G|E|M provides Probable Maximum Loss (PML) assessments as part of Real Estate Due Diligence of existing buildings located throughout the United Sates. The assessments are performed in accordance with ASTM E2026-16a, Standard Guide for Seismic Risk Assessment of Buildings and ASTM E2557-16a, Standard Practice for Probable Maximum Loss (PML) Evaluations for Earthquake Due-Diligence Assessments. The PML assessments are intended to provide an evaluation of potential damage to the identified structures to facilitate consideration of related risks by the client. The assessments are a statistical study intended to estimate the earthquake damage which may occur at the property. The assessments are based upon site reconnaissance and review of construction documents conducted by G|E|M Engineers.

The PML assessments typically include the following factors for evaluation:

  • Construction type and quality of the subject building including building geometry, structural systems to resist both vertical and lateral loads, and previous structural upgrades.
  • Characteristics of the site.
  • Projected intensity of ground motions.
  • Nature of the foundation soil based on area-wide seismic and geological data.
  • Appropriateness of the original design and details to resist seismic forces.

In accordance with the Standards governing this work, Probable Maximum Loss (PML) is a user defined term. There is no one method of calculating PML and no universally accepted value for certain variables. The intensity of ground shaking and resulting damage to the structures are determined statistically.

Using commonly available software, G|E|M identifies a scenario which will result in an intensity of ground shaking consistent with a Design Basis Earthquake, DBE - ground motion with a 10% probability of exceedance in 50 years - equivalent to a 475-year return period. Based upon this estimate of ground shaking, the damage to buildings at the subject property is evaluated using either the Scenario Expected Loss (SEL) or Scenario Upper Loss (SUL) criteria.

Scenario Expected Loss represents an estimate of damage at the mean value of a normal distribution curve describing damage to a large population of buildings similar to that being assessed. In a portfolio of similar buildings, approximately 50% are likely to experience less than the estimated damage, while the balance are likely to experience more than the estimated damage.

Scenario Upper Loss represents an estimate of damage that has a 10% percent probability of exceedance due to the specified ground motion of the scenario considered. In a portfolio of similar buildings, nine out of ten buildings are likely to experience less than the estimated damage, while one building out of ten is likely to experience more damage.

Depending on criteria provided by the client, the PML may be equivalent to either the SEL or SUL. For lending transactions backed by commercial mortgage backed securities, the PML Standard (ASTM 2557-16a) suggest the calculation of PML be based on the expected loss (SEL) in the event of a design basis earthquake.