The Top 10 True Costs of Underground Utility Strikes

Every utility strike during excavation is a multi-faceted event that triggers a series of direct and indirect costs to the entire construction site’s ecosystem.

March 24, 2024
Blog

Introduction

Every utility strike during excavation is a multi-faceted event that triggers a series of direct and indirect costs to the entire construction site’s ecosystem. While not all of these apply each time an excavator damages infrastructure, any combination of even just a few can eliminate a contractor or developer’s already narrow profit margins. Let’s explore both types of costs to discover some of the specific implications that can pile up.

 

We’ll begin with direct costs.

1. Health and Safety of Workers and Citizens
Before talking about the actual damage to the infrastructure, we need to focus on the greatest potential risk, that of individual safety; accidents involving utility infrastructure can pose risks to your workers on site and civilians in the surrounding area. Exposure to hazardous materials, electrical shocks, or gas leaks can lead to immediate injuries or longer-term health issues. Ensuring worker safety — beyond simply making sure they wear personal protective equipment (PPE) — and addressing any health-related consequences are essential financially, ethically, legally, and for the morale of your team. 

 

2. Repair Costs to Damaged Utilities
When utility lines such as water pipes, gas lines, or electrical/communications cables are accidentally damaged during excavation, the most obvious immediate cost involves repairing the broken infrastructure. This includes the labor, materials, and equipment needed to fix the utility lines. Naturally, the cost varies based on the extent of damage and the type of utility affected, but the expenses can quickly eat away at your profit margin. For instance:

  • Repairing a severed water main may require excavation, pipe replacement, and resealing.
    Fixing a damaged electrical cable involves splicing, insulation, and safety checks.
  • Oil and Gas line repairs involve leak detection, pipe replacement, and regulatory compliance inspection by the gas company or third parties to confirm repairs.
  • Fiber optic cable repair requires specialized skills, splicing equipment, and substantial costs for both materials and testing. 

 

3. Managing Damage Aftermath: Cleanup

After a utility is damaged, there’s often a need for cleanup to restore the area to its previous condition. For instance, if a water main bursts, flooding can occur. Gas leaks, oil or chemical spills may also require containment and cleanup efforts. Other cleanup may involve removing debris, drying flooded areas, and ensuring environmental safety. It may require specialized equipment (such as vacuum trucks for spills) and trained personnel. Additionally, environmental regulations dictate proper disposal of contaminated materials, and the process may require remediation efforts to prevent further harm to soil, groundwater, and nearby ecosystems. Finally, cleanup results must be tested and confirmed.

 

4. Project Delays
When utility damage occurs, construction teams and equipment on-site may not be able to proceed until the issue is resolved. These delays result in a waterfall of additional expenses, including extended labor costs due to idle personnel and equipment rentals and often new paperwork and permits that extend timelines. These stoppages ultimately disrupt project cash flow and increase overall expenses.

 

5. Penalties and Fines
Violating contractual Service Level Agreements (SLAs) and having milestones slip can lead to penalties imposed by the client or even local authorities who issue time-limited permits. As we will discuss in a moment, the financial penalties are only the “official” price you pay; future business with this client — or those he may no longer recommend you to — can be affected based on the ability to complete the work on time, without surprises that trigger these fees. Other penalties and fines may be levied by respective utility companies, municipalities, and authorities. 

 

6. Damage to Excavation Equipment
Utility strikes can also harm your excavation machinery, leading to repair or replacement costs, as well as the corresponding delays as the repairs occur or new replacement equipment is brought in. Often, these repairs must be executed urgently, and costs rise here as well.

 

Now, let’s explore the less “concrete” — but just as serious — indirect costs:

7. Impact on Reputation
Trust is crucial for long-term business success, and hitting utility infrastructure too often affects the contractor’s reputation. Current clients may lose confidence in the construction team, and potential clients may hesitate to engage with a company known for utility-related mishaps. Negative word-of-mouth spreads within the industry — to clients, partners, and even potential investors. 

 

8. Insurance Premium Increases
Frequent utility damage claims can raise insurance premiums – or keep contractors from attaining insurance at all. Insurers consider the risk profile of construction companies — claims frequency and severity — and a history of incidents drives up the cost of coverage. To avoid higher premiums that reduce profit margins, demonstrating risk management practices and technologies can influence insurance costs. We will address one such strategy, at the end of this list.

 

9. Lawsuits and Secondary Costs
Damage to utilities can trigger legal actions and secondary financial consequences. When utility damage affects neighboring properties, businesses, or public infrastructure, affected parties may file lawsuits. Those legal expenses include attorney fees, court proceedings, and settlements. Municipal services (such as traffic management, emergency response, or sewage treatment) may be affected, and repairing or compensating for these services adds to the financial burden.

 

10. Ecological Impact
Accidental damage to utilities can have severe ecological consequences. Whether it’s water, oil, gas, chemicals, or sewage flowing into the earth, water or air, the impact on the environment is both inherently harmful for the planet, as well as for your reputation. For example:

  • Water Contamination: A ruptured water main can flood the area, release surface pollutants into nearby soil and water bodies. Chemicals, heavy metals, or pathogens may endanger aquatic ecosystems and public health.
  • Gas Leaks: Gas leaks not only pose safety risks but also contribute to air pollution. Methane emissions from damaged gas lines affect air quality and contribute to climate change.
  • Sewage Spills: Sewage leaks contaminate soil, groundwater, and surface water. The ecological balance is disrupted, affecting flora, fauna, and human communities.
  • Oil and Chemical spillages: It is virtually impossible to extract these materials once they seep too far into the earth and threaten both biological ecosystems and water tables – the soil itself needs to be removed, together with the contaminants.
  • Increased oil consumption and Natural Gas/CO2 emissions – This occurs when roads need to be closed, traffic rerouted, or cars sit idling due to due to substantial utility strikes.

 

Yes, this was supposed to be a Top 10 list, but we couldn’t end it without a “meta” issue that touches on virtually all those mentioned thus far…

 

11. Administrative and Legal Costs:
Managing the multi-faceted implications of utility damage involves administrative and legal tasks for your team and third parties agents or consultants you may need to call in. These costs are often overlooked, but are essential for resolution in areas like:

  • Insurance Claims: Filing claims with insurers requires paperwork, documentation, and communication.
  • Regulatory Compliance: Meeting legal requirements involves administrative efforts, such as reporting incidents to relevant authorities.
  • Legal Representation: If disputes arise (e.g., with affected parties or insurers), legal fees and representation become necessary.

 

The Upshot:
Increase safety for people, the environment, and your equipment.

As should be clear, both direct and indirect costs emphasize the need for meticulous planning, risk assessment, and preventive measures during excavation projects. Avoiding utility strikes not only saves immediate expenses but also safeguards a company’s reputation and long-term viability.

If you had access to a single method that could, in a very pragmatic, effective, and affordable manner, significantly reduce the chance of triggering any of these scenarios, wouldn’t you grab it?

RodRadar’s Live Dig Radar® (LDR) technology does just that. It’s a groundbreaking technology that revolutionizes safety during excavations around utilities. The LDR Excavate™ digging bucket, incorporating the company’s Live Dig Radar technology, operates in real-time, providing an on-site approach to avoid utility strikes during excavation. Equipped with an integrated ground-penetrating radar sensing technology, the LDR Excavate™ assists excavator operators by detecting buried utilities. As the bucket moves through layers of soil, it instantly alerts the operator of potential utilities including their location and depth. Gone are the days of uncertainty, due to relying on unreliable utility data, and the delays from reliance on offsite experts; The LDR Excavate digging bucket ensures empowered, efficient digging. It’s your “eyes into the ground,” safeguarding lives, timetables, and your company’s reputation. When all else fails, LDR Excavate stands as the last line of defense—an indispensable tool for clarity, precision, and peace of mind in construction projects.
How much can you save from avoidable expenses?

Beyond increasing excavation safety, deploying LDR Excavate digging bucket to slash the number of utility strikes can save substantial sums by eliminating the long list of direct and indirect expenses and industry implications. Here is our ROI calculator to give you an idea of how much you stand to save.

Contact us today to learn more.

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59 Derekh HaRimonim St, Rinatya 7316500, Israel
T. +972.3.641.9302 E. info@rodradar.com

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