Thursday, May 22, 2014

Better Construction Matters!

Later this summer, a journal article Jeff Czajkowski of Wharton and I co-authored will appear in Land Economics.  But a shorter version of the research was published last week in Visualize, an insurance industry publication.  The link to the article is here:

We were interested to see if better enforcement of building codes could translate into lower damage when a hazard strikes a community.  The hazard we studied was hail, which is one of the costliest hazards for insured losses.  To determine the degree to which building codes were enforced we used the Building Code Effectiveness Grading Schedule (BCEGS) which is administered by the Insurance Services Office (ISO).  Damage data came from two sources, industry level damage from ISO and exposure level damage from Travelers Insurance.  We found that the difference in insured losses between communities with the higher ratings and those with no rating was a reduction in losses of about 20%.   

Monday, May 5, 2014

Building a House of Straw when a Wolf is in the Neighborhood

The Little Rock office of the National Weather Service has released some information on the damage survey conducted after the tornadoes of April 27.  The disturbing finding is that many of the homes suffering the worst damage did not have the exterior walls anchored to the foundation properly.  Anchor bolts are L or J shaped bolts inserted into the foundation before it cures leaving a threaded portion allowing the contractor to bolt the baseplate to the foundation.  Instead the baseplate of some of the homes were attached simply with cut nails.  Their summary can found here:

It may be faster and slightly cheaper to fasten the exterior walls without the anchor bolts but the cost and time saved makes little sense.   I checked prices for anchor bolts online and found that, when purchased in bulk the cost is less than $1.00 each for an 8 inch L shaped bolt with a diameter of ½ inch.  Spaced at 2 foot intervals, the material cost of a 2500 square foot house would increase by less than $100.  The American approach to production has been make it faster and make it cheaper.  That may be fine if the product in question is one that is largely disposable.  But if you are building a residential structure that may encounter a wind storm it seems to me that it is incumbent on the community and on the contractors to ensure that it will perform better than this.

It should not be expected that all residential homes have the capacity to survive a direct hit by an EF-5 tornado.  But the path of most EF-5 tornadoes only reach that strength for a small part of the path itself, meaning that many structures will only be exposed to winds in the lower level of the Enhanced Fujita scale.  Better construction will mean that the residents of those homes have a higher chance of survival and overall, the damage from the storm will be less.

A tension exists between providing affordable housing versus requiring that all homes be built to anticipate any possible hazard.  Communities want developers to choose their town for the next development and if lax standards make development more likely it’s tempting to water down the requirements.  But the cost differential on this one element can’t possibly be justified.