Over the past few years, water has been recognized as one of the main causes of damage and insurance payouts on construction sites and in operational buildings. It accounts for 30% of insurance payouts on builder’s risk policies. It is also the third-most common claim in operational buildings with over $13 billion total in payouts annually. Water leak incidents with damages in the millions are common and can often reach many tens of millions. Insurers are taking note: per incident deductibles which were in the tens of thousands of dollars per incident four years ago have been rapidly rising and are currently between $250,000 to a full $1 million now.
And water is also a critical and rapidly dwindling resource. In early November, the federal National Integrated Drought Information System reported that drought conditions were affecting nearly one-third of the United States. Thirty percent of the total geographic area of the country was in drought, affecting parts of 39 states and 92 million people.
As a result of the ongoing crisis, local and state governments are enacting restrictions on water use, such as California’s current policy requiring public water providers to impose strict new temporary rules on their end users.
Innovative solutions for the current global water crisis, including more efficient management of the existing water supply, are urgently needed. One place we know we can make a major impact quickly is in the built environment.
Our built environment is hugely inefficient. That inefficiency starts during construction and runs throughout a structure’s lifecycle.
The construction and operation of buildings required vast quantities of water. On top of that, approximately 25% of the water entering a building throughout its lifecycle is ultimately being wasted through leaks, poor management, or old and inefficient technology.
Unfortunately, we have become accustomed to the cost and risk of water loss and damage. But taking steps to make the construction and operation of buildings more water-safe and water efficient can reduce stress throughout the building’s lifecycle.
Over the last several years, new technology applications have proven to be effective water management solutions for construction sites and large commercial buildings. The best of these can be installed during construction and will continue to operate effectively throughout the building’s lifecycle.
In addition to their ability to mitigate water damage and significantly reduce the costs associated with it, these solutions help save water—a precious and increasingly scarce resource. The same solution can be applied during construction, and then transferred on to the building’s owner. Contractors, developers, and insurers also have new opportunities to mitigate the risk and steeply rising insurance costs related to water damage while water-proof buildings with a minimal environmental footprint.
Today’s groundbreaking technology offers solutions that mitigate damage from water leaks and significantly reduce waste. The best of these applications detects leaks, alert staff of anomalies, and automatically shut water off to prevent damage. They function during all phases of the construction project. They’re adaptable, robust, and modular so they can evolve with the structure.
Unfortunately, contractors and facility managers have been making do with outdated water-management tools for years. Until recently, there had been a lack of innovation in the space for decades. Old-fashioned technologies such as floor-based leak detectors are still common in many facilities and at construction sites. These sensors are basically just two wires in a container placed on the floor. If water touches the sensor, the system detects the short circuit and triggers an alert. Effectively protecting a facility requires a very large number of sensors, and you’ll need to guess where water would leak and flow, which is difficult to do.
But a new generation of AI- and machine learning-based inline solutions are emerging that help reduce water-damage risks to a fraction of their current level. Innovations in IoT and AI are giving contractors, developers, and facility owners the power to proactively mitigate water damage with huge efficiency.
These new systems can learn normal water usage patterns, alerting staff when an anomaly is detected. The systems can automatically shut off water supplies at the impacted location to prevent or minimize damage. The leading solutions can communicate over Ethernet, WiFi, or cellular networks and are supported by backup power, so they can be deployed even before Internet and electrical infrastructure has been installed and can continue to operate in case of outages or service interruptions.
The latest generation of water management technology has a proven record of success. One large multinational general contractor has, like much of the industry, suffered from repeated water leaks on its construction sites. This has led to project delays and rising insurance costs. The GC decided to implement technology across its sites and chose an inline, AI-based solution for this purpose. Three years down the road, water damage has practically been eliminated across the project portfolio.
A different company, the manager of a large complex encompassing more than 2 million square feet of office and retail space, recently requested an analysis of the water use costs related to the cooling towers that power its indoor cooling system. Powerful algorithms quickly detected more than 66,000 gallons of wastewater every day resulting from an easily resolved mechanical malfunction. Once it was repaired, the company saved hundreds of thousands of dollars in annual utility costs.
A study comparing sites that used this AI technology with those that didn’t found that protected sites incurred significantly less water damage insurance claims than those who did not. Of the sites surveyed, 41% of sites used the technology, but accounted for only 11% of claims—which means claims were down 75%. Moreover, these 41% of sites resulted in only 4% of payouts, or a full 90% reduction in the financial impact of water damage (from 41% to 4%).
INSURERS TAKE NOTE
The success of these technologies has led to other major recent developments, as insurers take note. Numerous insurance carriers provide financial benefits to WINT-protected facilities through reduced deductibles and premiums, while others simply require WINT to be installed as a prerequisite for coverage.
At WINT, we’ve formed many partnerships with companies across the insurance landscape, from carriers such as AXA XL, brokers like Howden, MGAs, and risk engineering firms, as a solution ranging from construction companies to commercial and multi-tenant apartment buildings. A few months ago, we announced a warranty program designed to mitigate the rising deductible in the builder’s risk market. The program, backed by leading insurer HSB, covers damages up to a quarter of a million dollars for water damage on construction sites, protecting general contractors and developers from the steeply rising costs of water related deductibles.
A NEW ERA
Innovative water management tools such as WINT are delivering immediate, meaningful results throughout the built environment. By transforming how facilities operators manage an essential resource, WINT is empowering a variety of industries to reduce waste and risk while elevating the experience and satisfaction of customers.
While technology is a critical element in reducing waste and risk, leaders in our industry must start to take water damage and waste with due seriousness. A plan to mitigate water damage or loss should be put in place at the start of a project and buildings at risk should be retrofitted with protections. Recognizing the risk and preparing for it will pay off for the environment, for the success of construction projects, and for the integrity of operational buildings.
About the Author:
Yaron Dycian is chief product and strategy officer for WINT, a groundbreaking software company that produces artificial intelligence-powered leak detection and water management solutions. WINT serves some of the world’s largest organizations including technology, construction, and real estate businesses. For more, visit wint.ai.
Modern Contractor Solutions, December 2023
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