By Brad Meyer
Going as far back as the 1580s, the idiom “the fox guarding the hen house” is often used to describe someone who should not be trusted. In this case, the “fox,” (or the person is charge,) oversees a situation, (or the hen house,) and clearly, the fox has a vested interested in every hen.
In construction today, many businesses are becoming increasingly more reliant on geocoded location-based services to complete property, disaster, and site inspections. By its definition, geocodes are a geographic coordinate system specifying an exact location through latitudinal and longitudinal coordinates. As a relatively “newish” technology, geolocation-based services collect data directly from an inspection site, saving time, money, and productivity and theoretically eliminating the need of additional individuals visiting the property.
While the potential of geolocation apps is encouraging, several issues exist. All geocoding methodologies are not created equal; thus, some foxes may be attempting to enter various hen houses. What are the problems and how can they be addressed? Read on for more information.
Location data intelligence can provide huge benefits for a variety of inspection types. However, the accuracy of geocoding is arbitrary and is entirely dependent on the geocoding process used to collect the data. In other words, different geocoding processes have different geocoding accuracies.
What are the Types of Geocoding Accuracies?
Four major geocode accuracies exist to make geocoding possible:
- ZIP+4 Codes - the five-digit code paired with four additional digits typically used in postal delivery routes and usually divided into geographic segments, such as city and streets. The ZIP+4 code can be used to locate an approximate location of an address at the block level, but nothing more.
- Interpolated Geocodes – uses math operations to arrange addresses between the specified points at regular intervals and is typically utilized for street-segment levels. Ultimately, the methodology is not super precise as the position of an address calculated may differ from the “real” one.
- Parcel-Centroid Geocodes - based on the boundaries of a property, this methodology can clump geocodes together, which doesn’t identify the exact location. In rural locations, geocodes may be hundreds of feet from the rooftop of the location.
- Rooftop Geocodes - combines parcel centroid and interpolation calculations with approximate data points, providing the most accurate yet most expensive method available for geocoding.
What Factors Should You Consider?
Before choosing a geocode service provider, use due diligence to test and validate the provider’s accuracy to ensure what is promised can be delivered. Some providers may claim to be “rooftop accurate” but only employ parcel centroid methodology.
Furthermore, location data on these digital images can be edited, causing increased fraud risk. Even photos using geolocation metadata (used to verify the location and time a photo was taken) are not considered a safe and reliable method for verifying the location.
In construction, fraud is a common occurrence. Because a construction project has several different project participants with an even larger number of moving parts, it’s easy to see how fraud could occur. According to one forensics expert at BKD LLP, an estimated 6% of construction’s annual industry revenue is lost to fraud each year. Given the US construction industry is approximately $1.2 trillion each year, fraud is alive and real in the sector.
In a virtual inspection using geolocation-based services, someone looking to abuse the system can easily manipulate the photo’s metadata to increase the value of the home or misrepresent progress for a draw inspection.
While geolocation capabilities offer advantages when determining a property’s location, some sort of quality control is required for verification and authentication.
Using a third party to verify the location, provide extensive quality control, and ensure risk mitigation helps to eliminate fraud concerns. With a second set of eyes on every inspection, data and photos can be validated and confirmed, ensuring pitfalls are identified and remedied.
In the case of mishaps or mistakes, a third-party provider also offers broad risk mitigation policies and extensive insurance (E&O, CGL, WC, Cyber, Theft, Fidelity, Excess), allowing the parameters to protect lenders’ interests. Thus, if the project turns upside down, the lender’s investment is protected because a third-party provider accepts liability for the project (regulators love this aspect of preventing a lender’s loss), fundamentally taking responsibility for its success or failure.
With the advent of technology applications in construction, geolocation services and tools are here to stay. No doubt, more and more providers are likely to enter the field over the coming years.
However, when a builder or contractor uses these services to complete a property inspection and no other form of quality control or accountability by an experienced and trained construction specialist exist, the fox is likely to be well satiated due to its diet of regularly fed hens.