frameworks.

Credit: Concept popularised by John Seddon, supported by reports by Centre for Policy Development

Summary:

Failure demand is the extra demand placed on a system because it failed to do something right the first time. It is work created by failures — not by the actual value-adding service.

Avoidable costs are expenses that could be prevented by acting earlier, smarter, or more efficiently — they are the wasted money spent dealing with failure demand and its consequences.

Concept detail:

When we don’t tackle root causes, we create endless ‘failure demand’ — repeated crises, emergency responses, and avoidable costs.  Smart investment shifts spending from reacting to preventing.  This saves money, reduces human suffering, and protects the environment.

Real world application:

Examples of ‘failure demand’:

• A customer calls again because their issue wasn’t resolved properly.
• A patient returns to hospital because their condition wasn’t treated thoroughly the first time.

Welfare agencies dealing with crisis cases because earlier prevention didn’t happen.

Examples of “avoidable costs”:

• Emergency hospital admissions that could be avoided with better primary care.
• Cost of cleaning up oil spills instead of maintaining equipment to prevent them.
• Law enforcement and incarceration costs that could be reduced by tackling root causes of crime (e.g. poverty, addiction, lack of housing)

Housing First — Reducing Homelessness

Root cause approach:
Countries like Finland invest in Housing First: giving people experiencing chronic homelessness a stable home first, then wraparound support.

Result:

• Reduces use of crisis services, shelters, emergency rooms, police callouts.

• Finland has nearly eradicated long-term homelessness.

• For every $1 invested, multiple dollars saved in health, justice and welfare.

Failure demand avoided:
Instead of constantly responding to rough sleeping, mental health crises, police incidents — the root cause (lack of stable housing) is tackled upfront.

Vaccination Programs

Root cause approach:
Investing in mass immunisation for diseases like measles, polio, COVID-19.

Result:

• Prevents huge downstream healthcare costs for hospitalisations, long-term disability.

• Saves billions in economic productivity.

Failure demand avoided:
Without vaccines, the health system and economy bear massive costs managing preventable outbreaks.

Early Childhood Education

Root cause approach:
Nordic countries and New Zealand heavily fund quality early childhood education, parenting support and child nutrition.

Result:

• Better life-long health, education, employment outcomes.

• Lower crime and welfare dependency.

• Economist James Heckman’s research: every $1 spent returns $7–$10 in avoided costs later.

Failure demand avoided:
Less remedial schooling, less crime, less unemployment benefits — because children start life healthy and ready to learn.

Clean Water & Sanitation

Root cause approach:
Universal access to clean water and sanitation in developed countries.

Result:

• Prevents millions of cases of water-borne disease.

• Saves massive healthcare costs and lost work time.

Failure demand avoided:
Treating cholera, dysentery, and related illnesses is far more expensive than providing clean water upfront.

Environmental Protection: Wetlands & Flooding

Root cause approach:
Preserve wetlands and restore natural flood plains.

Result:

• Protects communities from floods.

• Reduces costly flood recovery and insurance payouts.

Example:
Post-Hurricane Katrina, the US recognised that destroying wetlands and levees worsened flood damage. Now, investing in nature-based solutions reduces future failure demand.