Role of Predisaster Construction Market Conditions in Influencing Postdisaster Demand Surge

Abstract

The postdisaster survival of cities and communities depends on their capabilities to reconstruct and repair damaged buildings following large-scale natural disasters. The socioeconomic phenomenon of increased construction costs following large-scale natural disasters, also called demand surge, cripples our capabilities to recover from disasters effectively. Labor cost fluctuation following natural disasters is known to be a driving factor in demand surge measurement. The relationship between construction labor wage fluctuations and disaster’s magnitude has been defined in the literature. Despite the significant role of the construction industry in postdisaster labor cost fluctuations, the relationship between predisaster construction market conditions and postdisaster labor cost fluctuations has not been studied. The objective of this study is to quantify the relationship between predisaster residential construction market conditions and residential labor wage fluctuations following weather-related disasters. The historical county-level data on five construction market indicators (establishment count, contribution level, average weekly wages, employment level, and building permits) prior to disasters along with disaster magnitudes (property damage) were collected for more than 35 of the largest weather-related disasters (floods, storms, and tornadoes) in the United States. These disasters affected more than 4 counties from 27 to 214. Residential building labor cost changes were first measured for counties impacted by weather-related disasters. The multiple linear regression method was then utilized to quantify the relationship between predisaster residential construction market indicators and the percent change in residential building labor wages after weather-related disasters. The results show that changes in residential building labor wages following weather-related disasters depend on the predisaster level of construction market indicators and the interactions between indicators. It is expected that the results of this study will help cost engineers to prepare more accurate bids in the volatile postdisaster construction markets and help capital planners and postdisaster risk-mitigation agencies to identify the more vulnerable construction markets.