How cheap do sprinklers have to become before they’re considered cost-effective?

The cost of residential fire sprinkler systems has been a major point raised by builders in the residential fire sprinkler battle. They often cite unknown studies pointing to how many people will not be able to afford a home if the residential (one and two-family) code requirement is adopted.

I recently sat next to an actuary during one of my many flights and engaged in conversation as I often do with my seat mates. Of course, the conversation turned to residential fire sprinklers when he asked what I do for a living. So began the opportunity to take advantage of a "teachable moment" as I explained the whole residential sprinkler issue to this person who, as many persons, had not even thought of this technology when making a home purchase decision.

The very first question he asked after he learned all about this life safety technology was, you guessed it; how much does it cost? I explained about the 1 to 1.5% of a home's cost and the research putting this cost at $1.61 a sq. sprinklered foot. Immediately his mathematical mind went to work and within seconds he said; "That would only translate into approximately $5.00 extra mortgage payment a month" After I got over my awe of his mathematical abilities without the use of a calculator I remembered reading somewhere someone say that the additional mortage amount would equal the cost of a "Big Mac" a month.

During one of the recent hearings, someone provided testimony begging the question posed by the title of this blog. I bring it to you here in its entirety and urge you to make similar analogies, if given the chance, when addressing the cost of residential sprinkler systems. The testimony follows:

"To really look at the issue of the cost impact on homes and whether sprinklers will impact the cost of affordable housing, there is a basic question that has to be asked, “What drives the price of a new home?”  In many, if not most, markets, the answer to this question is not construction costs, but instead, what the market will bear, with sales prices rising and falling based on what buyers are willing to pay.  In such markets, costs associated with mandatory sprinklers are absorbed into the price by adjusting other costs or features or builder markup.

Even if there is an increase in the cost of a home based on sprinklers, the impact on a monthly mortgage payment is negligible in an average home.

Consider a hypothetical $3,000 sprinkler system in a $300,000 home with a 6.5% mortgage, a 5% credit on a $2,000/year insurance bill, and a combined Federal/State income tax rate of 33%; the net cost of fire sprinklers, after mortgage related tax deductions, would be $4.37 per month.  This represents a 0.23% increase in the monthly payment and roughly equates to the cost of a premium beverage at your local coffee shop

So, I pose the question to everyone listening to this program today, just how cheap do sprinklers have to become before they’re considered cost-effective?"

Maria Figueroa

Comments

[Jack Doe]

This should be left to the individual homeowner to decide. No more government interference!!
Freedom now!!!

[iraqi ff]

Residential fire sprinklers are to the home building industry what air-bags were to the big three automakes in the 70's.

More survivable for the homeowner and occupants and the firefighters who respond to residential fires.

Prevention IS cost effective vs suppression

[John Holahan]

My problem with the sprinkler ordinances are the questionable tactics used in the IRC code voting process. Sprinkler manufacturers and related parties held a junket where they stuffed the ballot box then led voting members back to the golf course or resort provided them.

My belief is that such unethical tacics may result in unreasonable outcomes. An upfront presentation to the Codes board could have resulted in valuable discourse instead of backdoor shenanigans.

john

[Dale Lyman]

Once again, a few of the above comments demonstrate that more factual information needs to be distributed. The IRC(which the majority of local jurisdictions adopt) has provisions which greatly simplify (thus reducing the costs) of a residential sprinkler system. Specifically section P2904 which allows a "combination" plumbing/fire suppression system to installed in lieu of a NFPA 13D. This section provides simplified design guidance so that the fire suppression is installed as an extension of the plumbing system and allow plumbers to install them. This will reduce the costs DRAMATICALLY, much to the chagrin of fire sprinkler contractors. Get a copy of IRC section P2904. Very interesting.

[JMH]

Questioning IRC funding tactics? The NAHB started the funding years ago, the sprinkler industry responded to their (NAHB) initiative and brought more people. The NAHB didnt like being beat by their own game, so they had the rules changed. The NAHB is an industry too, just like the sprinkler, drywall, masonry, etc industries. They are influencing voters with their invested interest too.

[MB]

There are companies that will do a combined system along with HVAC, plumbing & electrical. If you have the same co. do everything, the fire sprinkler system pays for itself pretty much up front. Also, insurance savings ...... Would you rather have a rating of 8 or possibly 6 or less. How much do you value your families? Are they worth the little extra cost? You can replace things but you can't replace people. Think about it!

[William Coldwell]

Considering the sprinkler proponents claim that house fires with sprinklers have 71% lower loss, the insurance industry should find them particularly valuable. My homewner's insurance company caps the total of discounts, leaving little room for additional discounts for fire sprinklers. Insurance actuaries should make curent realistic calculations of sprinkler value and apply them to rates.

[Engineer10388]

Homebuilder Associations are not concerned with the life cycle cost of a home, its maintainability, durability, or fire safety. I've seen them fight GFCI's, drip pans under water heaters, smoke detectors, making an attic access large enough to permit removal of a water heater or HVAC unit installed there, impact resistant glass in coastal storm zones, and of course sprinklers. All of these features add VALUE to a home, in addition to their other benefits. Of course each new auto safety feature also added cost and was fought tooth and toenail. But no homebuilder or anyone else would buy a new car without padded dash, seat belts, air bags, dual master brake cylinders, or the many other safety features we now consider essential. I'm equally sure any homebuilder who had to carry body bags out of a residence following a fire would "see the light" about the value of sprinklers. It's a scene not easily forgotten, but one entirely preventable with sprinklers AND smoke detectors.

[Randy]

It is time to look at every cost of building homes. As land values rise and the cost of construction (materials and labor) increase we add yet again another expense in the interest of consumer safety. Educate the consumer and the mortgage institutions about the increase cost and allow the sales price of the home to be based on cost, not surronding sales of older homes or homes in a short sell situation. After this is done then requier the safety upgrades as the builder can afford to furnish it. Oh of course then the consumer can't afford it. Vicious circle. Do we need sprinklers? Probably but we need look at this in a logical manner and be proactive not reactive. Base this on sound information not the uneducated public outcry of those lacking the common sense to protect themselves by sound fire prevention in their homes.

[Jason Philbrook]

I'd consider it in new construction if it were cheap enough (under $3k), but I am philosophically opposed to requiring it. Most of the homes in my area have wells, so it doesn't look like it's going to be affordable.

Other questions not addressed are inspection/maintenance costs of a sprinkler system and taxes.

I pay money every year for a service plan to have my heating system maintained for efficient/safe/reliable operation. What is involved for expenses for homeowners to make sure a home sprinkler system is safe and ready for action? If it is indeed zero maintenance that is a good selling point that should be mentioned.

Also, property taxes could exceed insurance discounts or other savings someone might hope for. We pay $10-20 per thousand (1-2%) taxes on assessed value (amount depends on the community), so a $5000 sprinkler system could add $50-100 annually to property taxes.

As far as comparing to cars and their safety features, a missed point of comparison is the value of training/skills and safety habits over safety gadgets.

More advanced driving instruction and regular testing, 100% seatbelt use, better less comfortable seatbelts, etc.. could be more effective and less expensive than an ever increasing "arms race" of airbags and electronic driving aids. I happen to like simple cars without airbags/abs/traction control, but they are not for everybody. In much the same way, far more could be done in homes to reduce fire risks if it's not cost effective for a family to install a sprinkler system, such as further discouraging DIY unskilled electrical work, better insulation to reduce the need for temporary heat sources, fire escape route drawings in each room like schools have, actual drills and fire extinguisher practice, reducing cigarette use, etc... Perhaps it's easier to sell someone something to fix the problem than to teach them something to avoid it unfortunately.

[Stephen Stump]

Boy, just can't seem to find anyone to quote sprinkler systems anywhere near the 1.60 quoted. What a joke. I can't get anything less than 3.00/sf. Also it requires a new designer/engineer (more money) more inspections (more money, and maintenance (more money). Also in modular construction it requires two sets of inspections, approvals, and certifications. (double the money) We can't make people not be stupid.
Posted by: Stephen Stump | 01/28/2010 at 06:11 PM

Response by Maria Figueroa
Mr. Stump:
The average cost of $1.61 a square sprinklered foot comes form a national study and includes all cost to the builder; including those costs not found on the bid; such as permit fees, water costs, etc. I recommend that you negotiate your rates a bit more, because the cost of $3.00 sq/ft seem excessive for the prevailing costs in the Florida market.

If the costs are as prohibitive as you cite, and the process as cumbersome and complicated as you state, I wonder why Excel homes has made a decision to immediately begin to install fire sprinkler systems in all new homes that they build even though their home state of Pennsylvania does not require them until January 2011. Maybe they are making a smart business decision. It is proven that those bringing products "first to market" have an advantage over all others. Perhaps this is why they "recently earned Professional Builder Magazine’s ranking as the nation’s third largest modular home manufacturer."
http://www.isitmodular.com/Default.aspx

Home fire sprinklers save lives and they will become part of the life safety features in all homes in the not too distant future. The safety train has left the station...