The world of docks, piers and wharfs in today’s world comprises a plethora of different designs, component structures, services and uses. As such, technology refinements now require a much closer review of these structures than perhaps has been completed in the past. Whether for marinas or commercial piers, understanding the total operation as well as the components making up the structure is a necessity if one is to properly understand the exposures that these structures represent when it comes to Safety.
PIERS & DOCKS SAFETY
There is no precise formula for calculating the present and in some cases replacement cost of dock structures. Today, major repairs or pier replacement needs to be professionally designed and to be in full compliance with all environmental regulations. There can be many “hidden” issues and costs involved when repairs are made as a result of a loss or in the rebuilding of the piers. There must be a proactive approach to understanding these issues, and the use of a competent marine contractor and loss control professional can result in the proper assessment.
Ask any marina owner, underwriter, marine claims representative or loss control person about how to properly value pier and docks and each will probably come up with a different way. Usually there is the replacement cost approach, the agreed value approach, and then the very popular market value approach. There has been everything from amicable discussions right through to arguments about the subject of valuing piers and docks. So what is the answer? Is there a magic formula? How will it work for all parties involved? This paper will try to provide some guidance on the thought process of what actually goes into valuing piers and docks. There are no specific valuation guidelines similar to Marshall Swift / Boeckh. So we will begin with understanding the different components that need to be assessed before we can begin to value piers and docks.
When one first looks at a particular pier and dock, the items that come to mind include all the components that make up the structure that goes into the water. It includes the pile structure, cross supports of different types, the walkway, and the bulkhead that may be on the shore side of the pier. And as you have correctly surmised, there is a plethora of different types of materials that may be used to construct these components. In some cases there are some very sophisticated underwater anchoring systems and different types of components to secure the pier. Also, many marinas have can moorings for their customers, bringing in another different component to the valuation. These structures however are just the beginning of additional components that may make up the piers.
In most marina scenarios there is the addition of electrical, water, fueling, waste removal, cable, and even telephone lines to consider. For commercial piers, there may be additional service lines such as steam, welding gases, and other systems.
Also, pier structures can include launching areas (include ramps of all different construction types), bulkheads, attenuation components, and breakwaters. So as we begin to think about valuation, we must first identify all of the components and their makeup in order to determine a value.
Components of Age and Maintenance:
Adding to valuation are the varying ages and the observed maintenance of these components. As we are all painfully aware, older and poorly maintained piers will significantly increase the cost of repairs as they will be less likely to withstand any type of loss. So how do age and maintenance impact valuation?
The components will each have a typical useful life, usually provided by the manufacturer. Maintenance has a direct relationship to the useful life; poor maintenance practice will generally take away from the useful life while good maintenance practices will generally add to it. Before we assume that maintenance has more impact on the value of a pier, remember that age will also come into play, as eventually any component will need to be replaced.
Good maintenance involves preventative steps such as routine inspections of all components both above and below the water and upkeep and ultimately replacement as they wear. Each of the components should have specific maintenance and replacement schedules that are best obtained from the manufacturer.
Inspections, as well as maintenance and repair efforts, should be documented by the marina facility in writing. These records should be maintained and available for review by the underwriter and loss control professional.
Varying Age & Component Types:
While many marinas and commercial piers are made up of a single type of construction done at one given time, there are many others that are composed of different components of different ages. Typically, this type of newer/older change out process is found in more established operations. An example is the replacement of wood floating piers with either composite or newer infused and concrete components. Thus, there is another variable to consider.
Components of Pier Valuation:
We now have an understanding of the components, the age, and the maintenance practices and the varying makeup of piers. So how does this puzzle of pier valuation come together?
Looking at the structures individually should lead to a better valuation that is truly representative. If there are ten piers that are of different ages and components, they should be evaluated separately. The same applies to structures such as launching pits, ramps and fueling piers. Also, one should break out the costs of the various servicing utilities on the piers.
Many times, there is a single figure that is provided by the owner, covering all of the piers, attenuators, bulkheads, launching piers, etc. It is usually a value that the owner is comfortable with to insure. It has been our experience that these owners start with the cost of the piers, and then find a factor that satisfies their financial situation, given the cost of insurance. Some marinas use the cost along with the anticipated maintenance budget and perhaps planned replacement as the components of their calculations.
Thus, there may be a good possibility that the owner’s valuation is not close to any calculated value based on the variables discussed above. As every underwriter understands, the value usually ends up being an agreed sum that is palatable to all parties involved. In order to determine if that agreed value has a sound basis, the following approach may be taken.
Start with a schedule of the different piers, launching pits/wells, attenuators, fueling piers, ramps, and breakwaters. Since there are no trade-in value books, the calculations should start with the replacement cost, by component. Today, we can obtain the cost of the piers on a square foot basis from manufacturers and marine contractors. Any estimates must also include the costs of the service utilities, and other components that might be found on the piers.
The last component is labor cost. These are all different and one needs to understand the costs in their specific area. Putting this all together will give us a very good idea of what is would cost to replace the different components.
Applying age and maintenance practices will be a function of the survey observations. Some will use straight line depreciation; others will use what they might define as useful life; and others will simply compare the calculated value to the requested insurance amount. However, the method of refining the calculation is not the most important process. Starting from a replacement cost and then factoring in age and maintenance should allow us to best understand the values at risk.
The process takes some time to research but will ultimately lead to a more realistic value.