Estimating Indirect Accident Cost Using a Two-Tiered Machine Learning Algorithm for the Construction Industry

Accurately estimating total accident costs is essential for managing construction safety budgets. While direct costs are well-documented, indirect costs—such as productivity loss, material damage, and legal expenses—are difficult to predict and often overlooked. Traditional ratio-based methods lack accuracy due to variability across projects and accident types. This study introduces a two-tiered machine learning framework for real-time indirect cost estimation. In the first tier, classification models (decision tree, random forest, k-nearest neighbor, and XGBoost) predict total cost categories; in the second, regression models (decision tree, random forest, gradient boosting, and light-gradient boosting machine) estimate indirect costs. Using a dataset of 1036 construction accidents collected over two years, the model achieved accuracies above 87% in classification and an R2 of 0.95 with a training MSE of 0.21 in regression. Compared to conventional statistical and single-step models, it demonstrated superior predictive performance, reducing average deviations to $362.63 and sometimes achieving zero deviation. This framework enables more precise, real-time estimation of hidden costs, promoting better safety investment, reduced financial risk, and adaptive learning through retraining. When integrated with a national accident cost database, it supports ongoing improvement and informed risk management for construction stakeholders.