Investigating the Costs of EHS (Environments, Health, and Safety) in Construction Companies (General Overhead)
Project Description
In the past, the majority of EHS activities in construction companies were aimed at simply complying with the rules and regulations. However, many construction companies come to realize that EHS activities keep them competitive in the market where sustainability becomes a key word. The portion of EHS cost in a construction company is assumed to increase. The option A focuses on EHS costs incurred at a home office of construction companies. Since most EHS general overhead costs incur to support construction projects, they need to be calculated and allocated to projects. EHS costs incurred at projects are excluded in this study.
The purpose is to investigate how a construction company calculates their EHS costs, and assigns them to different projects. If a company (that you contacted) does not have any environmental and health costs, you can reduce the scope of EHS costs only to safety costs. Note that cost objects are construction projects. In other words, each project is a cost object. EHS Costs refer to EHS costs occurred at home-office. Therefore, daily safety inspection at projects is not included in our study because they are project costs. Instead, safety training or auditing by home-office personnel is included because it is home-office overhead.
You may choose any construction company (homebuilder, commercial contractor, or heavy civil contractor).
You are advised to implement your research using the following processes (Note: they are not in a sequential order. Most processes can be done in parallel):
(1) investigate EHS costs using literature review (minimum two references)
(2) contact a construction company and arrange an interview with the right person (operational manager or accounting manager)
(3) develop interview questions (see a section of “interview questions”)
(4) do your interview
(5) analyze interview responses including generalizing your findings
(6) write your report
Interview Questions
To save your time, a guided interview questions are developed for you. You need to use the following interview questions at minimum. You may add additional questions if you want to investigate more (bonus points). Note that EHS costs refers to EHS costs incurred in a home office.
a. What kinds of costs are included in your EHS overhead costs? (examples of cost items: safety training, environmental reporting)
b. How can you calculate your EHS costs? (examples of method: general accounting, standardized costing, fixed percentage of total overhead)
c. What is the ratio of your EHS costs to total general overhead costs (i.e., home office overhead)?
d. How do you assign your EHS costs to your projects? What is the basis of assignments? (examples of method: labor costs-based allocation, contract amount-based allocation)
Report Format
a. Executive Summary (1 page)
b. EHS Costs in a home office (max 2 pages): literature view on EHS costs
c. Interview Design & Structure (max 3 pages): interview questions, interviewee info, etc.
d. Interview Results and Findings (max 3 pages):
e. Discussions and Conclusions (max 2 pages): your interpretation of results
f. References (max 1 page)
