Quantifying a negative: how homeland security adds value

Abstract

Currently, fire department performance is measured in terms of tangible loss reduction, meaning lower dollar losses of tangible structures and contents equate with greater performance. This metric is flawed because it ignores the unmeasured performance of a fire department that saves nearby at-risk properties and businesses. Therefore, this thesis proposes a new metric: the saved ratio metric. It includes damages and business losses that may have occurred but did not, thanks to the suppression actions of an effective fire department. The saved ratio is defined as the ratio of the value that was saved at an incident versus the value of what was at risk. The total value of what was saved is defined as the total amount of what was at risk minus the total amount of what was lost, and total at risk is quantified using a new network model of at-risk property. Adjacent at-risk property is cast into a network model whereby structures are nodes and adjacency or direct contact is represented by links. Three major conclusions can be drawn from this study. First, the methodology of the real estate and economic industries can be used to quantify tangible and intangible value for structure fires. Second, network theory can be used to map the potential spread of a fire, allowing the user to identify which structures were saved or lost. Third, it is possible to estimate the return on investment added to the community from a fire suppression response model.