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Cost–Benefit Analysis of Fire Protection in Buildings: Application of a Present Net Value Approach

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Abstract

In fire safety engineering, cost–benefit analysis provides a systematic method to assess whether the projected benefits from a fire safety measure outweigh its costs. However, there remains a wide discrepancy between methods used in the field for cost–benefit analysis, as well as a lack of quantitative data on the costs and economic impact of fire protection in buildings. In a recent research project, a reference methodology was proposed based on Present Net Value evaluation and on a combination of specialized construction database, fire statistics, and numerical modeling for estimation of the cost components. This paper presents the application of the methodology to four case studies. The case studies allow describing the methodology, the collection of data, fire statistics, and loss estimation, as well as illustrating how the methodology can support decision-making when multiple alternatives are compared. Under the assumptions adopted for the single-family house and the residential timber building case studies, it is found that for every 1$ invested in sprinklers, $1.06 is saved. This benefit–cost ratio increases with increasing valuation of indirect losses and statistical value of life. Sensitivity analyses are provided to explore the robustness of the investment recommendations. The results of evaluations, adapted from the presented case studies with project-specific inputs, can support decision making for policy makers, insurance companies, and individual building owners.

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Acknowledgements

The authors gratefully acknowledge the Fire Protection Research Foundation (FPRF) and the National Fire Protection Association (NFPA) for the funding through the project “Economic Impact of Fire: Cost and Impact of Fire Protection in Buildings”. The authors thank Amanda Kimball, Birgitte Messerschmidt, and the members of the Project Technical Panel for their support.

Funding

The research leading to these results received funding from the Fire Protection Research Foundation (the Research Affiliate of NFPA).

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Authors and Affiliations

  1. Johns Hopkins University, Baltimore, USA

    Thomas Gernay

  2. University of Maryland, College Park, USA

    Shuna Ni

  3. Utah State University, Logan, USA

    David Unobe

  4. Slovenian National Building and Civil Engineering Institute (ZAG), Ljubljana, Slovenia

    Andrea Lucherini

  5. Ghent University, Ghent, Belgium

    Andrea Lucherini, Ranjit Chaudhary & Ruben Van Coile

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  1. Thomas Gernay
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  2. Shuna Ni
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  4. Andrea Lucherini
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  5. Ranjit Chaudhary
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  6. Ruben Van Coile
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Correspondence to Thomas Gernay.

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Conflict of Interest

The authors declare the following financial interests/personal relationships which may be considered as potential competing interests: under a license agreement between Gesval S.A. and the Johns Hopkins University, Dr. Gernay and the University are entitled to royalty distributions related to the technology SAFIR described in the study discussed in this publication. This arrangement has been reviewed and approved by the Johns Hopkins University in accordance with its conflict of interest policies. Dr. Gernay serves as an associate editor for Fire Technology. Dr. Van Coile serves as an editorial board member for Fire Technology.

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Gernay, T., Ni, S., Unobe, D. et al. Cost–Benefit Analysis of Fire Protection in Buildings: Application of a Present Net Value Approach. Fire Technol 59, 2023–2053 (2023). https://doi.org/10.1007/s10694-023-01419-2

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