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Every year, hurricanes, tornadoes, hail, floods, severe winter weather, and wildfire result in billions of dollars in direct and indirect losses to commercial enterprises in all parts of the United States. In addition, every year, commercial facilities are severely damaged by other hazards, including internal water leaks and interior fires.
Although property insurance will cover many of the costs associated with these events, businesses that are severely damaged may never fully recover. According to the Insurance Information Institute's estimates, as many as one in four businesses forced to close after a disaster never reopens. Short- and long-term interruptions of business operations can lead to employee loss, as well as declines in revenue and competitive market share.
Code-plus programs, like the Insurance Institute for Business & Home Safety's (IBHS) FORTIFIED Commercial™, help businesses avoid or reduce damage and disruption caused by natural hazards and other risks that permanently close the doors of numerous enterprises each year. Proper maintenance and business continuity planning also are vital to loss reduction and are necessary complements to programs with a code-type focus. Reduced damage and disruption will help businesses re-open faster during a time of need for their customers, employees, and (often) their own family members. This level of dependability and service following a major catastrophe enhances a company's reputation and value in the community.
The Difference between Resilient Building Standards and Model Building Codes
Having the foresight to house business operations in a building that is well-designed and properly constructed to withstand natural hazards is as important for economic survival after a disaster, as having the resources in place for rebuilding following an event. Strong, well-enforced building codes and modern engineering standards provide the baseline level of safety for a community. However, since model building codes are minimum life safety standards, they may not provide businesses with all necessary property protection. Code-plus programs provide a framework for implementing additional levels of resilience to hazards, through a verified methodology, in a format familiar to designers and contractors. Code-plus programs typically have provisions that cover a range of building and project types including commercial and residential new construction and retrofitting.
In the United States, commercial properties are generally designed to meet International Building Code (IBC) requirements. Thus, code-plus programs typically assume a baseline level of performance based on minimum codes. Even in jurisdictions where building codes have not been adopted, designers and owners look to model codes as minimum criteria for the design and construction of safe buildings. Generally, the requirements of code-plus programs exceed certain requirements of the most recent edition of the IBC in order to provide improved disaster resistance. In addition to the promotion of best available practices for disaster resistance, effective code-plus programs require compliance with accepted certification standards regarding construction, plumbing, mechanical, electrical fuel-gas, and energy conservation. Some code-plus programs require additional inspections and verification to help assure building owners and tenants that key vulnerabilities have been addressed and the enhancements called for by the code-plus program are properly executed. Emerging performance-based approaches in the program to designing buildings also will help with continuity of operations or occupant protection targets for a specific level of event. As a hypothetical example, a facility could be designed to remain 100% operational in a 500-year event, while that structure's design enables the facility to remain structurally intact for occupant protection in a 5,000-year event. To date, this approach has been largely limited to seismic design.
Benefits to Businesses and Communities
Utilizing a code-plus program to enhance a property's resilience in the face of natural hazards provides the following benefits to the building owner, their tenants and the community:
- Greatly reduced potential for property damage from natural disasters and interior fire;
- Protection of physical assets, such as the building, equipment, inventories, and tenant improvements;
- Protection of tangible and non-tangible assets;
- Maintenance of business operations;
- Increased likelihood of immediate reuse post-disaster;
- Improved competitive advantage by providing continuous services to customers;
- Maintenance, or even increase, of market share during and after a widespread catastrophe;
- Maintenance or increase of steady revenue stream and strengthening of community ties by providing critical goods and services in difficult circumstances;
- Retention of employees and reduction of employee stress;
- Reduction of environmental impact by limiting building materials in landfills post-disaster and lowering overall of community recovery costs; and,
- Assistance to taxpayers everywhere - a study by the National Institute of Building Sciences Multihazard Mitigation Council found that for every $1 spent on disaster mitigation, society saves $4 in disaster recovery expenses.
Increased Cost of Construction
Owners and designers often express concerns about the cost and potential return on investment, when considering any additional requirements above the minimum building code. Through its FORTIFIED for Safer Business™ (FFSB) program, IBHS completed three pilot projects in 2012, including a 300,000 sq. ft., three-story office complex; a 200,000 sq. ft., five-story office building; and a 10,000 sq. ft., single-story office building. IBHS found that increased costs of construction for the enhanced standards varied between less than one percent for the larger facilities to approximately five percent for the smaller buildings. However, increased construction costs will vary with each project, depending on the facility's location, exposure to certain hazards, building height, footprint, shape, size, as well as type of construction.
How Does It Work?
The decision to participate in a code-plus program should be made in the design phase, when it is most cost-effective to incorporate resilience upgrades into building design plans, drawings and specifications. This helps avoid change order fees and results in faster completion of the design and a more efficient bidding process. Program engineering standards are typically designed to bring together a number of "best practices" in a format that can be utilized from design to construction of a commercial project. Achieving best results from the program requires a shared commitment to the code-plus program and the desired results among the building/business owner, the architect/designer and the builder/contractor.
The Need for Compliance
Code-plus programs often do not rely solely on proper design, but require an inspection and compliance process to assure that the design and construction incorporate the program criteria throughout the build. Early plan review by a qualified professional is often included and helps ensure that the building is designed in accordance with the program's engineering standards. Construction can then be monitored through periodic inspections by a third-party inspector, using project-specific checklists to give the owner peace of mind that the building will meet the program criteria upon completion. The FORTIFIED Technical Resources contains several sample checklists for each hazard in its program. This inspection process also should include the creation of a documentation file that will be crucial when seeking future designations or other benefits from insurance companies, lenders, realtors®, appraisers, etc.
Process for Constructing a Building in Compliance with a Code-Plus Program for Resilience
Identify natural hazards that must be addressed in the design and construction processes.
Note: Wind, building envelope and water/air management, interior fires, burglary, electrical surge protection, flood, and wildfire risks should be assessed for all buildings.
A design professional (Registered Architect or Professional Engineer) designs the structure to comply with all program requirements.
The design professional (Registered Architect or Professional Engineer) also will complete checklists and accompanying documents and submit documentation to a program administrator or a designated plan reviewer.
The administrator or plan reviewer will review and notify the applicant of completeness, errors and omissions.
Resubmittals may be required.
An independent field inspector will verify that all items identified on the project-specific inspection checklists have been correctly addressed for the structure, through a combination of field inspections and submitted photographs and documentation provided by the project coordinator/engineer (if such inspections are required by the program).
The inspection checklist for each peril is then typically submitted to the administrator or plan reviewer for verification.
- A documentation file of all compliance activities is presented to the owner. Documentation should include (but is not necessarily limited to):
- Photographs of key system upgrades after installation but prior to concealment by finished materials
- Test reports
- Product spec. sheets
- Change orders
- Signed and sealed design documents
- Completed and signed checklists
The Insurance Institute for Business & Home Safety (IBHS)—IBHS is an independent, nonprofit, engineering, research, and communications organization supported by the property insurance industry. The organization works to reduce the social and economic effects of natural disasters and other risks on residential and commercial property by conducting building science research and advocating improved construction, maintenance and preparedness practices. IBHS has developed the FORTIFIED program as a code-plus program for resilience. The FORTIFIED Home™ program address residential structures. For more information, visit the FORTIFIED web site.
Multi-Hazard Mitigation Council (MMC)—MMC advocates reducing the total losses associated with natural and other hazards by fostering and promoting consistent and improved multi-hazard risk mitigation strategies, guidelines, practices, and related efforts.