Updating the Estimate of the Administration Costs in Road Accidents Using Human Capital Method

1. Updating the Estimate of the Administration Costs in Road Accidents Using Human Capital Method Researchers: Charlaine V. Reyes Dyeor Kristy M. Balisi Advisers: Dr. Hilario Sean O. Palmiano Associate Professor, Dept. of Civil Engineering, UP Diliman Dr. Ricardo G. Sigua Professor, Dept. of Civil Engineering, UP Diliman

2. OUTLINE I. Introduction 1. Background of the Study 2. Statement of the Problem 3. Objectives 4. Significance of the Study 5. Scope and Limitations II. Review of Related Literature 1. Conceptual Framework 2. Definition of Terms III. Methodology 1. Police Administration Cost 2. Judicial System Cost 3. Insurance Administration Cost 4. Total Administration Cost

3. Background of the Study Annually, at least 1 million people are killed on the road worldwide. 70% of which occur in countries that World Bank classifies as low or middle income.

4. Background of the Study Apart from prime loss in human lives, there are also consequential losses to national economy • Lost Output Traffic Accidents • Medical Cost • Property Damage Cost • Pain, grief, and suffering • Administration Cost

5. Background of the Study Apart from prime loss in human lives, there are also consequential losses to national economy • Lost Output Traffic Accidents • Medical Cost • Property Damage Cost • Pain, grief, and suffering • Administration Cost

6. Background of the Study ADMINISTRATION COSTS these are the costs that are incurred by police investigation,judicial proceedings,and administering of insurance claims when a road accident occurs and is handled BACK

7. Statement of the Problem The administration cost in road accident is usually obtained in line with the ADB recommendations of getting the percentage of the total resource cost. Therefore, there is a need to have a direct approach of estimating the administration cost by measuring its actual cost components. BACK

8. Objectives Primary Objective: To come up with an improved estimate of the current administration costs in road accidents using the human capital method but veering away from the ADB guidelines

9. Objectives Minor Objectives: • To identify and discuss the cost components related to the administration costs • To compare the estimate of the administration cost in our study to the resulting estimate when using ADB guidelines • To discuss the importance of updating the estimate of the administration cost BACK

10. Significance of the Study • Road accident cost is important for conducting strategic planning and cost-benefit analysis in handling road safety project. • The study can act as a medium to encourage and implement an efficient road safety scheme. BACK

11. Scope and Limitations • The Human Capital Method is used to estimate the administration costs. • It covers four severity classifications of road accidents. • Information and data on road accidents from police, insurance companies and court clerks are employed in this study. • The data for year 2007 are collected. BACK

12. Conceptual Framework Traffic Accident Fatal PDO Serious Injury Minor Injury Administration Cost Police /MMDA Trial Court Insurance Company Police Cost Judicial Cost Insurance Cost BACK

13. Asian Development Bank Guidelines • For fatal accidents, it must be 0.2% of the total resource cost for all fatal accidents • For serious injury accidents, it must be 4.0% of the total resource cost for all serious injury accidents • For minor injury accidents, it must be 14% of the total resource cost for all minor injury accidents • For property damage only accidents, it must be 10% of the total resource cost for all property damage only accidents resource cost = [medical costs + property damage costs + lost output] BACK

14. Definition of Terms TRAFFIC ACCIDENT – occurs when it involves a collision of a moving vehicle on public road in which a road user is injured or a property is damaged BACK

15. Definition of Terms FATAL ACCIDENT - at least a single death happens to any of the victims involved in the road accident; a victim dies within 30 days from the onset of accident and as a result of crash. BACK

16. Definition of Terms PROPERTY DAMAGE ONLY (PDO) ACCIDENT - damage to property only happens in the accident and there is no casualty accounted. BACK

17. Definition of Terms SERIOUS INJURY ACCIDENT - there are no deaths but at least one of the victims involved is seriously injured, that is, the person is admitted to a hospital as a result of injuries from a motor vehicle-related crash and receives treatment for more than 30 days. BACK

18. Definition of Terms MINOR INJURY ACCIDENT - there are no deaths but at least one of the victims involved is slightly injured, that is, the person is admitted to a hospital as a result of injuries from a motor vehicle-related crash and receives treatment for less than 30 days. BACK

19. Human Capital Method The Human Capital Method or the Gross Output Method It focuses on the economic consequences of a road accident and usually includes a notional sum that reflects the pain, grief, and suffering incurred by the people involved and their families. This method is based on the idea that the value to society of avoiding a death or injury is related to the potentially lost economic output and resources. BACK

20. Police Administration Cost • The total police administration cost is calculated by multiplying the number of crashes for each severity type to its corresponding average police administrative cost. C1= nS * XS (1) C1 = total police administration cost n = number of crashes for each severity type, s X = average police administration cost for each severity type, s • The average police administrative cost by each severity includes all staff wages and other expenses born by police work in handling traffic accidents. BACK

21. Judicial System Cost • The total judicial system cost is calculated by getting the product of the number of crashes for each type of accident and its corresponding average judicial system cost. C2= nS * YS (2) C2 = total judicial administration cost n = number of crashes for each severity type, s Y = average judicial administration cost for each severity type, s • The average judicial system cost by severity is noted to include the expertise fee or service fee, court cost, labor cost, and transportation expenditure. BACK

22. Insurance Administration Cost • The total insurance administration cost is obtained by getting the product of the number of crashes for each type of severity and its equivalent average insurance administration cost. C3= nS * ZS (3) C3 = total insurance administration cost n = number of crashes for each severity type, s Z = average insurance administration cost for each severity type, s • The average insurance administrative cost by each severity includes all expenses born by the insurance companies. BACK

23. Total Administration Cost Labor Cost - includes the estimation of the monthly wage of each administration staff involved Material Cost - includes the fuel cost for transportation, maintenance cost of vehicle, office materials, telephone and mobile bills and utility expenses such as water and electricity Capital Cost - includes cost of office building, durable furniture, and vehicles used in dealing road accidents Total Administration Cost = C1 + C2 + C3 (4) BACK