Cost of underground utility damage represents a major drag on national economies

Underground utility damage is expensive. Several jurisdictions have attempted to estimate the cost of underground utility damage for individual incidents and for entire national economies. Costs can be broken down into direct costs and indirect costs. Direct costs include the costs of sending a crew to repair the damaged pipe or cable. Indirect costs include many factors that are often hard to quantify such as traffic disruption, injuries and fatalities among workers and the public, and the lost custom that local businesses experience. An important conclusion from the research into the cost of underground utility damage is that it represents a major drag on national economies, $50 to $100 billion annually in the U.S., £ billions in the U.K., and € 1 billion in the Netherlands.

UK

About 4 million excavations are carried out on the UK road network each year to install or repair buried utility pipes and cables.  Research at the University of Birmingham on 3348 incidents of damage to underground utilities determined the direct costs of utility damage during construction.

 

Facility	Avg cost per strike in 2016
Electricity	£ 970
Gas	£485
Telecom	£400
Fibre-optic	£2800
Water	£300-980

 

The researchers found that the true costs associated with utility strikes is much higher than this. Direct costs include the costs of sending a crew to assess and repair the damaged pipe or cable. Indirect costs include the impact of traffic disruption as a result of the strike, any injuries and other impacts on the health of the workers directly involved and the public in the immediate neighbourhood, and the lost custom that businesses experienced as a result of the traffic disruption. The research revealed that the true cost is about 29 times the direct cost. This is a startling result which indicates that the cost to society of underground utility strikes is much, much larger than is generally believed.

US

The CGA compiles information on the direct cost of damage to underground infrastructure for different types of underground infrastructure.

 

Facility	Avg cost per damage 2016
Natural gas	$5,914.00
Telecom	$3,022.00
Electric	$4,905.00
Cable TV	$2,190.00
Water	$3,003.00
Sewer	$5,163.00
Liquid pipeline	$7,711.00
Steam	$1,800.00
Average	$4,021.00

 

At an average cost of $4000 per hit, the CGA estimates that the direct cost to the U.S. Economy is about $1.5 billion (or roughly double this if the number of incidents annually is actually closer to 800,000). The CGA emphasizes that this is a conservative minimum estimate and does not include indirect and social costs.

Scott Landes, of Infrastructure Resources LLC, has compiled a comprehensive list of the direct, indirect and societal cost of damage to underground infrastructure.

 

Items that may or may not be collected

• External collection costs/agency commissions

• Barricades/traffic control

• Permits (city/county/state/provincial) to install replacement cables/pipelines

• Legal fees and litigation costs

• Exposing the damage for repair

• Materials used in repair

• Restoration of the area

• Actual cost of internal labour

• Heavy equipment used

• Generator/power equipment

• Food, lodging, and travel expense

• Emergency mobilization (contractor/locator)

Time

• Damage investigation, on-site and follow-up

• Internal staff collection efforts

• Out of service complaints

• Insurance resolution discussions

• Overtime for unexpected increases in workload

• Employee time/travel for depositions/trial

Overlooked/difficult to track

• Lost customers

• Customer loss of use (refunds/credits)

• Resolution of customer complaints

• Engineering/reengineering due to damage

• Establishing outage bridge to coordinate services interruption

• Support staff (3-20) for outage bridge

• Workload delays

• Future failure points (damage may weaken system and lead to future failure unattributed to 3rd party)

• Damage data capture and submission (software and/or manual)

• Emergency on call ticket notifications

• Facility owner records updates

• Reporting requirements (FAA, 911, PHMSA)

Soft costs

• Loss of brand confidence

• Negative public feedback

• Difficulty maintaining customer relationships, especially large businesses, with inconsistent services

Societal costs

• Loss of 911/emergency services

• Business closing

• Employee downtime

• Road closures/traffic delays

This is a very interesting list because it provides a perspective on the comprehensive impact on society of disruptions to utilities and telecom resulting from underground damage during construction.

If the ratio of total to direct cost determined by the researchers at the University of Birmingham is applicable to the US, it would mean that the total estimated impact of unknown or poorly located underground infrastructure on the U.S. economy is between $50 billion and $100 billion annually.

Netherlands

Network operators are required to report all incidents of damage to their infrastructure including location, cause and other information. Based on this and other information Kadaster publishes an annual report with statistics on underground utility damage. This information can be used to estimate direct costs of damage to underground infrastructure.

 

Damage to underground utilities in 2018
Annual excavation damage	41,169
Direct costs from damage	€ 34,500,000
Average repair cost per excavation damage	€ 838

 

If the estimated direct cost is multiplied by 29X from UK research to estimate the total cost, underground utility damage costs the Dutch economy about € 1 billion annually.

 

An important conclusion from the research into the cost of underground utility damage is that it represents a major drag on national economies, $50 to $100 billion annually in the U.S., £ billions in the U.K., and € 1 billion in the Netherlands.