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Benefit-Cost Analysis of Residential Fire Sprinkler Systems.


pdf icon Benefit-Cost Analysis of Residential Fire Sprinkler Systems. (1616 K)
Butry, D. T.; Brown, M. H.; Fuller, S. K.

NISTIR 7451; 67 p. September 2007.

Sponsor:

U. S. Fire Administration, Emmitsburg, MD

Keywords:

sprinkler systems; residential buildings; building fires; benefit cost analysis; economics; housing; costs; installing; maintenance; NFIRS; fire statistics; injuries; fire fatalities; sensitivity analysis; risk reduction; sprinklers; equations; risks; death

Abstract:

This report documents a benefit-cost analysis performed to measure the expected present value of net benefits resulting from the installation of a multipurpose network fire sprinkler system in a newly-constructed, single-family house. The benefits and costs associated with the installation and use of a fire sprinkler system are compared across three prototypical single-family housing types: colonial, townhouse, and ranch. The installation costs differ by housing types, with the colonial being the most expensive and the ranch the least. The benefits experienced by residents of single-family dwellings with sprinkler systems, as measured in this report, include reductions in the following: the risk of civilian fatalities and injuries, homeowner insurance premiums, uninsured direct property losses, and uninsured indirect costs. The primary costs examined are for initial purchase and installation of the sprinkler system. Maintenance and repair costs are not examined because they are negligible. Results of the benefit-cost analysis show that multipurpose network sprinkler systems are economical. The expected present value of net benefits (PVNB) in 2005 dollars is estimated as $2919 for the colonial-style house, $3099 for the townhouse, and $4166 for the ranch-style house. A sensitivity analysis is performed to measure the variability of the results to changes in the modeling assumptions. The sensitivity analysis confirms the robustness of the baseline analysis. The PVNB range from $704 to $4801 for the colonial-style house, from $884 to $4981 for the townhouse, and from $1950 to $6048 for the ranch-style house. Multipurpose network systems are the lowest life-cycle cost systems because homeowners can perform their own regular inspections and maintenance, and thereby save on costs they would incur with other systems. Given that they provide a similar level of performance, in terms of fire-risk mitigation, multipurpose network systems then achieve greater cost-effectiveness over alternate systems. This benefit-cost analysis is conducted for the United States Fire Administration (USFA) by the Office of Applied Economics (OAE) in the Building and Fire Research Laboratory at the National Institute of Standards and Technology. A benefit-cost model is designed and estimated, expanding on the prior cost analysis developed by OAE in NISTIR 7277, Economic Analysis of Residential Fire Sprinkler Systems (Brown 2005). This analysis provides a current estimation of the cost-effectiveness of installing residential fire sprinkler systems, updating a prior National Bureau of Standards (NBS) study, A Benefit-Cost Model of Residential Fire Sprinkler Systems (Ruegg and Fuller 1984).