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Putting health into health and safety & health and safety into business KitneyPtyLtd2014 KitneyOccupationalHealthandSafetywww.kitney.com Page1 of7

BUDGETING FOR HEALTH AND SAFETY LSBUS Occupational Health Nursing Mini Lecture Series

Welcometothisinformationsheetonbudgetingforhealthandsafety,whichaccompaniestheminilecturepresentedbyJoKitneyfortheLondonSouthBankUniversitysOccupationalHealthNursingDegreeProgram.JoKitneyisaVisitingTeachingFellowfortheLondonSouthBankUniversityandManagingDirectorofKitneyOccupationalHealthandSafety.

ToseetheminilectureonBudgetingforHealthandSafetyandotherlecturesinthisseriesgoto:http://vimeopro.com/kitney/lsbu

Introduction

Healthandsafetylegislationisveryclearinitsrequirementforemployersandpersonsrunningbusinessestomanagehazardsand risksandmeetobligations.Aside from theneed tomeet legalobligations,managinghealthandsafetyatwork isan importantpartofgoodbusinessmanagementandtheright investments inhealthandsafetycanbereallybeneficialandmakeadifferencetothesuccessorfailureofanorganisation.

Although some health and safety initiatives require little or no capital expenditure, the effectivemanagement of health and safety at work does requiremoney to be spent. In thisminilecture andinformationsheet,budgetingforhealthandsafetyisconsidered.

Welllookatwhatbudgetingisandwhyitissoimportant,typesofbudgetandhowbudgetsareset.Wellalsoconsiderdecisionmakingaroundbudgetsandhowanorganisationorbusinesscangainfrominvestinginhealthandsafety.

What is Budgeting? Initssimplestform,budgetingmeansallocatingresourcegenerallymoneyforaspecificactivity,projectorservice.Thesizeandamountofthebudgetwilldependonanumberof factorssuchastheoutcome

Putting health into health and safety & health and safety into business KitneyPtyLtd2014 KitneyOccupationalHealthandSafetywww.kitney.com Page2 of7

that is needed (such as a service that needs to be provided), available resource and costs thatwill beincurred.

Healthandsafetybudgetsareusedtolistdownthecostsassociatedwithrunninghealthandsafetyservices,providing training,buyingandservicingequipmentetc.Budgetsneeds to listprettymucheverything thatwillbeneeded tomakesurehealthandsafety iswellmet. Thesecostssoonaddup,so its important tounderstandcostsinadvanceandtotrackspendingtomakesuremoneyisbeingmanagedandwellspent.

Youcanseeonthefollowingslidethatbudgetmaybeallocatedforfixeditemswithaknowncost,suchasasalary,purchasingandservicingequipment,andmaybemoreopenendedandallocateasum tobroadlycover numbers of staff and health and safety needs, such as such as health surveillance, vaccinations,personalprotectiveequipmentandtraining.

Why is Budgeting Important?

Budgetingisimportantbecauseitencouragesforwardthinkinganddecisionmaking.Itquantifiescostsandresourceallocation.Budgetingalsoencouragesanorganisationorworkareatocheckonspendingtomakesuremoneyisbeingspentwhenandwhereitshouldbeandtoidentifyareasofoverorunderspend.

Theprocessofsettingabudget involvesthinkingaboutgoalsandplansandwhat isneededtomakethesehappen.Budgetingencouragesabusinesstoplanandmadedecisionsaroundwhatitcanresourceandwhat

Putting health into health and safety & health and safety into business KitneyPtyLtd2014 KitneyOccupationalHealthandSafetywww.kitney.com Page3 of7

itcant.Thisisreallyimportantasalackofresources(andtherighttypeofresources)isacommonreasonforhealthandsafetyobligationsandneedsnotbeingmet.

Budgeting is importantbecause it focusesattentiononwhatwillbedoneandhowmoneywillbe spent.Anyoneworking inhealthandsafetywillknowthatabudgetallocation ifoftenthedifferencebetweenanactivityorprojecthappening,andnot.

Whilst taking action for health and safety is considered essential tomeet legal obligations and businessneeds,it'snaivetothinkemployersorthosewhorunbusinessesaregoingtospendmoneyonanythingthatisnot justified. Itsreasonableforabusinessownerormanagertoquestionhowmoneywillbespentandthegaintheorganisationwillgetfromthis.

Thesegainsmaybecompliancewithlegalobligations,preventinginjuryorillhealth,improvingknowledge,cultureandsafebehavioursand,morecommonlythesedays,extendingthepurposeofhealthandsafetytosecuringahealthyandfitworkforcethroughhealthandwellbeingprograms.

Types of Budget Thereareanumberofdifferenttypesofbudgetsandeachtypeservesadifferentpurpose.Youcanseethesomeofthedifferenttypesofbudgetslistedontheslidehere.

From an occupational health and safety perspective, the main budgets used are a capital budget, anoperatingbudgetandaprojectbudget.

A capital budget is used to forecast costs of major capital purchases, such as computers and healthsurveillanceornoisemonitoringequipment/whilstanoperatingbudgetisusedtoforecastcostsofproductsand servicesabusinessmayuse inabudgetedperiod. Fromahealthand safetyperspective, thesemayincludeexternalaudits,vaccinations,hearingtestsandpersonalprotectiveequipment.Aprojectbudgetmaybesetforadefinedpieceofworkorprojecttolistdownandtrackcosts.

Manyorganisationswilluseanoperatingbudgetforhealthandsafetytomakesurethedaytodaycostsareaccountedfor,withcapitalexpenditureusedwherea large itemofequipmentorsoftware isneeded,suchas a new computer or audiometrymachine.Operating budgets aremost commonly used in health andsafety,whichtypicallyhastwoparts:theexpensesbudgetandtherevenuebudget.

Putting health into health and safety & health and safety into business KitneyPtyLtd2014 KitneyOccupationalHealthandSafetywww.kitney.com Page4 of7

Theexpensebudget indicatesallexpectedexpenses for the comingyear,whilst the revenue (or income)budget shows all projected revenues for the coming year. Formany organisations, a health and safetybudgetwillmainlyfeatureexpensesratherthanrevenuewhichisoneofthemainreasonswhyhealthandsafetyisseenasacostasitdoesnt,onthebudgetspreadsheet,generateincome.

Oneoftheimportantrolesofanyoneworkinginhealthandsafetyistomakesurethatbudgetsarewellsetandgivetherightreturnoninvestment.Thismaybereducingaccidents,injuriesandsicknessabsencerates,compliancewithobligationsand raisinghealthandwellness tohelp createamoreproductiveworkforce.Healthandsafetyisacost,butitshouldstillgiveareturnthattheorganisationwillbenefitfrom.

Otherbudgetstobeawarebutmaynotbeusedformosthealthandsafetyservicesareacashbudgetthatprojectscash flow for thenextyearanda salesbudget,which indicates the salesand incomeabusinessexpectstomakeinthecomingyear.

How is a Budget Set? When itcomestosettingbudgets,themanagementstyleofanorganisationandthetypeofbudgetbeingusedwilldeterminehowthebudget isset.Manytraditionalcompaniesuse topdownbudgeting,which iswhere topmanagementoutline figuresandavailablebudget formiddleand lower levelmanagers toplantheirworkandcostsaround.

Otherorganisationsusebottomupbudgeting,which iswhere lowerandmiddle levelmanagersanticipatetheirdepartmentsresourceneedsandputthese intoabudget,which ispasseduptheorganisationtotopmanagement.Youcanseethisoutlinedontheslidehere.

Whatworkswell inmostorganisations isacombinationofbothtopdownandbottomupbudgeting,as itdrawson topmanagementknowledgeofcompanygoalsandavailable resourceandon lowerandmiddlemanagementknowledgeofdaytodayoperations.

Asyoucanseeonthefollowingslide,abudgetisusuallysetoutinatableandwillhaveanumberofentriesin it, forexample the itemrequired (orbeingbudgeted for),acostper itemandnumbersrequired,oranoverallcost.

Putting health into health and safety & health and safety into business KitneyPtyLtd2014 KitneyOccupationalHealthandSafetywww.kitney.com Page5 of7

Costsmaybefinal iffiguresareknown,ortheymaybeforecastedorprojectedtohelpcalculateabudgetbeforeactual costsare known. Budgetsaregenerally set towards theendofone financial year, for thecomingyear,oratthestartofaprojectifitsaoneoffitemofwork.

Whilstitsimportanttohavestructurearoundbudgetsetting,itsalsoimportanttohavesomeflexibilityasthingsmaychangethroughtheperiodthatthebudgetissetfor.

Decision making around Budgets Thedecisiononwhetherbudgetwillbeprovidedforhealthandsafetymaynotbeclearcut,withdecisionsmade by management often objective and values based. Both of these matter in finding money andbudgetingforhealthandsafety.

Whilsttheneedtocomplywithhealthandsafetyisaknown,businesseswilloftenmanageandbudgetforhealthand safetydifferently.Someputhealthand safetyhighon theagenda, some integratehealthandsafety into quality, environment and thewider businessmanagement, some go beyond compliance andpromotehealth andwellness, some justwant tobe compliance andothersdo very little and then reactwhenaccidentshappen.

Theresacatchbudgetingforhealthandsafetywiththosewhospendmoneyupfrontmorelikelytohaveagoodsafetyrecordwithminimalinjuryandillhealth.Thosewhodontbudgetandinvestinhealthandsafetygenerallyincurcostsafteranincidentsuchasforsickleave,investigationsandmanagingprosecutionsandclaims.

Questionsthatcanbeaskedtohelpdetermineabudgetforhealthandsafetyare:

Putting health into health and safety & health and safety into business KitneyPtyLtd2014 KitneyOccupationalHealthandSafetywww.kitney.com Page6 of7

Healthandsafetyisnotatrivialcosttoanorganisingandplanningforisimportant.Itsnotunusualtohavesomedebatearoundwheremoneywillbe spentonhealthand safety. Debateswhich can,at times,getheated.

Agreeingon the goals,whatneeds tobedone and themust haveswillhelp in getting consensus for abudgetplan.Wheredisagreementshappen,theunderpinningcausesareoftenalackofagreementongoals,standardsthatwillbeachievedandavailableresource.Itisthesethatneedtoberesolvedtogetagreementonbudgetandinvestmentsformanaginghealthandsafetyatwork.

Return on Investment Wheremoney is spent on health and safety,whether this ismeeting legal obligations or going beyondcompliance,thismustbeseenasaninvestmentand,likeanyinvestment,itmusthaveareturn.

Thebudgetholder isentrustedtomanagethebudgetandspendaccordingtowhathasbeenagreed.Thereturnoninvestmentisthefulfilmentofthegoalsandaimsthatweresetdownduringthebudgetplanning,alongwithanywiderbenefitsthatmayberealisedsuchasagoodmorale,aproductiveworkforce,apositivesafetyculturealongwithtrustandrespectbetweentheorganisationanditsworkers.

Putting health into health and safety & health and safety into business KitneyPtyLtd2014 KitneyOccupationalHealthandSafetywww.kitney.com Page7 of7

There isnodoubt thatwell set goals,a clearunderstandingofwhatwillbeachievedand thebudget toachievethispaysrealbenefittoanyorganisationorcompany.Similarly,deliveringonthesegoalsandtheexpected achievements for health and safety reinforce the value that goodmanagement of health andsafetyhasforanorganisation.

Failuretodeliverwillquitereasonablyresultinquestionsbeingaskedabouttheeffectivenessofhealthandsafetyandthepersonnelwhoareresponsibleformanaginghealthandsafetywithinanorganisation.

Further Information

For information on London South BankUniversitysOccupationalHealthNursingDegree Program go to:http://www.lsbu.ac.uk/courses

ForinformationonKitneyOccupationalHealthandSafetyandtoreadotherinformationsheetsandarticleswrittenbyJoKitney,gotowww.kitney.com

Written and Presented by

JoKitneyVisitingTeachingFellow,LondonSouthBankUniversity(http://www.lsbu.ac.uk/)ManagingDirector,KitneyOccupationalHealthandSafety(www.kitney.com)Disclaimer

Noperson should relyon thecontentsof this InformationSheetwithout firstobtaining specificadvice fromKitneyOccupationalHealth and SafetyPty Ltdor a similarlyqualifiedhealth and safetyprofessional. Thispublication isprovidedon the terms andunderstandingthattheauthor,KitneyOccupationalHealthandSafetyPtyLtdandKitneyPtyLtdarenotresponsiblefortheresultsofanyactionstakenonthebasisofinformationinthispublication,norforanyerrorinoromissionfromthepublicationandhavenotbeenengagedtoprovideanylegal,professional,technicalorotheradviceorservices.Theauthor,KitneyOccupationalHealthandSafetyPtyLtdandKitneyPtyLtddisclaimallliabilityandresponsibilitytoanyperson,whetherareaderofthispublicationornot,inrespect of anything, and the consequences of anything, done or omitted to be done by any such person in reliance,wholly orpartially,uponanypartofthecontentsofthispublication.

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