“Can This Building Collapse?”
I remember being asked this question in 1991 when my guest family from Tanzania, Africa stepped out of the elevator on the 42nd floor of the Wells Fargo Center. Here for the International Special Olympics, I brought them to my KPMG Peat Marwick office to get an unmatched view of the Minneapolis-St.Paul skyline.
Little did I know that 30 years later there is more reason than ever to wonder about the answer to that question for any commercial building.
Not only did the horrific tragedy of the Surfside, FL condo collapse stir some fear, but perhaps more troubling is looking at historical data of structural failures.
Even with 5 months remaining in 2021, the number of building collapses and associated deaths from the period 2012 – 2021 are 181% and 240% higher, respectively, than the previous 10 year period from 2002 to 2011. This is based on data provided in Wikipedia on commercial structural failures.
Because of these concerns, there has been a rush to read and re-read Property Inspection Reports (“PIR”) in order to better understand the conditions and risk factors that do or don’t exist in commercial buildings.
But, can people effectively and efficiently read a population of thousands of PIR documents? Of course not!
However, like most things these days, technology has an important role to fill. Technology is well suited to read and interpret unstructured sentence data – what can be thought of as original content documentation of facts, circumstances and decisions.
To that end, we offer three suggestions for using technology to convert the chaos of this legitimately arduous task into an efficient, meaningful exercise:
#1 Keep the Business Executive Involved Early and Often
The gap that exists between professionals focused on the business and those focused on the data has not closed. In fact, it is getting wider. For this reason, the person responsible for making decisions about the business is the person that needs to be involved in planning and executing an extraction of knowledge.
Yes, the person focused on the data knows the ins, outs, whereabouts and so forth of where the data exists and the associated nuances of accessing it. But your goal is not more data; rather, fast, efficient knowledge … that can be used to make intelligent business decisions.
Ask yourself this: If I were hiring 10 interns to read 2,000 PIRs, would I ask the data professional to tell the interns the information I am asking them to find? Sure, the data professional needs to give them some instructions but that is secondary to my needs as a business owner needing critical knowledge.
#2 Know What You’re Trying to Find Before You Start Looking
Whether in residential or commercial buildings, the professionals involved in inspecting, underwriting, managing risk and paying claims have a very good understanding of where problems could exist. Use that experience to set up key business questions that you want answered.
If somebody asks me to “tell them what’s in the data”, I say “have a good day”. Okay, not really but I do have to redirect their expectations. They know their business problems, constraints and opportunities. Technology never has been or will be a panacea.
There are oceans of data in populations of sentence data such as PIRs. And, each ocean is dependent on context – the specific needs or business questions being evaluated.
When you’re in the ocean, knowing your destination – the information you’re trying to find – is critical or you’ll end up lost. Knowing the destination enables an effective plan and backup plan to be organized before starting the journey.
Additionally, consider third party experts like Bankrate as sources of knowledge. They have created a guide that explains what to look for when considering the structural integrity of a residential home and the engineering practices used to construct it.
#3 Embrace the Journey but Keep Your Eyes on the Destination
Because it is inevitable that you’re going to find things that you didn’t anticipate, there will be numerous opportunities to get lost in the proverbial rabbit hole.
The challenge is knowing the rabbit holes worthy of exploration versus those to be ignored. Some rabbit holes will provide substantive economic benefit to the business while others simply distract from the destination.
Take a moment and reread point #1. Only the business professional is equipped to recognize the value in pursuing a red flag versus setting it aside and continuing toward the destination.
SDRefinery recently completed processing a large population of residential PIRs. A different line of business but similar to commercial PIRs in that information is either unstructured sentence data or tabular data. The key stakeholders reported that they found unexpected actionable information in the results even before they started focusing on the results for the original target – i.e. the destination.
In summary, like anything new and innovative, go in with a mindset of eagerness to learn. Hence, the Journey mentality. And, because you’re using technology, the processing you’re going through is 100% iterative. In other words, every time you do it, the process becomes more efficient.
You are sure to gain an enormous amount of knowledge about your business with the right sentence data refining technology applied to your PIRs. While this will help you be smarter about underwriting and pricing property risk leading directly to increased profits (i.e. improved loss ratio), you may gain little confidence about your building not collapsing.