September 11, 2001 profoundly impacted all Americans and, in varying degrees, continues to have an ongoing ripple effect with respect to the U.S. political agenda, government affairs, and the economy. Over the past few years, the U.S. Congress has reacted to 9/11 by passing numerous legislative acts that have affected various aspects of the society, government affairs and business, including consolidating government agencies to create the Department of Homeland Security, and altering major national plans, such as setting aside the highly recognized Federal Response Plan in favor of the more complex National Response Plan. An entirely new market segment heretofore not widely recognized also has emerged.

Companies of all sizes generally have been required to increase insurance coverage as a result of the 2002 Terrorism Risk Insurance Act . Business organizations that ship goods, or that receive shipped equipment and materials, recognize the impact of the Maritime Transportation Security Act of 2002 and are waiting to see if a bill now pending in Congress passes with respect to the requirement for 100% screening of all cargo in U.S. ports. While none of the legislative bills is targeted directly at the construction industry; nonetheless, the construction industry has been, and will continue to be, affected –– as have all industries at some level.

Challenges

One of the major challenges affecting the design and construction community is that of changing standards of care because extreme acts of terrorism are now deemed to be foreseeable. Therefore, designers and contractors have a duty to take into account the possibility of terrorist attacks on the built environment and to take measures to evaluate and counter those risks. This circumstance is particularly critical in the United States when it comes to public facilities, public infrastructure, and certain types of commercial and industrial facilities. Thus, requirements for greater setback of buildings away from roadways; specifications for blast-resistant glass in windows and applicable doorways; as well as bollards, heavy planters or other physical barriers around public buildings and facilities have increased.

Terrorism has been held to not legally constitute an “act of war” in the force majeure clause of most insurance policies in the U.S.; therefore, construction contracts should be revised to address and allocate the risks of terrorism –– these risks include not only direct hits by terrorists on a project or facility, but also possible loss of productive time that might be attributed to attacks nearby that could shut down work in the vicinity of a terrorist event.

Insurance clauses with provisions in which contractors and subcontractors agree to indemnify each other against losses for personal injury or property damage may be triggered by a terrorist event, and contractors might possibly find themselves acting as insurers for property owners. Also related to insurance, contractors must be cognizant in the U.S. that some “all risks” insurance policies now exclude acts of terrorism, and because terrorism insurance is costly and difficult to obtain, procurement of such coverage is a matter for detailed discussion with the owner and with legal counsel before signing the contract documents for a project. The matter of terrorism insurance may affect project funding as well.

The challenges are many with regard to security risks in the United States, and these should be examined in detail for a thorough understanding of the issues. On the other hand, opportunities for new business and added profits for contractors in the “homeland security” market exist as well.

Opportunities

The business of “homeland security” is widely recognized by the design and construction community as a major source of new project opportunities. Small and large design, construction and engineering organizations across the country have responded to new business opportunities over the past five years in myriad ways –– from hiring new employees that are experts in security to recruiting former officials from public agencies dealing with defense or security matters –– as well as establishing whole new companies, divisions or internal organizations to deal specifically with homeland security business. For example, New York City-based Turner Construction International –– with more than 5,000 employees and 45 business units nationally –– has established a Homeland Security Group internally to focus specialized resources on the unique aspects of homeland security construction.

Note that “homeland security” encompasses all types of emergency and hazardous events (in addition to response to, and mitigation of, terrorist events), as well as national disasters (such as earthquakes, hurricanes, tornadoes, floods, forest fires, tsunamis and other natural events) plus other types of catastrophes such as nuclear accidents, chemical spills and other emergencies. The design and construction community has integral and essential roles –– protecting against and mitigating, as well as responding to (and helping clients recover from) emergencies, regardless of the causative factors.

The role of the design, engineering and construction community includes every stage of security and emergency management –– design and construction for pre-disaster mitigation in the case of new construction; retrofitting of existing facilities, including all types of infrastructure and buildings; and upgrading or making facilities more “robust” against all types of hazards through innovative building techniques and advanced technology. Designers, engineers and construction contractors also must work with public and private sector clients to respond to, and recover from, catastrophes of all types.

In the context of a broad perspective of this supporting role, opportunities for the design and construction community include the extensive work ongoing in California and elsewhere in the United States in seismic retrofits of buildings and infrastructure, as well as the work ongoing to repair levees in the Gulf Coast area of the U.S. in the aftermath of Hurricane Katrina.

Security work also includes strategic solutions for public transportation facilities to ensure the safety and security of tunnels below water, as well as below ground. The Department of Homeland Security currently has a massive program underway in the preliminary stages of investigation with respect to upgrading the nations' transit tunnels. Following initial inspections and recommendations for upgrades, the design and construction community is expected to benefit through contracts awarded to accomplish the required retrofits of these tunnels nationwide.

Utilities and energy suppliers, as well as chemical companies, in the U.S. are taking measures to upgrade facilities as well. These security upgrades represent business opportunities for designers, engineers and construction contractors for a wide array of services ranging from additional fencing and installation of high-tech sensors and cameras to other countermeasures designed to mitigate damage from natural disasters and to thwart possible terrorist attacks.

Security also is driving large wastewater systems upgrades in the United States. In January 2005, the Government Accountability Office (GAO) issued a report featuring experts' recommendations outlining ways in which federal funds should be spent to upgrade security at U.S. wastewater facilities. Since the GAO report was released, managers at wastewater treatment facilities have started the process of addressing various deficiencies. The safety and security of the American drinking water supply also is a critical issue, which has been referenced in federal and state legislation. In many cases, drinking water security has required the awarding of contracts to support security improvements at these facilities through constructed modifications, sensor and camera installations, upgraded fencing and other measures.

Construction industry executives and business development staff members, along with subcontractors and stakeholders, should be examining the impacts that homeland security initiatives have made in far greater detail, and government budgets should be reviewed to analyze the funding aspects of security that would relate to the design and construction community. In addition, a careful analysis of relevant activities of the Associated General Contractors (AGC) with regard to the security business would be beneficial, along with an examination of the activities of the American Society of Civil Engineers (ASCE), and TISP (The Infrastructure Security Partnership) –– a public-private initiative fostered by ASCE, AGC, the American Council of Engineering Companies (ACEC), USACE and others ––along with numerous other initiatives and factors related to design and construction business opportunities in the security market.