Property Construction & Valuation: Are you at risk?

1. Property Construction & Valuation:Are you at risk? April 23, 2008 - Interim Life Safety Measures portion only May 14, 2008 – Valuation portion only Sponsored by Premier Insurance Management Services, Inc.

2. Interim Life Safety Measures Steve Spaanbroek

3. A Proactive Program to Manage Risk The Joint Commission &Interim Life Safety Measures

4. Interim Life Safety Measures (ILSM): What are they? • Administrative method to offset a recognized Code shortcoming • A set of 11 measures for providing a safe environment during a significant construction project

5. When should ILSM be implemented? • When construction alters any required Life Safety Code elements • When a Life Safety deficiency is discovered or created including but not limited to: • Blocking or temporary changing of exits • Loss of integrity of fire walls or smoke barriers

6. Interim Life Safety Measures • Ensuring free and unobstructed exits. Staff receives additional information/communication when alternative exits are designated. Buildings or areas under construction must maintain escape routes for construction workers at all times, and the means of exiting construction areas are inspected daily. • Ensuring free and unobstructed access to emergency services and for fire, police, and other emergency forces • Ensuring that fire alarm, detection, and suppression systems are in good working order. • A temporary but equivalent system must be provided when any fire system is impaired. • Temporary systems must be inspected and tested monthly.*

7. ILSM Continued • Ensuring that temporary construction partitions are smoke-tight and built of noncombustible or limited combustible materials that will not contribute to the development or spread of fire • Providing additional fire-fighting equipment and training staff in its use • Prohibiting smoking throughout the hospital’s buildings and in and near construction areas • Developing and enforcing storage, housekeeping, and debris-removal practices that reduce the building’s flammable and combustible fire load to the lowest feasible level • Conducting a minimum of two fire drills per shift per quarter • Increasing surveillance of buildings, grounds, and equipment, with special attention to excavations, construction areas, construction storage, and field offices • Training staff to compensate for impaired structural or compartmentalization features of fire safety • Conducting hospital-wide safety education programs to promote awareness of fire safety. building deficiencies, construction hazards, and ILSMs

8. When should ILSM be implemented? • When a fire alarm or fire protection system is impaired. • Typically if a system will be impaired for longer than 4 hours in a 24-hour period, ILSM is required. Local AHJ’s or insurance companies may have more stringent requirements • When a life threatening condition exists.

9. ILSM Policy • Standard P & P setup language • A listing of the 11 administrative measures and any additional items specific to your organization • Criteria to evaluate deficiencies and hazards (matrix, scoring system or narrative) indicating when the ILSM program is implemented and what measures are in place

10. Questions?

11. Hospital Construction Costs & Valuations Peter Levesque, McGrath and Company, LLC

12. Company Profile MCGRATH & CO., LLC McGrath is a consulting firm, which provides Project Controls Services to clients in various industries. Our background is in Construction Management with expertise in estimating, scheduling, project management, claims consulting and property appraisals. We are chartered members of the Royal Institution of Chartered Surveyors - ‘The Property Profession’ Geographic Locations Domestic: California, Colorado, Maine, Massachusetts , New Hampshire (HQ), New Mexico, Oregon, Texas and Virginia. International: Ireland (branch office), Israel and China.

13. Client Portfolio Divisions: Microelectronics – Intel, Infineon, Nat’l Semi, AMD. Pharmaceutical – Wyeth, J&J, Astra-Zeneca, Merck. State Government – Maine, NH. Insurance – Chubb, Acadia, Zurich, One Beacon , AIG Management Consulting

14. Insurance Our experience in the property industry has allowed us to develop expertise in property appraisals and claims consulting . Our services to the Insurance Sector are directed by Peter Levesque: Peter has 19 years of experience, producing insurance appraisal and valuation services, in a wide variety of industrial, commercial and institutional occupancies. Peter is supported by a team of appraisers with full-time administrative support:

15. Portfolio Industry Experience: Health Care Institutional Public Utilities Industrial Electronics Mercantile Commercial Municipal Hospitality Insurance carriers:Chubb, Zurich, Acadia, One Beacon & AIG

16. TOTAL Insurable Value • The total values at a specific location or policy including: • Real Property (Buildings) excluding land • Site Improvements • Fixed and Attached? • Engineering & Overheads • Personal Property- Is it part of the process • Machinery & Equipment -Does it perform a service? • Furniture • Fixtures • Software?

17. Are your Values Are Correct? • Where Do Values Come From? • Types of Values • Replacement Cost • Reproduction Cost • ACV - Why not? • Fixed Assets. • Leased/Reagent Rental equipment. • Which Value are you using • Appraisal

18. Why appraise? • To get the correct value! • Not over insured. • Not under insured. • Saves time. • Distribution of value. • Detail of equipment in event of a loss. • It is an available service, why not use it. • Other uses. • Real/Personal Property

19. Hospital Construction • 1940’s - 60’s • Large wards, no AC, little privacy, slow air changes, hazardous waste, no technology • 1970’s - 80’s • Air Conditioning, semi-private rooms, more air filtering, more privacy, some technology • 1990’s - present • Extensive mechanical and technical, private rooms, privacy, flexible design, evidence based design

20. Why have hospital costs increased so much? • General Reasons • China: increased cost of building material (steel, copper, etc.) • Natural disasters: Katrina, Ice Storms, California fires, etc. • Construction Surge: Update obsolete facilities • 3,552 projects totaling $35.4 billion in 2007 • Labor: Limited contractors to handle complex construction • Hospital Specific • Code Changes: Facilities Guidelines Institute, OSHA, JCAHO • Industry Surge • Privacy Rules: HIPAA • Security • Competition: Patients, doctors, nurses • California: Seismic - 2012

21. New vs. Old Code upgrade: air changes, privacy, space requirements Occupancy up-grade: technology Design: aesthetically pleasing, patient/visitor comfort, staff efficiency Regulations

22. Cost/No-Recurring Costs • Construction Costs • Country wide average: $350/sf ($1.5 million/bed) • California average: $550/sf ($2 million/bed) • Non-recurring Costs • Excavation • Demolition • Testing • Mock-up

23. Contact • Steve Spaanbroek, Director of Facilities Consulting • Email: steve_spaanbroek@premierinc.com • Phone: 704-733-5580 • Peter Levesque, Appraisal Manager • Email: plevesque@mcgrathllc.com • Phone: 774-218-1924 • Premier Insurance Management Services, Inc. • Email: insurance@premierinc.com • Contact: 877-777-1552 • Website: www.premierinc.com/insurance