CIEE Cost-Benefit Analysis of Interventions 5 — Questions and Answers
Question 1: When presenting an ergonomic CBA to senior management, which framing approach is most persuasive for securing budget approval?
- Emphasizing OSHA compliance obligations and penalty avoidance only
- Linking ergonomic investment to operational metrics such as productivity, quality, and turnover cost reduction (Correct answer)
- Providing detailed anatomical descriptions of MSDs and their causes
- Focusing exclusively on the moral obligation to protect workers
Correct answer: Linking ergonomic investment to operational metrics such as productivity, quality, and turnover cost reduction
Senior management responds to business metrics; framing ergonomics in terms of productivity, quality, and turnover costs directly aligns with financial decision-making priorities.
Question 2: Turnover costs are often included in ergonomic CBA because MSDs increase employee turnover. A conservative estimate of turnover cost for a single mid-skilled manufacturing worker typically ranges from:
- $500–$1,000
- $1,000–$5,000
- $10,000–$30,000 (Correct answer)
- $50,000–$100,000
Correct answer: $10,000–$30,000
Research estimates turnover costs (recruitment, training, lost productivity) for mid-skilled workers at approximately 10–30% of annual salary, typically $10,000–$30,000.
Question 3: Which of the following represents a 'cost avoidance' rather than a 'cost reduction' in ergonomic CBA?
- Lowering current workers' compensation premiums after past claims decrease
- Preventing a projected increase in injury rates from new production line expansion (Correct answer)
- Eliminating overtime costs by reducing absenteeism from existing MSDs
- Reducing the number of OSHA recordable incidents from last year's baseline
Correct answer: Preventing a projected increase in injury rates from new production line expansion
Cost avoidance prevents a future cost from materializing, as opposed to cost reduction, which reduces an existing, already-incurred expenditure.
Question 4: The concept of 'diminishing returns' in ergonomic program investment means that:
- Benefits decrease over time as equipment wears out
- Each additional dollar invested in ergonomics yields progressively smaller incremental benefit once the highest-risk hazards are addressed (Correct answer)
- Employee engagement with ergonomic programs decreases each year
- The discount rate increases as the program matures
Correct answer: Each additional dollar invested in ergonomics yields progressively smaller incremental benefit once the highest-risk hazards are addressed
After high-priority, high-risk hazards are remediated, subsequent investments address lower-risk issues, yielding smaller incremental benefits per dollar spent.
Question 5: A company is deciding whether to pilot an ergonomic intervention at one facility before full rollout. From a CBA perspective, the primary benefit of piloting is:
- Reducing total intervention cost by limiting scope permanently
- Generating facility-specific data to refine benefit estimates and reduce uncertainty before full investment (Correct answer)
- Avoiding OSHA notification requirements for larger programs
- Allowing management to postpone capital expenditure indefinitely
Correct answer: Generating facility-specific data to refine benefit estimates and reduce uncertainty before full investment
A pilot generates real-world, site-specific data that improves the accuracy of benefit projections, reducing the risk of a poor full-scale investment decision.
Question 6: When comparing ergonomic interventions with different lifespans (e.g., 3-year vs. 7-year solutions), the most appropriate CBA approach is to use:
- Simple payback period for both
- Net present value analysis over a common time horizon or equivalent annual annuity (Correct answer)
- Benefit-cost ratio based on first-year savings only
- Total undiscounted costs and benefits for each option
Correct answer: Net present value analysis over a common time horizon or equivalent annual annuity
NPV over a common time horizon or equivalent annual annuity properly accounts for the different durations and the time value of money, enabling a fair comparison.
Question 7: Which statement most accurately reflects the relationship between ergonomic risk level and CBA priority?
- Low-risk tasks should always be addressed before high-risk tasks because they are cheaper to fix
- Interventions targeting high-frequency, high-severity risk factors typically yield the highest benefit-cost ratios (Correct answer)
- CBA is only appropriate for high-severity risks and not useful for low-risk tasks
- Ergonomic CBA should prioritize aesthetics and employee preference over risk level
Correct answer: Interventions targeting high-frequency, high-severity risk factors typically yield the highest benefit-cost ratios
High-frequency, high-severity exposures generate the most injury costs; interventions targeting them produce the largest avoided-cost benefits and thus the highest BCRs.
CIEE Cost-Benefit Analysis of Interventions 5
When presenting an ergonomic CBA to senior management, which framing approach is most persuasive for securing budget approval?