Fire safety and the cost of fire safety: Achieving the right balance

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MORGAN HURLEY from the Society of Fire Protection Engineers explains why it is necessary to balance the cost of providing fire safety with the potential costs associated with fire losses.

Today, building designs have become more complex and highly detailed. Buildings are larger, have more unusual shapes and comprise a variety of hazards. Fire safety engineers provide the specialised expert support that is needed to understand these complex building designs. Accordingly, all fire protection and life-safety designs should be prepared and supervised by a qualified fire safety engineer.
Fires exact a toll on society. These costs come from two sources. One source, which is the most easily recognised, is the losses that occur during and following a fire. The second source is not as apparent: the cost of providing fire protection in buildings. When designing fire safety in buildings, it is necessary to balance the cost of providing fire safety with the potential costs associated with fire losses.

DIRECT LOSSES VERSUS INDIRECT
Losses that are suffered in fires can be grouped into two categories: direct losses and indirect losses. Direct losses encompass the replacement costs of things that are damaged by fire. This includes damages to the building itself (whether repair or replacement is necessary) and the value of things that are located within a building that are damaged or destroyed by fire. Direct losses also include deaths and injuries to people from fire; the ‘value’ of these losses is inherently difficult to quantify, but necessary to consider nonetheless.
Indirect costs include the monetary value of losses that occur as a result of a fire that are not associated with the repair or replacement of a building or its contents. Indirect costs include costs of obtaining alternative building space and lost revenue due to business interruption.
In Australia, direct fire losses averaged just over $900 million per year from 2006 to 2008 (World Fire Statistics, The Geneva Association, Geneva, 2011). Indirect losses are much more difficult to quantify, but are generally on the order of 10 percent of the value of direct losses, which would bring the total cost of fire losses in Australia to about $1 billion per year.

ATTENDANT COSTS
Fire safety itself has attendant costs. These include the costs associated with providing fire safety measures in buildings, such as fire suppression systems, fire detection and alarm systems, smoke control systems and fire resistant construction.
Other fire-related costs include the costs of providing fire-fighting services and the costs of providing insurance cover. Insurance cover is simply a risk transfer mechanism (the purchaser of insurance pays to transfer risk to the insurer). Since insurance only affects who pays for losses, the cost of insurance is not considered in this analysis. Also, since fire-fighting services are provided at a community level, the cost of providing these services is not addressed either.
All human endeavours bring with them some risk, and it is not possible to achieve an environment entirely free of risk. Buildings are no exception. A building could be constructed entirely using non-combustible materials, but once furnishings, electrical and mechanical systems and people are brought into a building, they bring with them some fire risk. It is possible to minimise this risk by providing fire safety systems, but it is not possible to completely eliminate it.
Fire is an infrequent event. A building may never experience a fire, no matter how much or how little fire safety is provided. It is impossible, however, to determine ahead of time whether or not a building will experience a fire.
Generally, when one considers the costs of fire, a very long timeframe is used, such as the anticipated life of a building. The cost of fire is then expressed on an annual basis, which is determined by estimating the total fire losses expected during the life of a building and dividing these losses by the life expectancy of the building. These costs can be expressed on a current or future basis, but such an analysis is beyond the scope of this article.

BALANCING THE COSTS
The cost of fire (direct and indirect) is balanced by the costs of providing fire safety. As additional fire safety is provided in a building, the costs of fire would increase. There is a point of diminishing returns, however, where spending an additional dollar on fire safety results in less than a dollar of savings from fire losses.
This can be illustrated by considering two extremes: the most costly fire losses and the most costly fire safety. At one extreme would be a building constructed from thatch and wooden sticks. Most fires in this building would grow to consume the entire building, so fire losses would be maximised (but the cost of providing fire safety is minimised since little to no fire safety is provided.)
At the other end of the extreme would be a building constructed using every imaginable fire safety measure. Such a building would be extraordinarily expensive to construct and operate. In this building, fire losses would be minimised, but the cost of fire safety is maximised.
The challenge is to find a balance point between fire safety and the cost of fire safety. While fire safety engineers can assist greatly with finding this balance, the choice is not left to them alone (or building owners or facilities managers, for that matter.) Instead, society determines where this balance occurs. And society values different risks differently. Society generally will not tolerate large fires that result in the total loss of a building that serves an important function in the community. Similarly, society will not tolerate a fire that results in a large loss of life.
A further challenge in finding the balance between safety and the cost of safety is the fact that society does not explicitly state the amount of losses that it can tolerate. Society’s loss tolerance is reflected, to a certain degree, in the building and fire codes that it adopts. Case law also plays a role, however, as society may find some losses that occur in fully code compliant buildings to be unacceptable.
It is necessary to find the right balance between fire safety and the cost of fire safety on any building construction or renovation project. Providing too little fire safety can expose the building owner to risk, while providing too much fire safety is needlessly costly.

Morgan Hurley is technical director of the Society of Fire Protection Engineers.

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