Any opinions expressed herein are those of the author(s) and do not necessarily reflect those of Haag Engineering Co., Haag Construction Consulting, Haag Education, or parent company, Haag Global, Inc.

Inflation – Not My Problem!

By Derek Sayers, Managing Director of Haag Canada / Construction Claims Group Practice Lead

You have a contract price and you are going to stick to it! As the owner of a project, often it seems that the simplest way to control escalating costs is to stick to the contract price. To take the attitude that “the contractor competitively bid and won the project, escalation in costs is clearly (and contractually) their problem!”.

Source: Trading Economics, Commodity Index, https://tradingeconomics.com/commodity/crb

Many contracts, even if not said explicitly, have at common law an implied clause that effectively protects the contractor from changes that “materially change” the nature of the contract. This protects a contractor from, for example, starting a garage project and ending up building a house without having any redress to amend prices and time.

But inflating labour and material prices is not a “material change.” True enough.

Contractors are aware of this and therefore when building their business, developing relationships with their suppliers, and bidding projects, contractors will have endeavoured to control for price fluctuations. The burning question is, what happens when those price fluctuations become extreme as they have recently?

Does the contractor have any means of redress? No. Unless the owner is prepared to voluntarily take some of the pain (i.e., cost) of inflation, it is unlikely that the contract addresses inflating costs. The contractor took that risk when they signed the contract.

However, the contractor can take action to help themselves in this scenario. Rather than just submitting a claim for escalation, the contractor can open a portion of their books and have an open and frank discussion with the owner.

It is one thing to hear that the price of a commodity has increased by 50% or 80%, but it is another when this can be translated by the contractor into an increase in the price of specific products. At the very least an owner who has been shown the difference cannot plead ignorance. Showing the owner what an item’s bid price and input prices were, and how much they’ve increased since, can only be a good thing under these circumstances.

What about contingency? Many projects are launched with a contingency amount held back by the owner. Does inflation constitute an occasion when the contingency should be used? Usually, this question would not even be asked. Contingency has been set aside to be used for changes that either the owner wants or the engineering demands, but never to offset inflation! Indeed, those financing the project would consider it very poor project management were contingency to be handed out so easily, and they would be right.

However, this situation is far from straight-forward. It may seem that all the owner has to do is sit tight and let the contractor sort out their own problems. But, at some point this will become the owner’s problem as well. Whether it is when the contractor starts claiming for every change and all changes seem to be much more expensive than they ought to be, or, even worse, when the contractor files for bankruptcy.

A bankrupt contractor will cost the owner significantly more than if the contractor had been able to complete the project.

Owners should take note and keep communication open with the contractor so they might  understand how much financial pain the contractor is suffering. While it is not viable to simply keep paying more to help the contractor, the owner should explore how they might take some cost increase now in order to avoid more later. A good construction lawyer can draft an agreement that ensures any additional financial assistance is used to only benefit the owner’s project and not used for the contractor’s other projects or debts.

Many projects are currently in dire straits and it is easy to think that disputes will be settled equitably by an arbitrator or judge. Oftentimes though, neither party comes away from a dispute with the result they wanted or expected. It would be prudent for all parties to consider their positions when a dispute arises and ask themselves if there might be a better way.

It is something to be considered during these times of rapid inflation.

Derek Sayers, MRICS, MSCL, MIIC, is the Managing Director of Haag Canada and the Practice Lead for the Construction Claims Group at Haag Canada. Mr. Sayers has over 30 years’ experience as claims professional: project contracts manager, corporate claims manager and commercial specialist. In addition to this, he has built up the brand name and business of consulting firms in Canada since 2016, building solid and enduring relationships with owners, lawyers, and contractors across Canada. As Managing Director, Mr. Sayers leverages his expertise and leadership skills to serve Haag’s clients and expand the market reach of Haag Canada.

Any opinions expressed herein are those of the author(s) and do not necessarily reflect those of Haag Global, Inc., Haag Canada, or any Haag companies. 

AN UPDATE TO THE ENHANCED FUJITA SCALE

by Tim Marshall, P.E., Principal Engineer Emertitus, Meteorologist

Dr. Ted (Tetsuya) Fujita created a tornado damage scale in 1970 after the Lubbock, Texas tornado.  The damage scale was divided into six categories where F0 corresponded with minor damage to houses with estimated winds of 40 – 72 mph (18 – 32 m/s) all the way up to F5 where strong frame houses were swept off their foundations in estimated winds of 261 – 318 mph (117 – 142 m/s).  Dr. Fujita determined the failure wind speeds based on dividing the gap between the Beaufort Scale (which mariners use) and the Mach Scale (which aviators use) into 12 non-linear increments.

In the early 2000’s, wind engineering studies showed mounting evidence that wood-framed houses can be completely destroyed at wind speeds less than 261 mph (117 m/s).  Therefore, in 2001, the Wind Science and Engineering Center at Texas Tech University assembled a team of atmospheric scientists and wind engineers and developed the Enhanced Fujita (EF) Scale to address the inconsistencies of the F-Scale.  I was selected along with five other scientists to estimate failure wind speeds to various building types.

In 2007, the National Weather Service (NWS) adopted the EF Scale and began utilizing the recently published EF Scale document to evaluate building damage.  A copy of the EF Scale document can be found online at: https://www.spc.noaa.gov/faq/tornado/ef-ttu.pdf.  This document includes degrees of damage (DODs) to 28 Damage Indicators (DIs) and was much more complex and accurate than the original F Scale.  However, concerns remained about the relationships between the observed DoDs and wind speed ranges. Some DIs had limited guidance available.   Users of the original EF Scale asked for new DIs to be created, especially in rural areas where building DIs are not common. More recently, alternative methods of estimating wind speeds have been published, including mobile Doppler radar measurements, tree-fall pattern analysis, and failure analysis of engineered structures. None of these methods had been included in the process of estimating tornado wind speeds. As a result, there have been awkward adjustments in tornado intensity by the NWS, including El Reno, OK and Bennington, KS in 2013. Additionally, recent research comparing wind speeds estimated from mobile Doppler radar measurements to speeds estimated from damage using the original EF Scale demonstrated an alarming trend, whereby wind speeds in approximately 40% of tornadoes were underestimated by two EF numbers. This means wind speeds for many tornadoes may be on the order of 50 mph greater than is currently being estimated and recorded in the national tornado database using the 2006 EF Scale (which is the dataset that serves as the basis for all tornado hazard maps).

In 2014, the American Society of Civil Engineers (ASCE)/Structural Engineering Institute (SEI) and the American Meteorological Society (AMS) undertook an effort to develop a consensus standard for tornado wind speed estimation. The forthcoming ASCE/SEI/AMS standard, Wind Speed Estimation in Tornadoes, will officially standardize the EF Scale. The committee undertaking this effort is organized into seven subcommittees, which were established to upgrade the EF Scale and develop methodologies to use treefall patterns, radar measurements, in-situ measurements, remote-sensing data and forensic engineering to estimate wind speeds. Requirements for archival of data will also be included in the standard.  Both myself and Dr. Christine Alfano, P.E./CCM with Haag serve on this committee.

Updates to Version 2 of the EF Scale include developing new DIs, such as center pivot irrigation systems, religious buildings, passenger vehicles, and wind turbines, as well as redefining existing ones using knowledge gained from more than two additional decades of conducting damage evaluations using the original EF Scale. Additional updates included combining single- and double-wide manufactured homes into a single DI, creating separate DIs for wood-frame and concrete residences, recategorizing schools as single- or multi-story, and revamping the hardwood and softwood tree DIs to focus on single or multiple trees instead. Wind resistance levels have also been defined to aid in estimating the wind speed associated with specific visible damage. Where new research exists from laboratory, modeling, or other sources of data, wind speeds for specific damage states are also being updated. Updates also include improvements and standardization of the DoDs and associated wind speeds across DIs, and standardization of a procedure for the use of the EF Scale method. Representative damage photographs to serve as guidance, as well as a commentary with references, have been added to each DI. Many of these damage photographs comes from damage surveys that I conducted.  However, the range of wind speeds that fall within each EF Scale category are not anticipated to change.

More than 80 scientists from various disciplines have volunteered their time to develop this standard. Thousands of hours have been put into this effort, and it is anticipated the standard will be published within the decade. Public input will be requested once the draft standard has completed the committee balloting process.  It is anticipated the new standard will be issued within the next few years.  Stay tuned to this blog for future updates.

By Tim Marshall, P.E., Meteorologist, Haag Principal Engineer

Tim Marshall is a structural engineer and meteorologist.  He has served as a Haag Engineer since 1983, assessing damage to thousands of structures (particularly damage caused by wind and other weather phenomena). He has written numerous articles, presented countless lectures, and appeared on dozens of television programs in order to share his extensive knowledge re: storms and the resultant damage.  He is a primary author of many Haag Education materials, including the Haag Certified Inspector-Wind Damage course. Mr. Marshall a pioneering storm chaser and was editor of Storm Track magazine. See his profile here.

Any opinions expressed herein are those of the author(s) and do not necessarily reflect those of Haag Global, Inc., Haag Canada, or any Haag companies. 

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Any opinions expressed herein are those of the author(s) and do not necessarily reflect those of Haag Engineering Co., Haag Construction Consulting, Haag Education, or parent company, Haag Global, Inc.

HAIL DENTED MY ROOF INSUALTION – NOW WHAT?

Large hail falls onto a commercial building covered with a single-ply TPO roof membrane. A roof inspector scours the whole roof front to back and left to right and does not find any hail-caused ruptures, but then notices the insulation is dented…Now what?

Single-ply roofing membranes can be fractured or torn when impacted by hailstones; however, many single-ply systems can resist being damaged by hail (including large hailstones) when the roofing membranes are relatively new and in good condition. Most single-ply systems are installed directly over insulation boards and a hailstorm that doesn’t damage the membrane can still cause dents in the underlying insulation. Concerns often arise about the thermal performance of insulation after being dented by hail.

The thermal performance of insulation is typically quantified by its R-value, which is a measure of heat flow resistance. Heat flow is thermal energy passing through a space due to a difference in temperatures. For example, if a roof is hot on a sunny summer day and the space inside the building is air conditioned, there will be some amount of heat energy flowing into the building through the roof.  Insulation on the roof reduces the rate of heat flow between the roofing and the roof decking, which reduces the heat flow into and/or out of the building.

Insulation R-value can be measured in a laboratory by using a heat flow meter (HFM). In order to determine if the R-value of insulation has been affected by hail-caused dents, samples of insulation can be removed from the roof and the R-value of dented and non-dented insulation can be measured and compared. Haag Research & Testing Co. (HRT) is currently studying the effects hail-caused dents have on the R-value of various types of roofing insulation and has performed R-value testing on numerous samples sent to the HRT laboratory.

HRT is accredited by International Accreditation Service (IAS) to perform ASTM C518 – Standard Test Method for Steady-State Thermal Transmission Properties by Means of the Heat Flow Meter Apparatus, and this test standard is followed by HRT when analyzing the thermal performance of roofing insulation.

Hail-dented insulation can be easily found in non-sheltered portions of the roof provided the hail was large enough and hard enough to cause detectible dents.  Non-dented insulation can be difficult to find after a substantial hailstorm; however, some roofs have tall equipment or taller portions of the building that can shelter a region of the roof from wind-driven hail, which can be useful in finding a sample of non-dented insulation. In the event non-dented insulation cannot be obtained, the R-value of dented insulation can be measured, then a comparable dent can be added to the insulation and the R-value re-measured to reasonably determine if hail-caused dents had a measurable effect on the insulation R-value.

Tests performed on roofing insulation often show little or no measurable change on the insulation R-value due to hail-caused dents; however, if  dents are sufficiently large, deep, or numerous, a subtle change in R-value can be measured. Also, very large hail can crack or rupture insulation, resulting in a thermal short through the insulation which can have a greater influence on the measured R-value. If concerns arise regarding the effects hail-caused dents had on the R-value of a roof, consider taking samples of the insulation for testing.

*More information on R-Value testing by Haag Research & Testing or contact us.

Steve R. Smith, P.E., is Director of Research & Testing and a Principal Engineer with Haag Global. He completed nuclear power training with the United States Navy in 1994. He was honorably discharged in 1998 and went to work for Haag Engineering Co. as Senior Laboratory Technician. Steve has performed hundreds of hail impact tests on a variety of products including roofing, siding, and automobiles.  He graduated from the University of Texas at Arlington in 2005 with a Bachelor’s degree in Mechanical Engineering and is a member of the American Society of Mechanical Engineers, the Society of Automotive Engineers, and the National Association of Fire Investigators. Steve has inspected and assessed damage to a number of roof systems, including single-ply systems, composition shingles, cedar shake and shingles, concrete tiles, slates, and built-up roofing. As Director of Research & Testing, Mr. Smith oversees all testing projects, protocols, and manages Haag’s accreditation. Mr. Smith is based at Haag headquarters in Flower Mound, Texas.

Any opinions expressed herein are those of the author(s) and do not necessarily reflect those of Haag Engineering Co., Haag Construction Consulting, Haag Education, or parent company, Haag Global, Inc.

Haag Fire O&C is dedicated to providing the highest-quality forensic investigations of fires and explosions in the industry. Our team of seasoned and court-tested investigators is committed to quickly finding the answers you need through industry-recognized scientific methods. With a thorough understanding of subrogation, liability, and fraud, Haag Fire O&C makes your job easier by answering all of your questions for O & C investigation and providing technical reports, if requested, within 5 business days for most non-legal residential and auto assignments. The team is led by Director of Fire Investigation Services, Edward Roberts, IAAI-CFI– a seasoned fire investigator with over 1,500 fire investigations and 25 years of experience investigating fires.

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Edward G. Roberts, IAAI-CFI, Director of Fire Investigation Services

As Director of Haag Fire O&C, I combine my lifelong experience and training in fire investigations with the training I received as an adjuster to create an approach to fire investigation and report product that best serves your needs through quick response time, clarity, and ease of use. As a member of a number of professional organizations, I am actively and constantly working to improve the industry of fire investigation.

• IAAI-CFI, CFEI, CVFI, CFII
• 1500+ fire and explosion origin and cause investigations
• Court-proven and reliable, including mediation, arbitration, and depositions
• Published internationally
• Obtain recorded statements
• Provide educational programs to insurance and investigation communities

Any opinions expressed herein are those of the author(s) and do not necessarily reflect those of Haag Engineering Co., Haag Construction Consulting, Haag Education, or parent company, Haag Global, Inc.