Expert Commentary

Beyond Equipment Theft

This article describes losses due to criminal activities other than equipment theft such as vandalism, sabotage, unauthorized use, joyriding, and the theft of materials, particularly scrap metal. In each case suggestions are put forward to minimize the risk of loss. Some of the solutions are similar to equipment theft prevention techniques and technologies but most vary in the exact application.


Equipment Theft Prevention
September 2006

The theft of construction equipment is a significant and growing problem and tends to grab the attention of loss control specialists due to the value of the machines that are being stolen and recent efforts to track and analyze the problem. There are, however, similar, and often related, crimes that result in losses that, although less severe, become a significant drain on profits due to their frequency and the greater likelihood that such losses may not be covered by insurance. It is possible that the overall financial loss from these crimes is similar to that of equipment theft (see references below). These are also crimes that are often harder to prosecute and therefore harder to deter.

Theft of Materials

The theft of building materials is not a new problem but one that is a constant problem, particularly for those in the home building business. It is not just building materials that are stolen but also expensive electrical units from houses in the last phase of construction.

A similar crime is the theft of scrap metal such as the theft of a large amount of copper wire from utility company or the theft of a catalytic converter to extract the small amount of semiprecious metal; even large metal sculptures are being more frequently stolen. The recent spike in scrap metal theft is directly related to the high prices that scrap metal is presently commanding.

Both crimes are problematic because it not only costs money to replace the stolen material, but also business interruption costs are likely to be incurred. Furthermore, this is a risk that is sometimes not covered by an insurance policy. For the criminal, the risk is low because, without a serial number, the material is unlikely to be uniquely identifiable and therefore difficult or impossible to identify, prove ownership, and prosecute.

Solutions

Associations are starting to tackle the problem at an industry level. The Institute of Scrap Recycling Industries, Inc. (ISRI), has created a Scrap Theft Alert system. Whenever ISRI learns of a major scrap theft, it sends an email notice to scrap recyclers in the state where the theft occurred as well as in surrounding states. Another association taking an active role in combating scrap metal theft is the Construction Industry Crime Prevention Program of the Pacific Northwest (www.cicpp.com).

Another solution is to make the material uniquely identifiable. One such method is the use of HELPtechDNA. A container of HELPtechDNA contains thousands of miniature chips with a serial number etched onto them. The chips are premixed in a specially designed durable adhesive that contains an ultraviolet trace (UV). Once applied, all HELPtechDNA numbers are registered onto the National Equipment Register (NER) database that is used by police agencies through the country to identify the true owner of materials and equipment. When a law enforcement officer shines a blacklight over an area where HELPtechDNA has been applied, it will fluoresce, alerting the officer to their existence. Once located, the HELPtechDNA number can be read with an x30 powered magnifier, and the owner located on the NER database. HELPtechDNA warning labels and signs let thieves know that the items have a unique identity that cannot easily be removed. (More information is available at www.identificationtechnologies.com.)

One of the best solutions is to keep the thieves out. This can be done through traditional methods, such as gates and fences, but a recent addition to worksite security is DEWALT's SiteLock, a mobile alarm system based on a central control unit that links wirelessly to a variety of locks and sensors which can be placed on materials and equipment on a worksite and that will trigger an alarm if disturbed. (More information is available at www.dewalt.com/home.aspx.)

As ever, good project management can have an effect on security. In this case "just in time" deliveries will reduce the amount of material available to thieves.

Vandalism and Sabotage

Sabotage is a form of vandalism but needs to be treated separately because vandalism can be deterred by making your assets a riskier option for a vandal than other potential targets. On the other hand, the target for sabotage has already been chosen and is largely independent of risk. Sabotage may result from events such as a labor dispute, a competitor, or more general political demonstrations, such as protests against deforestation.

Solutions

Vandalism is, however, not entirely random. Whether it is graffiti or physical damage, the likelihood of vandalism is greater in certain areas (high crime, low visibility) and at certain times of day (nights, particularly weekends). If there is a choice as to where equipment is left over a weekend, these factors should be considered. Although random acts of violence are hard to deter, the equipment owner who is mindful of this risk and, with better overall security, is less likely to become a victim.

Combating sabotage depends largely on the exact nature of the threat and the local conditions. The bad news is that you have already been chosen as the target. The good news is that the events that lead up to such an act should provide you with some warning that will allow additional measures to be taken. A remote logging operation might consider corralling equipment and monitoring access roads. An urban work site might notify local law enforcement of a heightened risk. Please note that you should reach out to local law enforcement before you need them. There is much that you can do to help them help you, details of which are provided in a previous Expert Commentary, "Helping Law Enforcement Help You."

Joyriding and Unauthorized Use

Like vandalism, the target of joyriders is likely to be more random than unauthorized use where someone (usually an employee or subcontractor) uses equipment out-of-hours (usually over a weekend) for a different "cash-in-hand" project and returns the equipment before work resumes. The total loss of a machine is unusual, but there can be indirect costs. The potential for incidental damage to other property from joyriders can be significant, as can be the liability if injury results. Unauthorized use can result in a "theft" if an employee is using equipment during the weekend and decides later on that it is too risky to move the equipment back to the worksite.

Solutions

Most theft prevention and recovery mechanisms rely to some extent on the fact that a thief needs to move equipment some distance before selling it. A joyrider does not face the same challenges. The best, if not the only, defense against joyriding is therefore to immobilize the equipment. This may be achieved by securing the ignition system with a device such as Keytroller (www.keytroller.com) or by immobilizing the equipment using special locks designed for equipment such as those supplied by the Equipment Lock Company (www.equipmentlock.com). It should be noted that the blocking of smaller equipment with larger equipment that might help deter the theft of the more easily stolen machine may not be as effective against joyriders as a joyrider may be as happy, if not happier, to "ride" a large machine. Like vandalism, the risk is greatly diminished if measures are taken to render other targets in the area better targets.

Unauthorized use may also be tackled by immobilizing the equipment although an employee/operator may also be the person with the keys or code. Recording hour meters before and after weekends is the easiest way of detecting unauthorized use. Another powerful tool is the use of Global Positioning Systems such as QUALCOMM (www.qualcomm.com) that record the exact location and usage of a machine at any time of the night or day. Rental companies use GPS to monitor machines that go "off-rent" on a Friday but cannot be picked up until Monday morning.

Summary

Losses from vandalism, sabotage, unauthorized use, joyriding, and the theft of building materials and scrap metal are significant. The overall size of the problem is often underestimated because of the difficulty of tracking total losses because many of these losses are never reported to an insurance company. With a little effort, the chances of being a victim can be greatly reduced, with the added plus that many of the techniques and technologies also have a beneficial effect on safety and equipment theft.


References

Builder News: "Margins in Profit, Construction Theft: A Loss Cause," Nov. 2005.

"CICP Metal Theft Alerts," (www.cicpp.com).

"Combating Scrap Theft: Scrap Dealers Don't Want It and They're Doing Something about It," June 7, 2006 (www.ISRI.org).

"Construction Site Theft Costs Consumers," May 8, 2003 (www.buildingonline.com/apps/news/article/2256).

"Hammered by Theft," The Press-Enterprise, July 20, 2005.

"San Joaquin County Fights Metal Theft," July 20, 2006 ACTION Program link (www.agcrime.net/ag_crime_news.htm).

USA Today: "Thefts at Building Sites on the Rise," Dec. 28, 2005.

Wall Street Journal: "Metal Is So Precious That Scrap Thieves Now Tap Beer Kegs. Brewmaster Combs Junkyards for Company Property; Stealing 3½ Tons of Steel," March 14, 2006 (online.wsj.com/article_print).


Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

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