NFPA Journal

When Cuba Gooding, Jr. had Tom Cruise shouting “Show me the money!” in Jerry Maguire, it epitomized how value is intrinsically linked to dollars.

In the fire safety world, though, we still aren’t good enough at showing the money when it comes to the impact of fire safety provisions. We have data on the number of fires, fatalities, injuries, and direct losses, and while these are all good indicators of our overall fire safety picture, they are difficult to translate into an actual cost benefit for instituting fire safety provisions.

NFPA Research is working to change that. We recently teamed up with the Fire Protection Research Foundation on a project designed to improve our understanding of the cost of fire. The resulting study, “Economic Impact of Fire—Cost and Impact of Fire Protection in Buildings” (nfpa.org/foundation), is based on work carried out by an international team of researchers from Ghent University in Belgium, as well as Utah State University and Johns Hopkins University. The objective of the work was to establish and apply a methodology for evaluating the total benefits and costs related to fire protection features in buildings.

The evaluation balances the costs of fire protection features with the anticipated averted losses based on the expected beneficial impact of fire protection on human loss, property loss, and indirect loss in case of fire over the lifetime of the building. The costs include installation and ongoing maintenance. The averted losses are estimated using either fire statistics or a combination of statistics and predictive modeling.

The methodology developed can be applied to a group of buildings to support policy decisions at the local level for the requirement of fire safety provisions, such as the installation of home fire sprinklers in single-family homes. It then requires that the costs and fire-loss evaluations are averaged for a representative building prototype. But it can also be applied to specific building and investment decisions—such as analyzing fire protection investments in a manufacturing facility—by identifying costs and fire loss for a particular case, and considering the actual processes and hazards identified for the specific occupancy and location. We will use the methodology in future updates to our “Total Cost of Fire in the United States” report to provide a better estimate of the cost of fire protection, an area identified in the 2017 report as needing further research.

As with all models, the result obtained depends on the assumptions and input data chosen by the user. To show the effects of varying the input data, the authors of the “Economic Impact of Fire” report provide sensitivity analyses for the five case studies included in the report. Users of the methodology are encouraged to apply such sensitivity analyses to evaluate the robustness of their cost-benefit calculations. In addition to the case studies and the methodology outline, the authors have provided the code, allowing users to input their own data and run calculations on their specific applications. The code is available with the full report online.

NFPA Research continues to work on improving our big-picture understanding of the impact of fire, from important incident data collection to evaluations of the impact of fire on people, property, and the environment. While there are gaps remaining to be filled in fire’s economic impact, this latest work is a significant step forward in being able to quantify the value of fire protection. With this new research, fire protection professionals are now better prepared to participate in conversations about costs versus benefits. It is my sincere hope that this work will be used by individual building owners, insurance companies, and policymakers to reinforce their decisions in support of fire protection.