6e Risk Insurance and Mgmt System memo
COMMISSION AGENDA MEMORANDUM Item No. 6e ACTION ITEM Date of Meeting May 8, 2018 DATE: April 30, 2018 TO: Stephen Metruck, Executive Director FROM: Manette Moses, Director Health & Safety Jeff Hollingsworth, Sr. Manager Risk Management SUBJECT: Risk, Health and Safety System Contract Renewal Amount of this request: $600,000 ACTION REQUESTED Request Commission authorization for the Executive Director to execute contract documents for the purpose of renewing the Port's Risk Insurance and Management System, Origami Risk, through May 31, 2023, at an estimated cost of $600,000. EXECUTIVE SUMMARY Approval of this request will allow the Port to continue using the Origami Risk system to administer all aspects of our risk, safety, and industrial insurance programs; track leading safety performance indicators; manage injury, damage, vehicle and bus, or lost and stolen property claims; submit regulated data to Labor and Industries, and the Centers for Medicare and Medicaid; and track recoveries from liable third parties. The Origami Risk system, competitively procured in 2012, is a critical tool used by the Risk Management and the Health & Safety organizations to manage their day-to-day operations. For Health & Safety, the system must be used to comply with Industrial Insurance laws and regulations, meet federal and state reporting requirements, and capture important hazard and safety events critical for the development of safety improvements port-wide. For Risk Management, the system is used to capture and track all information associated with claim events, losses, litigation expense, and recoveries. The Origami system provides an online portal for self-reporting which streamlines the intake process and increases the reporting rate. ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1 Procured a new Risk Management system. Cost Implications: The annual cost of a new system would depend on the system selected via a competitive procurement. Implementation costs are estimated at $300,000. Template revised September 22, 2016. COMMISSION AGENDA Action Item No. 6e Page 2 of 3 Meeting Date: May 8, 2018 Pros: (1) While Origami Risk is the top risk management system as rated by several industry studies, a competitive procurement could offer required features at a lower recurring cost. System conversion costs and data loss risks from migration would need to be included in the overall assessment. Cons: (1) The schedule for the procurement and implementation of a new system is estimated at 18-24 months and would require significant resources from Risk Management, Health & Safety, Information & Communication Technologies, and the Central Procurement Office. Resources would be unavailable for other important programs and operations. This is not the recommended alternative. Alternative 2 Do not renew contract and drop the Port's self-insurance programs. The Port will be unable to maintain our self-insurance programs without system support. Cost Implications: $2,400,000 per year Pros: (1) None Cons: (1) This alternative is significantly more expensive than the recommended alternative due to an increase in insurance premiums and the cost for an insurance company or thirdparty administrator to process the estimated number of annual claims. (2) Electronic reporting and internal monitoring of claims has improved safety performance resulting in a 31% reduction in the Occupational Injury Rate between 2014 and 2017. Reverting to a third-party administrator will reduce or eliminate the gains from the past few years. This is not the recommended alternative. Alternative 3 Renew the Origami Risk contract for the next five years. Cost Implications: $600,000 (5 Year Cost) Pros: (1) Risk Management and Health & Safety have developed automated processes and robust reporting for the efficient management of our claim processing and safety programs using the Origami Risk system. With this recommended alternative, the Port will be able to continue to self-insure and self-administer our worker's compensation and high-deductible insurance programs. Template revised September 22, 2016; format updates October 19, 2016. COMMISSION AGENDA Action Item No. 6e Page 3 of 3 Meeting Date: May 8, 2018 (2) Data from electronic reporting and internal monitoring of events and claims help identify loss and injury trends and areas for safety improvements resulting in the reduction of future injury and loss. This work directly supports the Port' s Long Range Plan. Cons: (1) While Origami Risk is the top risk management system as rated by several industry studies, a competitive procurement could offer required features at a lower recurring cost. System conversion costs and data loss risks from migration would need to be included in the overall assessment. This is the recommended alternative. FINANCIAL IMPLICATIONS Cost Estimate/Authorization Summary Capital Expense Total COST ESTIMATE Original estimate $0 $600,000 $600,000 AUTHORIZATION Previous authorizations 0 0 0 Current request for authorization 0 $600,000 $600,000 Total authorizations, including this request 0 $600,000 $600,000 Remaining amount to be authorized $0 $0 $0 Annual Budget Status and Source of Funds The annual cost of the license agreement is budgeted 50 percent in the Risk Management expense budget and 50 percent in the Health & Safety expense budget. Financial Analysis and Summary Project cost for analysis $600,000 Business Unit (BU) Corporate Effect on business performance n/a (NOI after depreciation) IRR/NPV (if relevant) n/a CPE Impact n/a ATTACHMENTS TO THIS REQUEST None PREVIOUS COMMISSION ACTIONS OR BRIEFINGS None Template revised September 22, 2016; format updates October 19, 2016.
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