Building standards - Standard 2.15 Automatic Fire Suppression Systems: cost benefit analysis

4. Previous Cost Benefit Studies

4.1 Introduction

4.1.1 Automatic fire suppression systems installed in domestic and residential premises are primarily designed for life safety purposes. Successful activation can provide occupants, including vulnerable occupants, with additional time to escape following an outbreak of fire. The added benefit of automatic fire suppression in domestic and residential buildings means that the damage and disruption caused by fire is greatly reduced.

4.1.2 A number of studies have examined the costs and benefits of installing automatic fire suppression systems in domestic and residential buildings and the results of these studies are summarised below. It should be noted that some of the studies are quite old.

4.2 Results from Previous Studies

4.2.1 A BRE^[4] study in 2004 examined the benefit: cost ratio for the introduction of automatic fire suppression systems in range of different residential property types – houses, flats, various types of care homes and various types of HMOs. Additional analysis was also undertaken for different building heights.

4.2.2 The benefits examined included the prevention of deaths and injuries and the reduction in property damage. The average value of a prevented death and injury was based on UK Government data for the year 2000 and updated to 2002 prices. The average value of property loss was also taken for a UK Government study. The costs considered included the cost of installing the system, the provision of water supply and annual maintenance. These costs were provided by members of the UK sprinkler and water industries.

4.2.3 The main conclusions of the analysis were:

• Residential sprinklers are not cost effective for most dwellings. The benefit cost ratio was in the range 0.19 to 0.67 for the generic categories of houses and flats.
• Residential sprinklers are probably cost effective for residential care homes. The benefit cost ratio was in the range 1.2 to 4.9 for different types of care home e.g. older people, children, disabled people.
• Residential sprinklers are probably cost effective for tall blocks of flats (11+ storeys) where the benefit cost ratio was 2.12.

4.2.4 The 2004 BRE report was subject to some criticism from the Fire Sprinkler Association^[5] (FSA) which criticised some of the assumptions, particularly the assumptions regarding the effectiveness of sprinklers in reducing deaths, injuries and damage. Reworking the calculations, the FSA found a net benefit for many more building types, particularly flats and some HMOs.

4.2.5 In 2009 BRE^[6] undertook a study for the Scottish Government to undertake a cost benefit analysis for the installation of sprinkler systems in new build houses and update the analysis of the 2004 BRE report for flats and maisonettes where the topmost storey height is not more than 18m above ground level. For houses in the analysis, the sprinkler system was a low cost system based on a New Zealand model which was connected to domestic plumbing with water supplied by the town mains supply, no alarms to indicate sprinkler activation or call the fire service, no control valve and no ongoing maintenance requirements. For flats, the system was in accordance with British Standard BS 9251.

4.2.6 The analysis focused on the same costs and benefits as the previous 2004 BRE study and found that:

• The low cost system was cost effective for houses with a benefit cost ratio of 1.8. However, adding one man-hour of maintenance to this low cost system had a very detrimental effect and took the benefit cost ratio to 0.5.
• For flats, the benefit cost ratios were 1.2 (town mains water supply) and 1.1 ( pump and tank water supply) although there was some uncertainly around the results.

4.2.7 A BRE^[7] study in 2012 for the Chief Fire Officers Association sought to update the 2004 BRE study and to consider sprinkler protection in new build residential premises. The components of costs and benefits were the same as in the 2004 report, but updated/revised assumptions were used. The main conclusions of the analysis were:

• Residential sprinklers are cost effective for all residential care homes for elderly people, children and disabled people. The benefit cost ratio was in the range 1.9 to 11.6. The main reasons for the higher ratios include higher property damage values and increased effectiveness in preventing deaths, injuries and damage.
• Residential sprinklers are cost effective for most blocks of purpose-built flats and larger blocks of converted flats. The benefit cost ratio was in the range 1.4 to 2.3 with a reduction in installation costs and increased effectiveness in preventing deaths, injuries and damage, the main drivers of the improved ratio. The previous research had only found a positive ratio for tall (11+ storey) flats.
• Residential sprinklers are cost effective for traditional bedsit type HMOs where there are at least six bedsit units per building and the costs are shared. The benefit cost ratio was 1.9 for this type of HMO, but it was noted that should there be less than six units or costs cannot be shared across units, the assumptions may not be valid.
• Residential sprinklers are not cost effective for houses.

4.2.8 To support the Domestic Fire Safety (Wales) Measure 2011 which requires the provision of automatic fire suppression systems in new and converted residential premises, the Welsh Government commissioned BRE to undertake a cost benefit analysis of the provision in the Measure.^[8] The analysis was undertaken for a range of residential premises and the costs and benefits considered in the analysis were the same as those included in the BRE studies reviewed above. However, the Welsh Government also requested that the reduction in greenhouse gases associated with sprinkler fires be considered. There is an annual benefit from reduced greenhouse gases, but the monetised value was estimated to be very small compared with the other benefits.

4.2.9 The analysis was undertaken on the forecast number of new residential buildings to be built over the period 2013 to 2022. The key findings of the research were:

• Fitting sprinklers in all new residential properties in Wales is not cost effective.
• Sprinklers are cost effective in new care homes and halls/dormitories, primarily due to the reduction in financial losses from damage to the building, its contents and business interruption.
• Sprinklers may also be marginally cost effective in new blocks of flats, blocks of sheltered flats and traditional HMOs (with an average of six units per building). These premises benefitted from sharing the costs over a number of accommodation units.
• Sprinklers are not cost effective in new single occupancy houses, shared houses, hostels and sheltered houses.

4.2.10 The analysis was undertaken for new build premises and noted the cost of sprinkler installation may be higher in building conversions. The earlier BRE report noted that retro fitting costs could be 20% higher than new build costs.

4.2.11 In 2015 Optimal Economics undertook a research project for the Scottish Government^[9] to update the cost effectiveness position regarding residential sprinklers in Scotland. The analysis was undertaken for houses, flats, HMOs and halls of residence and considered both new build and existing buildings and systems operating from mains water supply and those requiring storage tanks and pumps.

4.2.12 The main results showed:

• For houses, the results were consistent with the earlier studies. Automatic fire suppression was not cost effective in both new build houses and retro-fit properties using either mains or pump and tank systems. The benefit cost ratios were in the range 0.16 to 0.23 (central case).
• For flats, if sprinklers could be installed towards the lower end of the estimated costs, installation would be cost effective for mains water supply systems in both new build and retrofit properties (BCR range of 1.47 to 1.68). For pump and tank systems, the benefits were much more marginal with the BCR range 0.9 (retrofit) to 1.03 (new build).
• For HMOs, the study found that installing sprinklers in shared houses was not cost effective, but for HMOs in flats there could be a case for sprinklers at the lower end of the estimated costs. The BCR for large (10 beds) units was in the range 1.4 to 1.6 if costs towards the lower end of the range were used.
• The case for sprinklers in halls of residence was stronger, particularly at the lower end of the estimated cost range. The benefit cost ratio was 1.73 to 2.26.
• There is evidence that the risk of fire (and therefore the expected benefits of suppression systems) is higher in certain social, demographic and economic circumstances e.g. people living in deprived areas, single men, older people and people with problems related to drugs and alcohol. Where the risk of fire is increased (e.g. risk doubled in deprived areas) there is a very strong case for installing sprinklers in flats (new and existing).

4.3 Other Studies Reviewed

4.3.1 In addition the cost benefit studies, the analysis has also reviewed some research on the cost of fire. The UK Department for Communities and Local Government (DCLG) as was, commissioned a series of studies on the Economic Cost of Fire which sought to estimate the total cost of fire to the English economy. The last study^[10] provided estimates for 2008.

4.3.2 Using a modeling approach, costs were broken down in to three categories – costs in anticipation, as a consequence and in response to fire. Costs as a consequence are most relevant to this research and include the cost of fatal and non-fatal casualties, lost business, property damage and costs to the police and criminal justice system. These latter costs arising as a result of arson.

4.3.3 In 2008, the costs as a consequence of fire were estimated to be almost £3.3 billion with the costs of casualties (£1.4 billion) and property damage (£1.5 billion) accounting for the majority (88%) of the total. The estimate of the cost of casualties (fatal and non-fatal) were derived from the DfT estimates of the value of a death and injury. This is consistent with the previous cost benefit studies.

4.3.4 Average property damage per fire is estimated to be £2,634 per fire, but this is calculated across all fires including buildings, non-buildings and false alarms. If the property damage cost was restricted to building fires, the average per building would be £24,200 and lost business per building fire would be £730.

4.3.5 This estimate of average property damage costs is higher than the estimates used in the cost benefit studies where damage costs for domestic properties were between £7,000 and £9,000 and between £23,000 and £30,000 for commercial properties.

4.4 Cost Estimates from Previous Studies

4.4.1 The studies reviewed in Section 4.2 contained considerable information on the costs of installing and maintaining sprinkler systems. Table 4.1 provides a summary of the costs used in the analysis and to allow comparison, all costs are presented in 2021 prices.

4.4.2 The Table shows:

• Retro-fitting a system is approximately £500 to £1,000 more expensive for flats/houses.
• Annual maintenance costs are higher in the more recent studies.
• Pump and tank water supply systems are approximately £800 to £1,600 more expensive than mains systems.

4.4.3 While Table 4.1 provides a summary of the main assumptions underpinning the various cost benefit studies, the Optimal Economics report included cost estimates from a range of contractors and a local authority from which the following points are relevant:

• Costs from seven local authority social housing sites found that the cost of installing automatic sprinkler systems was approximately 1.2% to 2.1% of total project costs if using mains fed water. If a pumped system was required, sprinkler systems were approximately 4.3% to 4.8% of project costs. On average, the pump and tank systems added 3,400 (2021 prices) to the cost of installation.
• A contractor suggested that the cost of a water mist system would generally be 20% higher, although there could be savings as a result of reduced water damage and lower installation costs because of the reduced need for space for water storage.
• Contractors did not provide a clear indication of the scale of the projects for which costs were provided, but a number suggested that a pump and tank system would add £1,700 to £2,200 (2021 prices) to the project cost.
• Some contractors suggested that there could be additional costs for a more distant location.
• Retro-fit costs would be higher with concealed pipework more expensive than surface mounted pipework.

4.4.4 In January 2014, the Welsh Assembly Government announced it would be funding a pilot programme for the design and installation of fire sprinklers in social housing in Wales for housing associations and registered social landlords. BRE^[11] were appointed to undertake research to monitor and record the learning and experience in relation to the design and installation of sprinkler systems including the water supply.

4.4.5 The study examined twelve schemes (eleven new builds and one conversion) covering bungalows, 2-storey houses, walk up flats with separate entrances and flats with communal entrances. The following points emerged from the analysis:^[12]

• The design and installation costs were in the ranges:
  • £1,000 - £1,800 for a new build bungalow. The highest value was for a BS 9251: 2014 Category 3 system where the sprinkler system for terraced bungalows was part of the same system as an attached block of flats.
  • £1,500 - £2,000 for a new build 2-storey house (BS 9251: 2014 Category 1).
  • £700 - £2,200 for a new build flat (BS 9251: 2014 Categories 1, 2, 3 combined).
• Water company charges were £0 for standard charges (e.g. a new combined domestic water and sprinkler system per 32mm connection) or £400 per accommodation unit for bespoke cases (fixed design fees for a new dedicated/separate sprinkler supply or new combined sprinkler supply connections larger than 32mm).
• Where installed, the cost of booster pumps or pump and tank systems were in the range £100 - £1,700 per accommodation unit. The maximum cost was in cases where there was one booster pump for each accommodation unit. Costs were reduced where boosted pumps or pumps and tank could be shared over a number of accommodation units.
• Combining these elements yields design and installation and water company and supply costs of:
  • £2,300 - £2,800 per bungalow.
  • £1,800 - £3,300 per 2 -storey house.
  • £1,000 - £4,000 per flat.

4.4.6 Other costs, where quantified were in the range £50 - £1,200^[13] per unit for builders and electrical work.

4.5 Conclusions from the Literature Review

4.5.1 The main conclusions from this review which are relevant to the current research include:

• The studies are consistent in the costs and benefits to be measured. The costs include installation costs, water supply costs and maintenance costs. The benefits are the prevention of deaths, injuries and a reduction in property damage.
• All studies adopt DfT estimates of the value of a fatal and non-fatal casualty.
• Most of the analysis has been undertaken on new build properties rather than alterations, conversions or extensions to existing buildings.
• The analysis tended to find that the benefit cost ratio was lower if pump and tank water systems were required. The extent to which this type of system would be required for alterations, extensions and conversions is a material consideration.
• The analysis found that retro fitting of systems tended to be more expensive than when required in new buildings.