Preparing for the Unthinkable

Nothing could prepare a company for the events that occurred Sept. 11, when terrorist attacks on the World Trade Center and the Pentagon directly impacted tens of thousands of Americans and left many more wondering about their own safety. But in the aftermath of such events, building service contractors can help put their minds, and those of their employees and customers, at ease by making sure they have disaster plans in place to minimize risk for more common emergencies such as floods, fires, tornadoes, earthquakes or industrial accidents.

“These situations happen with startling regularity in the U.S. and can occur in almost any location, yet the ‘it won’t happen to us’ syndrome often leads contractors to be unprepared,” says industry consultant William Griffin, who has encountered many natural disasters in the Seattle area where his consulting firm is based.

Many BSCs only supply customers with disaster planning tips or literature, failing to heed the information themselves. And of the few contractors who do plan for emergencies, many safeguard against threats to their offices or the equipment and data they house, but don’t consider how to prepare their employees when facing emergencies within customer facilities.

A comprehensive disaster or emergency plan for a contract cleaner should cover both customer and in-house needs, as well as consideration for operations both at the home offices and on location.

Getting started
How does a contractor start tackling this long list of contingencies? Many disaster recovery contractors or government agencies offer worksheets and checklists that help businesses cover all aspects of planning.

The U.S. Federal Emergency Management Association, the U.S. Small Business Administration and the American Red Cross all offer information on their Web sites.

To begin the process, contractors should assemble a planning committee to help review and update insurance policies relevant to emergencies they anticipate; contact local regulating authorities and emergency planning organizations regarding common safety measures or to find out who to call during a crisis; do a capital-asset inventory; establish a list of vital records that need protection; and analyze the business impact of various disasters.

Next, the committee needs to write a company plan to address any steps employees should take before, during and after emergencies. This can include everything from where to store data off-site (see related article), to evacuation procedures, to emergency contact information. BSCs should make sure to allow supervisors at each account to tailor their plans to include those of the customers, if those buildings have their own emergency plans to follow, says Griffin. But make sure a copy of those altered plans is available for executives or managers to reference if an incident does occur.

At the same time, BSCs might want to provide a courtesy copy of relevant disaster plans to customers along with the contractor’s emergency contact information.

Safeguarding employees
When a disaster strikes, one of the most important concerns is the safety of employees and customers, but that can be difficult to manage when they are at different or multiple locations.

“Have a place to meet where people can verify who is out of the building, and have a back-up spot in case the first is unreachable,” says Griffin. “But make sure workers know when to evacuate and when to stay put, such as during an earthquake where its best to remain in the building until tremors stop.”

If there is too much chaos keeping workers from reaching a specific meeting area, contractors might consider having workers call an 800 number. What some BSCs in the Manhattan area found out Sept. 11 was that local lines and cell phone lines were down, but that employees still could call in on 800 lines that were routed differently.

Even though some situations could render personal communication devices useless, they still can be helpful in the majority of emergencies, says Michael Griggs, past president of the National Institute of Disaster Restoration and the owner of Disaster Restoration Inc., Denver. That’s why he outfits each employee with a cell phone, which has been quite inexpensive. Companies even can limit the phones’ use to just a few key numbers if that is a concern.

Contractors also should establish a communications network among management and provide them with the means and a plan for contacting employees, both on and off the job to either locate those in a building or to warn workers if a site is unsafe or closed, according to Falls Church, Va.-based Patterson//Smith Associates, which specializes in contractor insurance.

Plans also should enable BSCs to provide a list of employees that were in a building that suffered a disaster. For some companies that have the technology, this may involve remote access to time-keeping records in case staffing tends to be too flexible to be sure of who was involved.

In addition to evacuation and communication measures, contractors may want to have an emergency kit at each site especially when preparing for a fire or industrial incident, says Griggs.

As a norm, contractors should make sure workers wear a solid pair of work boots and chemically-resistant gloves, he says. In addition to that, an emergency kit should include respirators with different cartridges for use in different conditions. HEPA cartridges will help reduce asbestos inhalation or other contaminants that could be released if a building is damaged. If odors could be a problem from industrial materials or chemicals, then a charcoal cartridge would be useful.

Griffin also suggests a flashlight in case the lights go out while workers are in a building, and possibly a portable radio that can help them learn of what is going on if they are otherwise unable to communicate with others.

Purchasing peace of mind
A contractor’s insurance program is another critical component of disaster planning. Purchasing appropriate coverage and limits can prevent severe financial losses incurred from things such as business interruption and equipment damage to relocation, according to Patterson//Smith representatives.

But it’s not the only answer. Sometimes coverage isn’t available for all of a company’s needs. That is why contractors must work closely with their agents to develop the right program for protecting building service businesses and their employees.

Patterson//Smith offers the following as examples of the coverages that can assist BSCs in recovering from a natural or man-made disaster:

If a substantial amount of a company’s income is based on one job, this endorsement to its property coverage can be valuable. In the event the building sustains a loss and the BSC is unable to clean it, this protection protects its loss of income. It also allows the contractor to retain valuable employees while the facility is being repaired. The deductible to this coverage is hourly (12, 24, 48, etc.), though the time frame and amount are negotiable with the carrier. Once the deductible has been met, coverage is usually subject to a 21-day limit – even if the limit has not been used up, there is no more coverage. The location also must be specified on the policy. If this is not a realistic expense for contractors to incur, they should consider addressing this potential situation in the specific job contract.

Extra Expense It’s vital any company start up as quickly as possible after suffering a loss. This coverage responds by providing funds in excess of a BSC’s usual expenses. It allows the contractor to relocate immediately and to purchase or rent additional equipment – such as desks, filing cabinets, phones, computers, faxes, photo copiers, etc.

BSCs should pay attention to this limit because it often is not adequate to pay for a company’s loss, according to Patterson//Smith representatives. The mortgage still will need to be paid on an owned office building while it is being rebuilt; the rent at a new location will be an extra expense. When determining this limit, BSCs should consider the amount of time that would be needed at a temporary location (an additional expense to the company). Re-building could take more than a year if the disaster hits a large area.

Valuable Papers and Computer Software Data Replacement This coverage provides financial support for reconstructing lost records. BSCs should be realistic when estimating the time and expertise needed to recreate records.

Computer Coverage Evaluate this limit and consider including the value of the company’s phone system – phones often function as computers these days. BSCs also should consider any laptops or hand-held devices that executives or managers may have away from the company’s premises.

Civil Authority A civil authority such as the federal or local government may close a company’s building due to a direct loss to another building nearby. For example, if a fire destroys a building across the street from a BSC’s premises. Access to that contractor’s building may be denied even though it had no direct damage. Note that the damage must occur at a nearby property to trigger this coverage. This protection is most often an extension of business income. It too, generally has a 72-hour deductible and once the deductible is met, coverage is usually subject to the same 21-day limit – even if the monetary limit has not been exhausted.

Equipment Breakdown This protection fills the gap in coverage created by the property form for mechanical or electrical breakdown. Property forms exclude losses due to mechanical breakdown and loss due to electrical arcing. Without this coverage, an electrical disconnect that caused damage would be excluded under the property form. This applies to items on a BSC’s premises, but not job sites.

Flood Insurance Responds to damage caused to a property by a flood. A flood is typically defined as covering a minimum of two acres. If your building were the only business on the block to flood, coverage probably would not respond.

Contributing Properties Insurance What happens if the disaster does not affect a contractor, or its clients, but rather its largest suppliers? If a business has a major or exclusive supplier that reduces prices drastically based on purchase volume and loyalty, a BSC may be able to buy coverage that will reimburse the additional cost incurred to obtain supplies from an alternate source.

Another vital aspect of insuring against disaster-related losses is to continuously reevaluate coverage levels, says Don Waite, public information officer for the Small Business Administration’s (SBA) Area 2 disaster office in Atlanta.

If a disaster is labeled severe enough by federal and local authorities, the SBA makes loans up to $1.5 million available to qualifying businesses to help cover physical or economic loses, within the first nine months following a crisis. Often, Waite sees companies that have insurance, but never updated it to cover the increased value of a growing business. This often leaves the companies with little help to recover, and many don’t even realize they can turn to the SBA. Under some circumstances, even companies considered to be larger than the average SBA recipient can receive help.

But Waite advises BSCs to seriously look into their own insurance policies rather than relying on the government to help them after the fact.

“There are situations where the disaster isn’t large enough to qualify for aid, or the aid isn’t enough or doesn’t arrive fast enough to help a business,” he says. “Many companies often couldn’t survive for more than a week or two in a crisis situation if business is seriously impacted, and they falter before we can get them the aid, no matter how quickly we work.”

But if BSCs think far enough ahead and prepare for potential problems, they have much better chances of surviving any disaster with staffs and finances intact.

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