CIEE Cost-Benefit Analysis of Interventions 3 — Questions and Answers
Question 1: In ergonomic CBA, 'presenteeism' refers to the financial impact of:
- Employees attending safety training during paid hours
- Workers being physically present but performing below full capacity due to pain or discomfort (Correct answer)
- Supervisors observing ergonomic tasks without participating
- Mandatory ergonomic assessments conducted during work time
Correct answer: Workers being physically present but performing below full capacity due to pain or discomfort
Presenteeism captures productivity losses from employees who come to work despite musculoskeletal discomfort, reducing output without generating an absence record.
Question 2: A sensitivity analysis in an ergonomic cost-benefit study is used to:
- Measure employee sensitivity to physical stressors before intervention
- Test how changes in key assumptions affect the overall CBA outcome (Correct answer)
- Assess which body regions are most sensitive to ergonomic risk
- Determine the sensitivity of measurement tools used in the study
Correct answer: Test how changes in key assumptions affect the overall CBA outcome
Sensitivity analysis varies uncertain inputs (e.g., injury rate reduction estimates) to determine how robust the CBA conclusion is under different assumptions.
Question 3: When calculating the return on investment (ROI) for an ergonomic program, the correct formula is:
- ROI = (Total Benefits / Total Costs) × 100
- ROI = ((Net Benefits − Program Costs) / Program Costs) × 100 (Correct answer)
- ROI = (Program Costs / Total Benefits) × 100
- ROI = (Total Benefits − Program Costs) × Discount Rate
Correct answer: ROI = ((Net Benefits − Program Costs) / Program Costs) × 100
ROI expresses net gain as a percentage of the investment, calculated as net benefits (benefits minus costs) divided by program costs, multiplied by 100.
Question 4: A manufacturing plant reports 15 MSD claims per year averaging $8,000 each in direct costs. An ergonomic program costing $30,000 is expected to reduce claims by 60%. What is the annual net benefit?
- $12,000
- $42,000 (Correct answer)
- $72,000
- $102,000
Correct answer: $42,000
Annual claim cost = 15 × $8,000 = $120,000; 60% reduction = $72,000 saved; net benefit = $72,000 − $30,000 = $42,000.
Question 5: Which of the following would be classified as an 'intangible benefit' in an ergonomic CBA?
- Reduction in OSHA recordable injury rate
- Decrease in workers' compensation premiums
- Improved employee morale and job satisfaction (Correct answer)
- Lower overtime costs due to reduced absenteeism
Correct answer: Improved employee morale and job satisfaction
Intangible benefits like improved morale are real but difficult to assign a precise monetary value, distinguishing them from quantifiable hard savings.
Question 6: The payback period for an ergonomic intervention is best defined as:
- The number of years until the intervention needs to be replaced
- The time required for cumulative benefits to equal the initial investment cost (Correct answer)
- The percentage of costs recovered through insurance reimbursements
- The duration of the ergonomic training program
Correct answer: The time required for cumulative benefits to equal the initial investment cost
Payback period measures how long it takes for the financial benefits of an intervention to recoup the initial expenditure.
Question 7: When should an ergonomist recommend AGAINST implementing an intervention based on CBA findings?
- When the benefit-cost ratio is 2.5:1
- When the net present value is positive
- When the benefit-cost ratio is less than 1.0 and no strategic intangibles justify the investment (Correct answer)
- When the payback period is less than 2 years
Correct answer: When the benefit-cost ratio is less than 1.0 and no strategic intangibles justify the investment
A benefit-cost ratio below 1.0 means costs exceed benefits, and unless significant intangible or strategic factors override, the intervention is economically unjustifiable.
CIEE Cost-Benefit Analysis of Interventions 3
In ergonomic CBA, 'presenteeism' refers to the financial impact of: