” for error are known as “landmines”. (Note: In some circles, these are referred to as, “Latent Organizational Weaknesses (LOWs).”)	$629	*	# OF EMPLOYEES Enter the total number of employees (at all levels) working within the Organization being analyzed.	=
HUMAN FALLABILITY ? HUMAN FALLABILITY While landmines are present in the majority of conditions involving “human error”, an allowance must be made for human fallibility. Since the range of 84 to 94 percent is generally accepted (see above), this leaves a range of six to sixteen percent purely attributable to people “screwing up”. The mid-range (11%) results in an average human fallibility cost of $77 per year per employee. The Calculator multiplies each of these figures times the total number of employees in the unit/organization being analyzed to arrive at an annual “generic” cost of human error.	$77	*		=

Admin / Investigation / Resolution ?

ADMIN / INVESTIGATION / RESOLUTION

This section accounts for the resources directly expended to investigate, resolve, and administer the errors that do occur. For input into these fields, consider the current status of how errors and events are investigated and resolved within your organization.

AVG HRS PER COND	AVG HRLY RATE	# OF COND PER YEAR
Note the fields titled, "AVG HRS PER COND" and, "# OF COND PER YR". In these fields, "COND" represents "Condition", which is any occurrence that you would devote resources to investigating/resolving.	* For "AVG HRLY RATE", simply use an average hourly pay rate of those involved in the investigation, resolution and administration of errors and events.	* Note the fields titled, "AVG HRS PER COND" and, "# OF COND PER YR". In these fields, "COND" represents "Condition", which is any occurrence that you would devote resources to investigating/resolving.	=
Annual General Error Cost ? Annual General Error Cost The calculator will automatically calculate the current generic (rework, recovery from missteps, etc.) costs of human error within your organization.

B. Injuries, Illnesses, and Fatalities

OSHA REC RATE	OSHA REC RATE The "OSHA REC RATE" is for entry of your current OSHA Recordable Rate.	÷	OSHA AVG FOR SECT	=
# of Employees		*	OSHA Ratio	*	$1,200	*	0.95	=
(AVG) # of medically consulted injuries		+ (plus)	(AVG) # of fatalities	=

HU Illness/Injury/Fatality Cost ?

HU Illness/Injury/Fatality Cos

The calculator will automatically calculate the dollar costs of illnesses, injuries, and fatalities that your organization is currently experiencing. Please note that all medical costs are multiplied by 0.95 to account for the 95% relationship between safety incidents and human error.

C. Physical Plant / Environmental Costs

AVG # EVENTS PAST 3 YR		AVG COST PER EVENT
	*		=
		Physical / Environmental Cost
		Total Annual Cost of Human Error

PART II: Human Error Reduction Return on Investment (ROI)

Reduce Human Error by:	%
ANNUAL COST SAVINGS
Year 1: Implementation Investment	Year 1: Implementation Investment This is your total external cost associated with implementation of efforts to reduce human error / enhance human performance.
	ROI ? Year 1: ROI This field represents your direct Return on Investment (ROI) during your first year following implementation to reduce human error. It is calculated by subtracting your ANNUAL COST SAVINGS from your Implementation Investment, then dividing the remainder by the amount of your Implementation Investment (to arrive at a percentage return on your external costs).	%
Year 2: Maintenance Investment	Year 2: Maintenance Investment Your Year 2 Maintenance Investment has been automatically calculated at an estimated 10% of your Implementation Investment. You may override this with whatever amount of external cost you actually anticipate in order to maintain your positive momentum.
	ROI ? Year 2: ROI This field represents the return on your investment during Year 2, assuming you maintain the same reduction in error rate as you achieved in Year 1. If you are doing things properly, your actual error reduction rate should be much better, resulting in an even higher ROI.	%

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