Suffolk Construction takes a big hit in San Francisco

"Self-insured" sounds like a euphemism for "uninsured." Unless it involves selling insurance to others to build a risk pool.

Quotes from the article I found disturbing and amusing:

A team of workers had spent the day installing a hand-rail
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The crew finished work for the day at 3:10 p.m.
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I guess this is why construction projects take so long
 
I'm no actuary, but Suffolk does enough projects that they could have their own adequate risk pool going. If they save, say, $2 mill in insurance costs on 21 projects they still come out ahead after a $40 million write-off. Obviously I'm just pulling these numbers out of thin air, but it's something to consider. Just because they lose money on one project doesn't necessarily mean that they lose money overall.
 
Amateur photographer is using drones.

Fire
http://youtu.be/ZGyyB317II0

Aftermath
http://youtu.be/q2h8oDanxkc

Failure to tighten the props.
http://youtu.be/acrIea1EAjA

I think beeline and kz need to step up their game!
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Hard to say how the loss amount is calculated. Is it just the value of the construction in place, or does it also include cost of demolition and reconstruction, or does it also include carrying costs of the developer's financing and deferral of revenue? All three would probably be a tidy sym.
 
That is a huge loss. There are millions of demo cost in there just to get started again.

cca
 
My friend lives down the road from this and was sending me pix and live feeds while it was happening. It was just a shocking scene to watch. What really annoyed me though was how the news stations kept insisting this was a steel framed building when it clearly was not. We all know that media standards have gone in the toilet, but common sense (and then some construction pic hunting) proved that the building is wood frame.

This raises larger issues about building with wood, as the IBC allows it for 6 or more stories but CA had its own state-written code until 2008 that forbade it. The NPFA is opposed to combustible construction for mid-rises.

SFGate actually ran a good article about this: http://www.sfgate.com/bayarea/matie...Bay-building-was-vulnerable-under-5321063.php
 
fattony said:
"Self-insured" sounds like a euphemism for "uninsured." Unless it involves selling insurance to others to build a risk pool.
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I am an actuary. It is often beneficial for large companies with large capital pools to self insure, since they save on the risk premium, profit loading and overhead expenses that an insurance company charges for. Suffolk can also earn investment income on their capital they are holding to self insure, which would otherwise go to an insurance company as well.
 
JumboBuc said:
I'm no actuary, but Suffolk does enough projects that they could have their own adequate risk pool going. If they save, say, $2 mill in insurance costs on 21 projects they still come out ahead after a $40 million write-off. Obviously I'm just pulling these numbers out of thin air, but it's something to consider. Just because they lose money on one project doesn't necessarily mean that they lose money overall.
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FenwayResident said:
I am an actuary. It is often beneficial for large companies with large capital pools to self insure, since they save on the risk premium, profit loading and overhead expenses that an insurance company charges for. Suffolk can also earn investment income on their capital they are holding to self insure, which would otherwise go to an insurance company as well.
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Thanks guys, the term makes more sense to me now.
 
From the San Francisco Fire Department's report.
...a large type-1 construction structure that was concrete and non-combustible on the bottom two floors. The remaining floors upward were lightweight construction type-5 unprotected wood, which is why the fire spread so quickly.
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The fire would have spread even more quickly, except it began in a corner of the building that was opposite from the wind direction.

One story was 50-75% destroyed, six stories were 75-100% destroyed. Adjacent buildings suffered $1 million in damages. Building was 76-80 percent complete.

Project cost for the fire building and a similar, undamaged adjacent building also under construction was $227 million.
 
JumboBuc said:
I'm no actuary, but Suffolk does enough projects that they could have their own adequate risk pool going. If they save, say, $2 mill in insurance costs on 21 projects they still come out ahead after a $40 million write-off. Obviously I'm just pulling these numbers out of thin air, but it's something to consider. Just because they lose money on one project doesn't necessarily mean that they lose money overall.
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Yeah, they are definitely big enough to handle it, and it wouldn't even be a write-off. The accounting for such a thing establishes a reserve fund on the balance sheet, built over time from what would have been paid to insurance. The cost is recouped from the fund and has no impact on the profit and loss statement. The balance sheet will shrink a bit, but such things eb and flow anyway.
 
stellarfun said:
From the San Francisco Fire Department's report.


The fire would have spread even more quickly, except it began in a corner of the building that was opposite from the wind direction.

One story was 50-75% destroyed, six stories were 75-100% destroyed. Adjacent buildings suffered $1 million in damages. Building was 76-80 percent complete.

Project cost for the fire building and a similar, undamaged adjacent building also under construction was $227 million.
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This sounds oddly similar to another fire from a couple years back...

http://www.sfgate.com/bayarea/article/2012-fire-leaves-eyesore-near-West-Oakland-BART-5312256.php

Had to take the Transbay bus to work that day (and then catch BART to make the other hour of the trip), and the concrete story with charcoal on top is quite a landmark from the train. Funny part was, I had gone by every day and watched it go up, wondering why they did the hybrid design...
 
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