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Cost/Benefit Analysis
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Cost/benefit analysis regarding the effect of such processes and procedures are developed.
Once the methods to mitigate or prevent the risk have been established it is important that you ascertain whether the benefit accrued is more than the cost to implement the control. When suggesting an improved methodology for controlling risk to a superior, it is advisable that the cost-benefit be presented also. Look at the following example of cost-benefit analysis in a sausage-making plant:
|
Where Risk Occurs |
Hazard Sources |
Possible Actions |
Potential Cost Benefit |
|
At the meat grinding (mincing) machine |
The operator of the mincing/grinding machine picks up the chunks of meat with his/her hands to place in the grinding machine. If the operator’s hands are dirty, then the risk of contamination between different sausage lot |
Possible action 1: The operator should wash his/her hands with antibacterial soap and rinse and dry his/her hands between every lot. Possible action 2: The operator should wear new disposal plastic gloves for each batch. |
An operator makes 50kg batches of ground mince to go on to the sausage maker. At R 30/kg this means 50kg x R30/kg = R 1500. If a batch is contaminated with bacteria such as Salmonella, then R 1500 could be lost. Additionally, if the sausage were to cause illness among a wide group of consumers the loss in revenue due to the poor reputation of the manufacturer could have even higher financial losses. The cost of one bottle of antibacterial soap is R 15. The cost-benefit of this control method is thus R1485 or 100 times the cost of the control. |