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Looking ahead is the key to infrastructure resilience

May 29, 2018

U.S. needs to focus on front-end planning to address failing infrastructure nationwide.

post storm flood

Frederick Douglass’ famous quote, “It is easier to build strong children than to repair broken men,” might also be applied to the nation’s infrastructure crisis. As the U.S. faces widespread problems of deteriorating roads, bridges, dams, water mains, power plants, communication networks and more, it’s crucial to devote more time and resources planning to avoid failures so ultimately less time and fewer resources are wasted responding to them.

Maintaining and repairing the interconnected sectors of American infrastructure is difficult and costly. As the historic, devastating hurricanes of 2017 proved, this is especially true as severe weather events escalate in frequency and severity. In his introduction to our recent white paper, “Rebuilding Infrastructure: The Need for Sustainable and Resilient Solutions,” Zurich’s Head of North America Commercial Insurance Paul Horgan pointed out that in responding to natural disasters, people often lose sight of the big picture:

“The immediate focus after a disaster is to get the lights back on. In reality, we should be taking the time – in advance – to make sure the lights will stay on when the next disaster strikes.”

In trying to turn the nation’s collective focus to front-end planning instead of back-end response, perhaps the biggest hurdle is funding.  Budgets are strained and deficits abound on federal, state and local levels. And deep political divisions across the country affect both resolving budget crises and allocation of limited resources. While that reality makes it understandable some would balk at the large investment needed for rebuilding or extensive renovation projects, consider this: A National Institute of Building Sciences study indicates that every dollar invested in hazard mitigation measures exceeding ICC building code requirements saves four dollars in disaster recovery.

To put it bluntly, we can pay now or pay later … but if we pay later, we’ll pay much more.

“Paying now” may also reap long-term economic benefits that outweigh budget worries. An Economic Policy Institute report notes, “… each $100 billion in infrastructure spending would boost GDP by $150 billion. This increase in GDP would in turn boost employment by a bit over one million workers.”

In addition, rebuilding to more resilient standards isn’t necessarily the intimidating expense it might seem to be. For instance, some Zurich customers have reported it costs less than 2 percent of added material expenses to build a hurricane-hardened facility.

That doesn’t mean we can brush aside significant challenges of funding proactive resilience strategies. However, varied approaches to investment and protecting that investment can put the U.S. on the path to real progress. Here are a few ideas worth prioritizing as we map out possible solutions:

Public-Private Partnerships (P3s) – After years of lagging behind Europe, infrastructure P3 projects are significantly on the rise in the U.S. P3s, in which private investors help fund sizable infrastructure improvements, have become a more cost-efficient option for many state and city governments. A prime example is the Chicago Skyway, where private sector investors paid the city $1.83 billion for reconstruction of the bridge in exchange for operational rights and corresponding toll revenues.

P3 terms and conditions can vary widely based on the type and size of a project, but a properly tailored surety bond can help minimize the risks associated with a construction project and help assure a project’s completion.

Stricter building codes – The evidence gleaned so far from Hurricane Irma’s impact on Florida speaks strongly to the positive effect of stricter building codes enacted there in 2002. The Sunshine State now has one of the strongest building codes in the nation and post-Irma reports suggest houses built to the new requirements fared much better during the hurricane than those built earlier. Stricter codes may, of course, result in higher costs and also demand more tax-supported regulation (a code is only effective if it’s enforced). Still, returning to the idea that it’s easier to “build strong” than “fix broken,” ensuring higher building resilience standards prior to construction may be more practical from both a bottom line and societal perspective.

Reassessing continuity plans
 – The volatility of recent weather-related events makes clear that both public and private enterprises need to view protecting infrastructure as an evolving and ongoing process. Building resilience on the front end also includes reviewing continuity plans with supply chain and logistics service providers to ensure operational continuity. This is where regular visits from a Risk Engineer for up-to-date evaluations can serve you well. Being as current as possible with risk assessment can be the most important step in risk mitigation.

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