Fire Alarm System: Economic Impact

Updated: Dec 13, 2019

Information is key to boosting efficiency, and lowering steep maintenance costs. Fire alarm systems present a unique, but manageable dynamic of maintenance cost-structure. Through a systems perspective, life-cycle cost analysis, an industry-standard method for determining overall economic impact, is the best method to accurately stipulate expenditure for commissioning, maintaining, repairing, and salvaging fire alarm parts over its entire usage time. Understanding cost patterns inadvertently promotes maintenance options that target investment opportunities to receive the most benefit from system improvement while reducing steep costs associated with unscheduled repairs. Simply put, it is mission critical to: 

Present a realistic total cost of ownership (TCO) model that projects how much it costs to maintain and upkeep a system and presents the economic benefits of obtaining a robust maintenance program for the next 10-years. 

As seen in the process diagram above, the three major cost patterns to focus on are: annual inspections (fixed), 24/7 fire alarm & sprinkler monitoring (fixed), and intermittent corrective services (variable). However, before breaking down cost patterns, it is important to determine current value of the existing system. Initial investment amount is forth-telling of owner’s value placed on the importance, design-complexity, scope of devices to maintain, building-specific risk precautions, and quality of system installed. Initial investment, also categorized as asset-valuation, represents the total cost of installing (or replacing) an entire system, with respect to labor and material. Asset-valuation is also a key metric for establishing budgetary goals and serves as a constraint factor to limit maintenance expenditures. Consider a commercial retail store initial investment (“sunk cost”) breakdown for installing a 2020 up-to-code fire alarm and life-safety system. See Table 1. 

In this scenario, the 'Estimated Total Initial Investment' determines the worth of the system, and consequently, the expected attention and maintenance responsibilities to keep the system in satisfactory condition. If roughly $32,500 has been invested to commission this fire alarm and life-safety system, how much money should reasonably be spent to maintain the system in peak-performance for the next ten-years?

Let's first understand the scope of this system. It contains 97 fire alarm units and 52 life-safety devices, one notifier (NAC) booster, one radio/cellular communicator, and six sprinkler monitoring modules. The facility is classified as a mid-size commercial building, sprinkler integrated, and because there are more than fourteen (14) fire alarm devices, 24/7 monitoring is mandated by the local fire department. Translating the requirements into set of actionable services, four cost patterns are described here to represent this facility's maintenance cost. 

24/7 Monitoring and annual inspections are required activities and can are considered fixed costs on the TCO model. Periodic corrections, on the other hand, represents the likelihood of a number of devices requiring replacement/repair on a yearly basis. For this system, there's a likelihood that up to three devices will require servicing (replacing/troubleshooting) each year. Causation include, but are not limited to: unintentional damages, backup battery drainage, failure associated with aging hardware, unauthorized personnel tampering with system, extreme environmental conditions, and/or general accidents. It’s important to note that periodic corrections are typical for any commercial building due to the high level of foot traffic. Such corrections are typically non-emergency calls and can be corrected during annual inspection visit.

Unscheduled corrections, on the other hand, can be extremely costly. Although fire alarm and life-safety systems have built-in precautions, any number of unforeseen circumstances can trigger a major set of correction requirements at a short-notice. For this facility, there is a likelihood of 2 to 4 system breakdown events within a span of 1-years that will require major correction. It can range from system damages due to water infiltration (ex: pipes burst), severe weather that causes FACP to short-circuit, unauthorized individuals tampering with system, and a host of other scenarios. To better capture these scenarios, consider Table 2 breakdown of a typical TCO projection for this system. 

Seen here, the TCO projection accounts for general maintenance, scheduled corrective actions, and unforeseen risks that directly impact the system reliability. Although annual inspection and monitoring services represent the bulk of TCO, a whopping 74% of the cost, these tasks are mandated and mission critical for shielding against broader liability - life and property safety.

The upside of having to pay for mandatory fire alarm requirements is that property insurances premiums are stipulated on the same life-and-property risk assessments that fire alarm system. This means that properties can qualify for deductible means if fire alarm safety benchmarks, risk mitigation, and up-to-code maintenance programs are achieved annually. The governing principle of this provision is that a peak-performing fire alarm and life-safety system mitigates fire-related risks and increases life and property protection. It is then the job of the fire alarm company, under the instructions of the property owner, to ensure that system is in; peak-performance, up-to-code, Certificate of Inspection & Reliability has been issued yearly, and incremental improvement is employed. 

In conclusion, it is mission critical to perform a full systemic assessment of the equipment's current conditions, identify safety benchmarks, and stipulate an ideal maintenance budget predicated on identified cost patterns. This method shines light on broader risks and liabilities present while providing a data-driven roadmap to assist in strategically targeting investment opportunities to receive the most benefit from system improvement.

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