Disaster Recovery

Editor’s Note: This is the second article of a two-part series covering disaster preparation and recovery. Part one appeared in Construction Business Owner’s July 2013 issue and is available here.

Natural disasters are often followed by disorder. Emotions run high, and the dynamic environment dictates that snap decisions be made. The success of recovery efforts directly correlates to the effectiveness and execution of disaster preparation. Regardless of the plan, however, there is unpredictability associated with any disaster, so each element of the plan should be flexible enough to compensate for unforeseen conditions. After the event passes, it important to begin the recovery process expeditiously. The following diagram depicts the chronological steps involved in the recovery process:

After a disaster event has occurred, it is important to determine the level of damage sustained as well as its impact on internal and external operations. Electricity and water may not be in service. Transportation routes may be blocked or damaged. Associates may be displaced. By assessing the situation, you can develop a framework for moving forward through the recovery phase:

• Are all employees and their families safe and accounted for?
• What is the level of damage at the main office? Are utilities operable? What contingencies are in place if utilities and traditional communication lines are inoperable?
• Should the firm mobilize into satellite offices?
• What is the state of each jobsite?
• How should the firm sequence the recovery to best accommodate the associates, the firm and the customers? 

It is imperative that the firm document the damage associated with any disaster. Once the affected area is safe and cleared by appropriate emergency personnel, the contractor should document the extent of the damage through reports, photographs and video. This will assist insurance officials in their processing of the claims and will document the state of the firm’s projects. After normal operations are resumed, there will be expectations about a project’s schedule and budget. When the firm has documented the disaster and can provide a picture of its impact, it may avoid the adversarial discussions and litigious situations that might otherwise arise from delays and budget overruns. When documenting a disaster area, consider the following:

• What is the extent of the damage to the site? What is the damage to materials stored onsite?
• What is the extent of the damage to the site and potential transportation routes to the site?
• Is there damage to areas not visible to the human eye? Have there been breaches in the building shell that could allow for mold propagation and other organic growth? What is the extent of visible mold intrusion throughout the remaining structure?
• What is the damage to offsite materials belonging to the contractor, subcontractors and suppliers?
• When reviewing the CPM schedule, was consideration given to adjusting the schedule for the disaster event delay and to remobilization, demolition and reconstruction?
• What necessary steps will be required by the customer’s insurance and financial entities before construction can recommence?

Communication
In many situations, the communication and assessment phases can be conducted concurrently. The premise behind the communications element is to determine the best course of re-establishing channels internally and externally. Phones are often rendered inoperable after such disasters as hurricanes and earthquakes. Two-way communication channels may be operable but are often overloaded by emergency personnel utilization. How will the firm execute the recovery plan? Is the communication plan developed in the preparation phase feasible in light of the current conditions? Is the point of contact accessible, or is a contingency plan necessary? While the initial communication channels might be crude, quick utilization of what is available helps create a sense of normalcy for the firm. 

It is also important to establish communications with other agencies, including the firm’s insurance company, its bonding company and other financial institutions that are critical to its ongoing operation. A person should be charged with maintaining an updated list of contacts and initiating communication as soon as possible. With the assessment complete, firms can expedite the process of filing claims and rebuilding projects and offices.

Mobilization
Once areas have been deemed safe, it is important to remobilize quickly.  Remobilization provides additional challenges:

• How will equipment be transported to each location?
• Is the equipment being correctly utilized for such operations as demolition?
• What additional equipment will be required? Who will furnish this equipment?
• What are the sourcing options for fuels, lubricants and other vital fluids?
• How will domestic water, power and sanitary facilities be provided?
• What subcontractors and suppliers will be most affected by the event? Will some of them be unable to meet their contractual obligations?

After suffering damage wrought by hurricanes such as Andrew and Katrina, many of the affected businesses, regardless of industry, were incapable of reopening. Mobilization, much like the other elements of the disaster recovery plan, is dependent upon people. In what capacity can the firm assist its employees to help drive internal recovery? Many firms gain loyalty and develop a familial atmosphere more from what they do in times of need than what they do in everyday operations. 

Customer Management
Marketing and customer management are often not considered immediately after an event. Some firms may be concerned about appearing opportunistic or greedy. However, addressing the customer’s needs after a firm has organized itself demonstrates a continued proactive instinct for customer service. The following questions demonstrate an affinity for the customer’s interests:

• In what capacity can the firm help the customer’s businesses? What assets are capable of being put to use to help the customer?
• What format or delivery mechanism will provide the greatest value and inform the customer of the project’s current state?
• However unorthodox, what actions can the firm take to facilitate an expeditious recovery for the customer?

As the customers focus on their associates and business, their attention is drawn away from future construction opportunities. By assisting them in their operations in the short term, contractors may influence customers’ planning and operations in the long term. Pundits would argue that there is little value in managing customers that commoditize the selection of contractors. However, expressions of aid and generosity, regardless of contractual agreements, are often remembered and may generate  loyalty among even the most hardened customers.

Evaluate/Debrief
It is often implausible to perform disaster-recovery trial runs. Therefore, once the event has passed and the restoration is in progress, it is important to examine what successes and failures occurred because of the firm’s disaster readiness plan. Within the volatile environment a disaster creates, the plan’s strength is tested.

Conducting a postmortem on preparation, recovery planning and responsiveness is similar to analyzing closed projects. Below is a series of questions used to determine the effectiveness of disaster readiness plan execution and the subsequent recovery:

• How did associates fare? Were there scenarios that the firm could learn from?
• In general, what are the lessons learned about the firm’s disaster preparation and recovery process and procedures?
• Were jobsites effectively prepared, and was the level of damage commensurate to the level of the preparation?
• Were documents and other information systems safe and undamaged?
• Did the communication process work? What were the impediments?
• What was the impact to applicable insurance and builder’s risk policies? Will adjustments need to be made to future pricing and bids?
• What effect did the event have on the labor supply in the area?
• What are the short- and long-term effects on transportation routes, material sourcing, subcontractor workloads, etc.?
• What technical insight was gleaned from the impact to worksites?
• What are the short- and long-term effects on customers and future work?
• What critical decisions need to be made regarding continued operations in disaster-prone markets and areas?

That final question may answer everything for a contractor. Many firms are lured to areas because of the perceived abundance of construction opportunities. For example, contractors have long viewed the coastline of Florida as a limitless pipeline of work. However, this area is also prone to devastating weather conditions. Ultimately, the firm must question whether it can absorb the effects of such exposure annually and remain profitable before, during and after any type of catastrophic event.