Workers Compensation Insurance Rating Bureau of California Workers Compensation Insurance Rating Bureau of California Report on Concrete Dam Construction Excerpt from the WCIRB Classification and Rating Committee Minutes July 31, 2012 About this Report The WCIRB prepares and presents reports to the WCIRB s Classification and Rating Committee to assist in the formulation of proposed changes to the Insurance Commissioner s regulations. Once adopted by the Classification and Rating Committee, the recommendations contained in the report are provided to the WCIRB Governing Committee and may be included in a WCIRB regulatory filing that is submitted to the Insurance Commissioner for approval. About the WCIRB The WCIRB is California's trusted, objective provider of actuarially-based information and research, advisory pure premium rates, and educational services integral to a healthy workers' compensation system. Learn more at www.wcirb.com.
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Report on Concrete Dam Construction 5207, Dam Construction concrete all operations; including the making, setting up and taking down forms, scaffolds, falsework and concrete distributing apparatus and reinforcing steel installation Executive Summary Objective Classification 5207, Dam Construction concrete all operations; including the making, setting up and taking down forms, scaffolds, falsework and concrete distributing apparatus and reinforcing steel installation, does not develop sufficient data to produce statistically credible advisory pure premium rates. Therefore, the WCIRB studied this classification to determine whether this classification should be eliminated and its operations reassigned to one or more existing classifications. Findings and Recommendation Based on its review of the above matter, the WCIRB determined that the operations contemplated by Classification 5207 are comparable to many of the operations contemplated by Classification 6011, Dam Construction N.O.C. all operations. The WCIRB recommends that Classification 5207, Dam Construction concrete, be eliminated effective January 1, 2013. If adopted, all dam construction and demolition will be assigned to Classification 6011, Dam Construction N.O.C. all operations, with respect to policies effective on and after January 1, 2013. 1
Draft Report on Concrete Dam Construction 5207, Dam Construction concrete all operations; including the making, setting up and taking down forms, scaffolds, falsework and concrete distributing apparatus and reinforcing steel installation Introduction Pursuant to the WCIRB s policy of reviewing classifications that do not develop sufficient data to produce statistically credible advisory pure premium rates, Classification 5207, Dam Construction concrete all operations; including the making, setting up and taking down forms, scaffolds, falsework and concrete distributing apparatus and reinforcing steel installation, was studied to determine whether this classification should be eliminated and its constituents reassigned to one or more existing classifications. Classification History The history of Classification 5207 is as follows: 1915: Classification 5207, Concrete Work Dams, was established to apply to the construction of concrete dams, and Classification 6002, Dams, was established to apply to the construction of all other types of dams. 1920: Classification 5207, Concrete Work Dams, was eliminated and its constituents were assigned to Classification 6002, Dam Construction. 1926: Classification 5207, Dam Construction concrete, was re-established to apply to the construction of concrete dams, and Classification 6002 was amended to read, Classification 6002, Dam Construction earth including all operations. 1929: Classification 5213, Concrete Construction N.O.C., was established. 1930: Classification 5207 was amended to include all operations. 1937: Classification 5207 was amended to include the making, setting up, and taking down of forms, scaffolds, false work and concrete distributing apparatus; Drivers, Chauffeurs and their Helpers. 1961: Classification 5207 was amended to specify that tunneling is to be separately rated. 1968: Classification 5207 was amended to include reinforcing steel installation. Description of Operations Following is the classification phraseology, footnote and relevant summary of operations that are assigned to Classification 5207. DAM CONSTRUCTION concrete all operations; including the making, setting up and taking down forms, scaffolds, falsework and concrete distributing apparatus and reinforcing steel installation Tunneling shall be separately classified. 5207 Classification 5207 applies to the construction of concrete dams as well as dam repair, alterations and seismic retrofitting. The construction of concrete dams involves clearing land and the excavation and grading of earth to form the foundation and abutments (the sides of the canyon or valley). A cutoff wall may be excavated deep into rock or holes may be drilled in the foundation for the installation of reinforcing steel that extends up into the dam and tied to steel inside the first lifts of the dam. 2
The preparation of abutments and the construction of the foundation are shown in Figures 1 and 2. Figure 1 Figure 2 Forms made of wood or steel are constructed along each section of the dam. Scaffolding and shoring are installed. Additional reinforcing steel is placed inside the forms. Concrete is poured into the forms and allowed to cure to produce a section and lift. 1 Construction of sections and lifts are continued in this manner to heights that may exceed several hundred feet. Forms and falsework are stripped and constructed with the progression of each stage of construction, as shown in Figure 3. 2 Figure 3 1 Each section of concrete is typically 50 feet wide and each lift of concrete is typically 5-10 feet high. 2 Classification 5207 also contemplates the construction of concrete auxiliary components that are incorporated into the dam, such as spillways, gates, penstocks, observation decks, concrete hydroelectric power plant structures, concrete pumping stations, inlet and outlet towers, drainage wells and surge shafts. Installation of hydroelectric power plant mechanical components and miscellaneous work performed after the completion of dam construction are separately rated. 3
Classification 5207 Payroll and Loss Experience Below is a summary of the payroll and loss data developed under Classification 5207 for the most recent five years of available data: Year Table 1 Classification 5207: Payroll and Loss Experience Number of Employers Payroll Losses Loss to Payroll Ratio 2004 6 353,163 27,740 7.855 2005 7 427,489 0 0.000 2006 6 208,025 0 0.000 2007 4 415,499 4,665 1.123 2008 5 522,001 0 0.000 Total 28 1,926,177 32,405 1.682 Classification 5207 Credibility Factors Indemnity Credibility 3 Medical 0.09 0.12 As shown above, Classification 5207 does not generate sufficient experience to produce a statistically credible advisory pure premium rate. The Unit Statistical Reports (USR) received in the five-year period displayed above represent 17 different policyholders. Of these, three (3) are labor contracting firms and three (3) firms no longer have workers compensation coverage. The WCIRB s library of inspection reports contains two (2) reports that assign Classification 5207 4 one that describes the construction of concrete dams and one that describes the installation of reinforcing steel in connection with the construction of concrete dams. Classification Analysis In view of the lack of statistical credibility, the WCIRB considered assigning concrete dam construction to a related classification, 6011, Dam Construction N.O.C. all operations. Classification 6011 applies to the construction, repair, alteration and seismic retrofitting of earth-filled or earthen dams. The construction of earthen dams involves clearing land of bushes, rocks, small trees, and debris using heavy machinery and equipment including backhoes, skip loaders, compactors, bulldozers, and trenchers. Dirt and rock is excavated from keyways in the sides of the mountain. Dirt is removed from borrow areas and loaded into trucks and transported to the dam site where it is unloaded and compacted. 3 The relativity for each classification in the upcoming policy year is determined based on a comparison of that classification s actual losses per $100 of payroll and the ratio of losses per $100 of payroll underlying the current pure premium rate. The credibilities assigned to a classification are the statistical weights assigned to that classification s experience as a predictor of future claim experience relative to the loss per $100 of payroll underlying the classification s current pure premium rate. The predictability or credibilities assigned to a classification s recent historical experience depends on the volume of indemnity and medical claims incurred during the experience period. The WCIRB strives to have classifications that are fully, or 100%, statistically credible based on historical experience over five or fewer years, which means that the classification s relativity in the upcoming policy year can be best estimated using only the loss per $100 of payroll experience from the latest two-, three-, four- or five-year periods. The WCIRB generally will not recommend the establishment of a new classification if the credibility factors are less than one-half (< 0.50). 4 Both employers have current workers compensation coverage. 4
Earth materials (rip/rap) are blasted and excavated from designated areas of the mountainside and placed in specified areas, after which they are compacted under large amounts of pressure. In support of this, a rock crushing and classifying structure may be built and operated to make crushed rock for filler. The earth filler materials are conveyed or transferred by truck to the dam construction area and compressed into successive layers of earth. This process is repeated until the required elevation has been achieved. A facing of crushed stone is applied to prevent erosion by wind or rain. The various components of an earthen dam under construction are displayed below in Figure 4. Figure 4 To complete most earthen dams, concrete work is performed to produce spillways, barriers, outlet tunnels and structures, abutments, and sidewalls. Forms made of wood or steel are constructed and set in areas requiring concrete. Reinforcing steel is placed inside the forms. Concrete is poured or pumped into the forms, allowed to cure, and forms are removed. 5
Figure 5 below displays a very large operating earthen dam and its auxiliary concrete structures. Figure 5 As with the construction of concrete dams, the construction of earthen dams is performed pursuant to public works projects and employees working on such projects earn prevailing wages. As described above, the construction of earthen dams primarily involves earth moving; however, such projects may include a significant amount of concrete construction, including reinforcing steel installation, building concrete forms, and pouring and finishing concrete. All of these operations are common to those associated with Classification 5207. The WCIRB therefore recommends that Classification 5207 be eliminated and that the operations contemplated by Classification 5207 be reassigned to Classification 6011. Statistical Analysis Classifications 5207 and 6011 Combined To assess the impact of eliminating Classification 5207, WCIRB staff developed a summary of the payroll and loss data for Classifications 5207 and 6011 combined, and compared the current selected loss to payroll ratio for Classification 5207 to the selected loss to payroll ratio for Classifications 5207 and 6011 combined (see Tables 2 and 3). 6
Table 2 Classifications 5207 and 6011 Combined: Payroll and Loss Experience Year Number of Employers Payroll Losses Loss to Payroll Ratio 2004 7 353,649 27,203 7.692 2005 9 431,057 0 0.000 2006 7 213,542 0 0.000 2007 5 447,166 4,187 0.936 2008 7 1,852,023 0 0.000 Total 35 3,297,437 31,390 0.952 Indemnity Credibility Factors Credibility 5 Medical 0.11 0.15 Table 3 Comparison of Selected (Unlimited) Loss to Payroll Ratios at Policy Year 2012 Level 5207 and 6011 Combined vs. 5207 Classifications 5207 and 6011 Combined Classification 5207 Difference 3.816 3.668 +0.148 (+4.03%) Conclusion and Recommendation Many of the operations involved in the construction of concrete dams (Classification 5207) are similar to those involved in the construction of earthen dams (Classification 6011). The WCIRB therefore recommends that Classification 5207 be eliminated and the operations contemplated by Classification 5207 be reassigned to Classification 6011. 6 Approval of this recommendation will require the following changes to Part 3 of the California Workers Compensation Uniform Statistical Reporting Plan 1995 to be included in the January 1, 2013 Pure Premium Rate Filing. 5 The relativity for each classification in the upcoming policy year is determined based on a comparison of that classification s actual losses per $100 of payroll and the ratio of losses per $100 of payroll underlying the current pure premium rate. The credibilities assigned to a classification are the statistical weights assigned to that classification s experience as a predictor of future claim experience relative to the loss per $100 of payroll underlying the classification s current pure premium rate. The predictability or credibilities assigned to a classification s recent historical experience depends on the volume of indemnity and medical claims incurred during the experience period. The WCIRB strives to have classifications that are fully, or 100%, statistically credible based on historical experience over five or fewer years, which means that the classification s relativity in the upcoming policy year can be best estimated using only the loss per $100 of payroll experience from the latest two-, three-, four- or five-year periods. The WCIRB generally will not recommend the establishment of a new classification if the credibility factors are less than one-half (< 0.50). 6 It is noted that Classifications 5207 and 6011 combined do not generate sufficient payroll and loss experience to generate a statistically credible advisory pure premium rate; however, dam projects are unique in nature, usually are very large, spanning several years to complete and most likely would develop sufficient payroll and loss data to create statistically credible advisory pure premium rates. It is recommended, therefore, that Classification 6011 be retained. See Item CR12-07-04, Report on Dam Construction, for more information. 7
Proposed Changes to the California Workers Compensation Uniform Statistical Reporting Plan 1995 Recommendation Eliminate Classification 5207, Dam Construction concrete, as it is no longer statistically credible. PROPOSED DAM CONSTRUCTION concrete all operations; including the making, setting up and taking down forms, scaffolds, falsework and concrete distributing apparatus and reinforcing steel installation Tunneling shall be separately classified. 5207 8
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