Stabilization of construction costs after a hurricane

As part of recovery after a hurricane, property owners must sift through the damages to their buildings and infrastructure, then begin clean-up and rebuilding. Once physical health and safety are assured, owners and the insurance companies providing coverage deal with the massive devastation, and that includes assessment and rebuild for each property damaged.

Post-hurricane rebuilding is an expensive process in a volatile environment after hurricanes wreak havoc in the US and Caribbean. Providing probable costs requires creating a budget based on the real-world conditions and availability of resources. Yet, typical building costs and estimating databases are almost useless immediately following a major storm. To properly contract for repairs, property owners have to rely on contractor estimates. And it can be tricky to find contractors who can respond, as many are overwhelmed with work and they themselves are learning about the conditions and availability of materials and resources.

First steps

It is the owner’s responsibility to make the building safe and ensure no other damages will likely occur, to their own building, while figuring out the next steps in repair and rebuilding. This includes putting up temporary protection over broken windows and doors, holes in the roof, etc. to minimize any further damages to the property before it can be fully weatherized.

Then, there are essentially two options for rebuilding after a hurricane:

• Rebuild as the property was previously
• Rebuild with betterments and improvements

It is fairly common to want new and improved buildings after the destruction of a hurricane. This is a chance to improve on what existed or to start over and do things a different way.

Budgeting

An important step in understanding rebuilding options after a hurricane is to analyze the budget—to understand what building materials and betterments are necessary (often dictated by current building codes that require upgrades to what used to be there) versus those the owner wants (such as replacing vinyl tile with ceramic tile).

Building costs

As you create a budget for rebuilding, keep in mind that building costs generally increase after major storms due to surges in demand and logistical factors. Skilled labor is typically at a premium, as the local labor pool is limited or overwhelmed by the disaster. Damages to infrastructure and other local resources can make it challenging and more expensive to manage labor from outside the area—where will they stay, how will you feed them, how will you transport them to the area and around the area when they arrive? That is something that has to be factored into rebuilding costs, and insurance companies do take into account the higher prices and the struggles to rebuild after a storm in their payouts.

Building materials can be limited, as well, depending on the location of the property. It is typical to experience a shortage of materials leading to increased costs. Any materials already in the area may be priced at a premium and it is expensive to source and then ship materials in from elsewhere.

One way to reduce some of the post-storm pricing pressure is to strategize and mitigate some of the forecasted shortages before a storm hits. Some owners of large facilities purchase materials to store ahead of hurricane season, such as sheetrock, lumber, or scaffolding, so they are available if needed. This can be a useful strategy, though it is important to be thoughtful about doing this. The materials must be stored in a protected area, so they are not damaged by the storm. Some materials should not be stored for long periods in unconditioned space.

Infrastructure

It is common for power and other infrastructure to be damaged after a widespread storm. In the aftermath, it is critical to assess if the electric grid is stable. If possible, have a source of power generation available if the grid goes offline. Try to have this equipment in place beforehand, as it may be difficult or expensive to rent or purchase after.

Stabilizing costs

With our boots on the ground experience after catastrophes, we understand the challenges of stabilizing costs in the aftermath. Call us today to learn how we can help you rebuild after the last disaster, or help you prepare for the next one.

[1] https://disasterphilanthropy.org/disaster/2020-atlantic-hurricane-season/