Cost–Benefit Analysis of Fire Protection in Buildings: Application of a Present Net Value Approach

In fire safety engineering, cost–benefit analysis provides a systematic method to assess whether the projected benefits from a fire safety measure outweigh its costs. However, there remains a wide discrepancy between methods used in the field for cost–benefit analysis, as well as a lack of quantitative data on the costs and economic impact of fire protection in buildings. In a recent research project, a reference methodology was proposed based on Present Net Value evaluation and on a combination of specialized construction database, fire statistics, and numerical modeling for estimation of the cost components. This paper presents the application of the methodology to four case studies. The case studies allow describing the methodology, the collection of data, fire statistics, and loss estimation, as well as illustrating how the methodology can support decision-making when multiple alternatives are compared. Under the assumptions adopted for the single-family house and the residential timber building case studies, it is found that for every 1$ invested in sprinklers, $1.06 is saved. This benefit–cost ratio increases with increasing valuation of indirect losses and statistical value of life. Sensitivity analyses are provided to explore the robustness of the investment recommendations. The results of evaluations, adapted from the presented case studies with project-specific inputs, can support decision making for policy makers, insurance companies, and individual building owners.