Cost Benefit Analysis of a Fire Safety System Based on the Life Quality Index

Abstract

Carrying out a cost benefit analysis requires, on the one hand, estimation of costs for the installation, running and maintenance of the system under consideration. On the other hand, it also requires estimation of the net reduction (in dollars) in property damage, as well as the effect on occupant injuries and fatalities. Costing of injuries does not raise ethical problems, but there is no universally accepted answer to the question “What is the value of human life?” Beever and Britton carried out a cost benefit analysis of various fire safety measures in one and two family dwellings in Australia but carried out analysis of the financial aspects separately from consideration of life safety. Thus it was not possible to uniquely rank the various options considered. In this paper their analysis is updated by integrating the financial aspects with the life safety aspects using a new approach, called the Life Quality Index (LQI) method, that has been developed by the Institute for Risk Research of the University of Waterloo, Canada. The life quality index can be calculated for many countries from widely available and reliable statistical data. It has been successfully used in environmental science and nuclear and structural engineering. When applied, as an example of the use of the method, to a cost benefit analysis of the use of sprinklers in one and two family dwellings in Australia using the Beever and Britton data, the LQI methodology yields a financial measure of the benefit expected if sprinklers were installed in one and two family dwellings. The analysis shows a very low benefit to cost ratio and it is thus concluded that installation of sprinklers in these dwellings is not cost effective.