When disaster strikes: How to minimize the fiscal impact of emergency construction

As the scale and frequency of weather-related disasters continue to escalate, the financial burden on local governments is becoming increasingly severe. The NOAA National Centers for Environmental Information reported 28 weather and climate disasters in 2023, surpassing the previous record of 22 set in 2020, with a total cost of at least $92.9 billion. In 2024, through October, NOAA has confirmed 24 U.S. billion-dollar weather and climate disaster events.

Beyond the loss of life and property, natural disasters can impose substantial financial burdens on local governments. The Congressional Research Service (CRS) highlights multiple financial impacts, including declines in tax revenue and increased disaster recovery expenses. One major reason for the high cost of natural disasters is the expense of emergency construction work. Emergency repair rates can be 50% to 100% higher than standard labor costs, and lengthy cost negotiations can exacerbate the problem as facilities continue to deteriorate.

To address these challenges, state and local governments can leverage data-driven strategies to enhance their resilience planning and fast-track facilities recovery. 

Deploying a data-driven foundation
In response to the rising frequency and costs of extreme weather events, organizations are increasingly prioritizing facilities resilience in their planning efforts. This involves fortifying physical assets against disasters, making it a crucial component of long-term facilities strategy. 

Business continuity is a key aspect, requiring executives, facilities leaders and stakeholders to determine which assets should be prioritized for recovery after a disaster. Priorities vary by organization; for instance, local governments may focus on fire stations, while hospitals prioritize keeping ICUs operational. A critical component of this approach is conducting a thorough Facilities Condition Assessment (FCA) to create a solid foundation for decision-making.

FCAs can identify asset vulnerabilities, highlight the extent of deferred maintenance backlogs and provide accurate estimates of replacement costs. The data gathered through an FCA distinguishes critical information from less important details, clearly presenting the facts about asset conditions and facilitating the effective communication of needs across the organization.

Long-term resilience planning is essential as extreme weather patterns persist. Organizations must adapt to these realities by doing things like ensuring HVAC systems can handle prolonged warmer temperatures or enhancing stormwater systems to manage increased rainfall. Installing or upgrading emergency generators may be necessary to maintain operations during power outages. Prioritizing preventative measures and preparations with an FCA helps government officials to strategically implement improvements for their communities. 

Once plans are in place, construction work must be procured to make these alterations and modernizations. Many government officials across the United States are utilizing a construction procurement method called Job Order Contracting, also known as JOC, for efficient and compliant project delivery and emergency response.

The role of Job Order Contracting in emergency response
A compelling example of effective emergency response is from California’s Pajaro community in Monterey County. In March 2023, severe rainstorms led to extensive flooding. The first levee breach occurred on March 11, and a second breach followed two days later, submerging the area and displacing thousands of residents.

Monterey County officials, along with the California Department of Forestry and Fire and the National Guard, issued evacuation orders and worked tirelessly to rescue those who stayed behind. On March 17, before the floodwaters had fully receded, county officials, the California Office of Emergency Services (OES) and other stakeholders assessed the damage and planned a city-wide cleanup. 

With speed being of utmost importance, Monterey County officials utilized their JOC program, provided through Gordian, to remove the debris. An Indefinite Delivery, Indefinite Quantity (IDIQ) construction procurement solution, JOC enables organizations to complete many projects with one, competitively awarded contract. This unique, single-solicitation approach reduces the procurement cycle by about 25%, according to an independent research report sponsored by NIGP and Gordian, significantly accelerating project delivery.

Speed was just one of the reasons why JOC was the perfect solution for cleaning up and revitalizing the Pajaro community. An accurate Unit Price Book (UPB) is a cornerstone of any successful JOC program because it provides local construction costs and is the basis for pricing the program’s every project. A comprehensive and accurate UPB allows the parties to focus on completing projects instead of negotiating prices. Even when the scope of a project changes, the contractor prices the additional work out of the UPB and issues a supplemental job order. Possessing a shared source of truth for pricing enhances transparency, fosters trust between owners and contractors and ensures emergency project costs aren’t inflated.

Government officials, the local contractor and other stakeholders worked together closely to develop daily proposals for each phase of the project, ensuring accuracy for FEMA reimbursement. The project required extraordinary collaboration and tireless effort, with up to 40 stakeholders holding twice-daily strategy meetings to plan activities, address hurdles and assess progress. Residents were asked to place flood-damaged items in the street for categorization and disposal, resulting in the removal of 7,841,080 pounds (3,920.5 tons) of debris.

When initial plans hit snags, the team quickly adapted, redrawing collection paths and rerouting crews. This adaptability, a hallmark of JOC, allowed contractors and subcontractors to adjust their operations effectively.

Building better communities
The Pajaro cleanup project illustrates how strategic planning can enhance resilience and minimize the fiscal impact of emergency construction. Monterey County implemented their JOC program in 2012, initially with the goal of proactively and more efficiently reducing their backlog of capital projects. With the introduction of JOC, project timelines were drastically reduced by 12-14 weeks. And in just one year, Monterey County saved $3.5 million directly attributed to their JOC program. The county has since utilized JOC for alterations, modernization and renovation projects across their communities, benefitting from calling on the program for routine tasks and emergency response. 

As natural disasters become more frequent and severe, state and local governments must adopt innovative strategies to manage the financial impact of emergency construction. Facilities assessments provide the data needed to make informed investment decisions and Job Order Contracting solutions help control costs of emergency work. By leveraging these planning and procurement tools, governments can enhance their resilience, streamline recovery efforts and ultimately build better communities.