Fire and flood risks can pose considerable damage to your construction site. The true cost however extends far beyond physical damage. The most immediate consequence of a major incident are the delays that a project can be subject to. Delays are incurred due to the need to assess damage, clean up the project, and repair any work that has been undone.
Delay has a knock-on effect on the financial viability of a project, coming hand in hand with disruption due to work stoppages and reduced productivity. As a result, idle labour costs, necessary overtime, or additional employees may be needed to ensure projects are completed on time.
Financial loss can also be incurred as plant or equipment such as machinery and tools may need to be repaired or replaced. Materials stored on site can also be destroyed and are necessary to replace.
The health and safety risks created by a fire or flood incident cannot be underestimated, with Construction (Design and Management) Regulations 2015 requiring health and safety risks on a construction project to be assessed and managed. Smoke and toxic exposure caused by fire or the soot, ash, and residue post-fire can require specialist remediation to remove contaminants before works can continue, while fire-damaged electrical systems or machinery can remain unsafe with a risk of shock.
Flooding can increase the potential for slips, trips, and falls on waterlogged surfaces, while electrical systems exposed to water can create a risk of electrocution. Floodwater can carry contaminants, such as raw sewage and toxic chemicals. To ensure the building site is a safe workplace in the wake of an incident, remediation will be required before workers return.
Insurance is a major consideration. Following a severe fire or flood incident, long-term costs like insurance premiums may rise, while insurers may implement conditions on cover afforded to future projects due to the perceived risks. Claiming in the event of an incident is also a time-consuming, complex process. Necessary documentation may have been lost in the incident, while liability for the incident may not be fully understood.
Contractually, fire and flood can pose difficulties. Missed deadlines can trigger liquidated damages, financial penalties for missed milestones, or create disputes with contractors. Often the financial loss associated with these secondary costs will far outweigh the direct costs of the incident.
Delays, disruption, or breaking the terms of a contract can all ultimately damage client confidence, and the trust of stakeholders. While it may only be a single site that suffers, the impact of such incidents will extend beyond that and is likely to affect future opportunities or the perceptions of your risk management abilities.