Occupational accident direct cost model validation using confirmatory factor analysis

Abstract

Accident cost estimation become more important since it may cause financial implication to the company. However, there are no consensus between researchers in classifying direct cost component. The objective of this study is to evaluate direct cost model of occupational accident cost by using confirmatory factor analysis (CFA) method. There are three cost components proposed for direct cost estimation which are medical cost, rehabilitation cost and compensation cost. Local specific approach (by reviewing previous accident record in the company) is adopted in data collection process and only accidents occurred between 2008 and 2013 were considered in this study. There are 344 cases in total which came from six different sectors in manufacturing industry. For each occupational accident, the site safety officer in charge, human resource and account department officer were interviewed in order to estimate the direct cost. Then, the relationship between three observed variables for direct cost is evaluated by using CFA. The CFA result shows that the occupational accident direct cost model has acceptable goodness of fit that proved relationship between three observed variables (medical, rehabilitation and compensation cost) and its latent construct. In conclusion, the model justify that direct cost consists of three components, which are medical cost, rehabilitation cost and compensation cost.