Re-Thinking Parking Garage Security Requirements

Karen Tallent, CPP

Often the security concerns of a parking garage are limited to safety issues. Is it clean? Is it well lighted? Is there anything to trip over or slip on? Anything that would increase a liability exposure and costs of operation is the main security priority.
However, when the parking garage or surface lot is income-producing property, the security concerns should also be couched in the framework of asset protection. Viewed as an asset, the vulnerability of the asset can be studied quantitatively and the owner's security concerns translated directly to the capitalization expectations of the investment property.
As outlined in the Protection of Assets Manual (2000, POA Publishing, LLC, Volume 1, Chapter 2, page 2-1): "A basic precept of asset protection is that an effective security plan or program must be based on a clear understanding of the actual risks faced." Defining the security problem areas should include the kind of threat (loss event profile), the probability of the threat (loss event probability) and the effect on the asset (loss event criticality) were the threat to occur.
There are a number of loss event profiles that can occur, including common crimes of assault, vandalism and the increased terrorist concerns. For this article, we will examine the parking revenue security in these terms. Can revenue loss occur? If so, what is the likelihood of this occurrence and what security countermeasures can be planned to reduce or eliminate the threat of revenue loss?
The probability
For this example, we'll use a monthly gross revenue figure of $25,000 in a parking garage that serves both a visitor and monthly population. Next we'll look at the loss event probability. The parking industry roughly estimates that somewhere between 1 to 20 percent of the overall revenue is lost due to lax management efforts, theft and fraud. The most commonly recognized loss of revenues is through theft, with employee theft and fraud responsible for roughly 70 percent of all losses.
Given a direct correlation between opportunity and theft, determine where a property falls within the probable range of 1 to 20 percent. To do that, explore the following questions:
* Are revenue controls maintained 24/7/365 or are the barrier gates opened during slow or less profitable times of operation?
* Are strict audits performed with accountability of all tickets and transactions?
* Are these audits performed by an outside auditor?
* Are all contract cards accounted for and all payments received for all cards in use each month?
* Are the revenue controls fully automated or does the attendant handle the money and make revenue decisions?
* Are lifestyle audits performed on all persons associated with revenue collection?
If your parking business is operating with tight attention to the revenue, then your loss probability is probably hovering around 1 percent. If not, then your probability calculation will use the higher percentage to calculate your potential risk.
Using our example, we have attendants at the exit lanes collecting visitor fee payments and we put the gates up after hours, causing some minor loss in revenues and complete loss of ticket audit controls. Because our revenue controls are probably not as secure as they should be, we estimate our probable actual losses at 15 percent. This translates to $3,750 per month (25,000 x 15%= $3,750). Annualized, that's $45,000.
The effect
Assessing this loss event criticality, in addition to the actual revenue loss of nearly $50,000 dollars per year, the value of the asset (the balance sheet fixed-asset contribution to the worth of the overall property), based on a capitalization rate of 7%, is undervalued by $315,000!
Countermeasures for preventing this loss are abundant and a return on investment case can be made for adding automation and audit procedures.
Using our example, we could keep the gates operating 24/7 by adding a machine-readable ticket acceptor at the exit lane. Most manufacturers of this type of equipment offer credit card and cash payment acceptance for these after-hours transaction processes. By gaining control of our tickets for audit purposes and collecting additional dollars for after-hours operation, we can estimate a reduction in our loss percentage to 10 percent instead or 15 percent or a $2,500 (25,000 x 10% = $2,500) per month loss. This reduction in annual losses of $15,000 is a fast payback for the ticket acceptance equipment necessary at the exit and it adds $105,000 back into the value of the structure.
Further interest in parking operations from a loss prevention/value capitalization discussion would lead to additional automated controls and processes, such as a reduction in staffing or redeployment of the attendant from the exit lane. That's a discussion for another day.

Karen V. Tallent, CPP is a board-certified security professional through ASIS International and Director of Domestic Markets for Secom International. She can be reached at

Article Abstract from March, 2003

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