The economic impact of a disaster will be lessened by minimizing losses and improving the facility’s response and recovery time. The likelihood of an event happening, along with the associated recovery cost will provide the facility’s annual liability.
Recovery cost= ∑ cost of unsalvageable books + recovery service cost + restoration of material
Annual liability= ∑(recovery cost)(likelihood of disaster event per year)
A sample calculation for the Oak St Facility’s annual tornado liability is shown below. The area of the facility is approximately 75,000 square feet and the area of Champaign is 17 square miles. The ratio of the facility to Champaign is 0.00269. Thus, the probability of a tornado hitting the facility was based upon land ratio between the facility and the city.
The reason only F2 and F3 tornadoes were used for the calculation was that F0 and F1 tornadoes would not be able to cause damage to the materials within the facility and F4 tornadoes happen so infrequently that adequate data could not be found.
Additional calculations are shown in Appendix G. The variable costs in this analysis include unsalvageable books and the cost to restore materials and by implementing a disaster recovery plan these variable costs will be reduced.
The team first assessed each disaster’s liability by multiplying each disaster’s damages, likelihood, and severity. These liabilities were then added together to find the facility’s total annual liability. The team found the sprinkler system to have an $81 annual liability, based upon the assumption that the sprinkler heads were installed correctly. Tornadoes had an annual liability of $1,462 due to their frequency in the Midwest, and flooding was $9,989. Earthquake was estimated to be zero due to the absence of large, destructive earthquakes and the high earthquake rating of the shelves. Train derailment, while often devastating, had a likelihood of 80 defects (derailments) per billion trains. The small likelihood reduced the annual liability to a negligible amount. The total annual liability is approximately $11,451.
A mold outbreak occurred at the Rare Book and Manuscript Library in the fall of 2007 that affected approximately 300,000 books. The total clean-up effort, including recovery services by an outside company (BMS CAT), equipment, stabilization supplies, material replacements, and staff time cost $892,450 (a breakdown of these costs is shown in Table 7.1). Although that facility is different than the Oak Street Facility in its storage of books, the processes, damages, and labor costs would be similar after a disaster and were used to evaluate the economic impact of a recovery plan.
|Total $ Spent to Date
Once the mold was detected, it took over four months to prepare and plan before any cleanup was attempted. The team’s plan will eliminate much of the work done in those four months (such as defining scope, alternative plans, quotes, protocols, and vendors) and it would take less than a week of preliminary work (preparing a presentation for administrators and contacting vendors) to start recovery, ensuring no further mold damage. Subtracting the reduced preliminary hours comes to a total savings of $8,800 (440 hours at $20 an hour). BMS costs approximately $72 an hour to recover special collection materials. This includes the total work hours and equipment used.
BMS, while performing an adequate job at the Rare Book Library, would have to deal with other, uncommon issues at the Oak Street facility. These issues range from 40 ft high shelves to a random distribution of the special collection materials. With the team’s algorithm and recovery plan, BMS would be able to locate and treat these materials immediately, reducing the replacement costs or the number of unique materials lost. A more efficient material recovery system will also reduce the total labor hours spent on recovery, and the team’s recovery plan will ensure a higher degree of prevention with early detection methods.
Using the reduction in preliminary work, it was estimated that the new plan could reduce the amount of required work by four days a month. This comes from knowing the locations of the special collection material and the best method to retrieve them. Four days a month (four Saturdays) would save an average of $35,000 per month. In the previous disaster that would save $140,000 over the four months of cleaning that took place, a reduction of 16%.
Assuming an annual liability of $11,450, and maintaining the 16% reduction in the cost, it can be expected that there will be a $1,832 reduction in annual liability. With an initial investment of $6,190 towards preventative measures, the $1,832 reduction in annual liability will have a payback period slightly more than three years. Figure 7.1 is a visual representation of the net present value associated with the money saved by the disaster recovery plan. Over the course of ten years a total value of approximately $7,500 would be saved with a 27% return on interest (ROI).
Appendix E shows the data table for NPV (using 6% interest rate), net cash flow, and ROI.
There is currently no set budget for the project, however, viable grant money from the National Endowment for the Humanities would provide up to 2.5 million dollars to finance the project. These 2.5 million dollars would be used to finance the detection systems and improvements mentioned along with purchases necessary in the disaster recovery process such as extra lifts or other recovery equipment.
The economic impact in terms of losses will ultimately depend on the percentage cost of the collection items damaged and what can be recovered back to good condition. The breakdown of collection items and their replacement costs is shown in Table 7.2, these costs have been assigned by the Oak St. Facility after consultation with both professionals in each archival area and insurance providers.
||Cost per Item
|STOS General Collections
|STOS Priority Materials
|RBML - Books, Serials, etc
|RBML - Microform
Table 9.2: Break down of replacement cost per item
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