Lessons Learned from a School Flood
In the fall of 2016, an extreme weather event resulted in four feet of water entering the lower level of an educational facility in Eastern Canada. The flood water, mixed with mud, fuel oil, and sewage, caused significant damage to building finishes and contents. Classes were shut down, and students were temporarily relocated to other schools. It was important that the building be remediated and made operational as quickly as possible.
An insurance adjuster was assigned to the claim, and a restoration contractor engaged to proceed with the necessary emergency work to mitigate the loss. The contractor was also given approval to begin the rebuilding process.
The work commenced quickly, and the job appeared to be moving along well. However, when the invoices started coming in a few weeks later, policy subscribers were surprised by the high cost of the project. In addition, there were concerns with the scope of work being completed, and the timing of the project. At this point, SPECS was contacted in order to get the project under control.
The SPECS consultant traced the issues back to the magnitude and complexity of the project. Often it is difficult for an adjuster to dedicate the time required to manage a project of this size, and to address structural, environmental, and mitigation concerns. At the time of this project, the adjuster was also handling a large number of other claims in the region, related to the same catastrophic event.
Due to the pressure to begin the remediation work, subcontractors were given free rein to proceed, with little discussion around scope of work or pricing. The SPECS consultant vetted all of the invoices provided, and corresponded with every subtrade working on the project. The audit of the remediation work revealed excessive spending of up to 50% more than what would typically be charged. Furthermore, some finishes were needlessly removed from the building, resulting in higher rebuild costs and extended timelines.
SPECS also found that there was some duplication in efforts between the facility directors and the restoration contractor. One instance of this was in the hiring of an Environmental Engineer, which was undertaken by both parties, resulting in added costs.
Another factor affecting cost was the handling of the contents portion of the claim, which was substantial. Without the necessary direction, the contractor proceeded to dispose of a large amount of items that could have been salvaged, resulting in additional expenses in the hundreds of thousands of dollars.
As SPECS was brought into the project “late in the game”, some of the contractors’ invoicing had already been submitted. Going forward, all documentation was vetted by the SPECS appraiser, and adjusted where required. Lines of communication were now open between the owners, contractors, adjusters, and examiners.
The leadership ability and third party objectivity of the SPECS appraiser did not go unnoticed. SPECS involvement in the loss was expanded to include overseeing the rebuild portion of the claim. An important first step was to gather the details necessary to limit the scope of work to items related to the loss. Although the facility directors were interested in making changes to unaffected areas of the building, the focus was shifted back to returning the building to its pre-loss condition, thereby simplifying the tender process. SPECS was also able to make recommendations around tendering the project to larger commercial construction companies, who were better equipped to take on a project of this size. While the tender ultimately followed government protocol, the information and specifications provided were used to develop the scope of work.
SPECS appraisers have extensive experience in construction/restoration, and are well-versed in insurance industry practices and principles. They also understand the need to keep costs and timelines under control.
The first lesson in large projects like this is that it doesn’t pay to panic. SPECS appraisers take the time to assess the situation, ask the appropriate questions, and wait for the answers. From then on, all actions can be controlled and monitored. This switch from “a panic driven and hasty approach” to a “controlled and methodical approach” ensures that the loss will be handled with efficiency and accuracy.
Another lesson learned on this project was that involving experienced consultants like SPECS from the outset of the loss will result in savings of both time and money in the long run. In many instances, initial direction given to the insurance and restoration professionals – followed by some judicious monitoring – is all that is required to make the claim run smoothly. This is particularly critical if the claim has special circumstances, is of a large scale, or involves multiple stakeholders. Many restoration contractors are not familiar with large commercial losses, and treat them as they would a typical residential claim. These projects often need to be examined with a more seasoned set of eyes, and handled with a different approach.
These lessons were taken to heart. The adjusters involved in the school flood have since looked to SPECS for guidance on similar projects, armed with the knowledge that relying on expert advice early in the process can be a much less costly course of action than learning the hard way.