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
OUTLINE
I. Introduction
1.
2.
3.
4.
5.
Background of the Study
Statement of the Problem
Objectives
Significance of the Study
Scope and Limitations
II. Review of Related
Literature
1. Conceptual Framework
2. Definition of Terms
III. Methodology
1.
2.
3.
4.
Police Administration Cost
Judicial System Cost
Insurance Administration Cost
Total Administration Cost
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.
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
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
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
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
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
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
Significance of the Study
• Road accident cost is
important for conducting
strategic planning and costbenefit analysis in handling
road safety project.
• The study can act as a
medium to encourage and
implement an efficient road
safety scheme.
BACK
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
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
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
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
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
Definition of Terms
PROPERTY DAMAGE ONLY
(PDO) ACCIDENT - damage
to property only happens in
the accident and there is no
casualty accounted.
BACK
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
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
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
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
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
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
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
BACK
(4)