Standstills and the temporary suspension of work on any project can lead to serious losses. Whether these are caused by financial reasons or natural hazards, project delays can stem from disputes between project stakeholders to changes in the political environment.
Projects can grind to a halt in the wake of economic challenges or financial reasons, or a result of delays in the delivery of materials and equipment. Potentially, a project will be temporarily suspended, or in the worst case abandoned altogether, depending on the severity of the cause for interruption.
In some cases, the aforementioned can fulfil the conditions of a ‘material change in risk’ which will trigger the insurance policy protecting the project. Although these terms and conditions can be modified, insurers and reinsurers must work closely with clients to overcome such challenges.
Often, the role of the insurance company has more to do with the identification and management of risks than with negotiating policy agreements alone. Clients benefit from the expertise of Risk Engineers who have expert knowledge across projects of various scale and size, over a wide range of industries.
Top tips from your insurance partner
Transparency will save costs
By working together with your insurer on the risks relating to your project, you may uncover new information relating to risks. Getting your insurer involved early will help ensure that your project has been thoroughly reviewed for potential risks, you will also benefit from recommendations and information the insurer can provide from design to construction to erection.
“To make sure clients are provided access to all the insurance services that are relevant to their project, it is important to make sure insurers are involved in the project, preferably already in the planning stages,” says Kyösti Korventausta.
“Beyond Property Insurance, it is important to have discussions about how materials and equipment will reach the construction site, for example. By getting involved early, insurers will have knowledge of the entire history of the project, something that may be difficult to collect in the later stages of the project.” Kyösti adds that, ”Insurers can add value to your project, providing input on risk management, which contributes to project completion and can help save on costs.”
Keep the lines of communication open
Understand the financial and economic risks that may impact your venture. To truly stay on top of things there must be open and honest dialog between partners, authorities, and other stakeholders. This includes the lines of communication between you and your insurer. It is important to keep the team up-to-date on developments happening on-site.
Disaster planning and crisis preparedness go a long way
Having plans in place for various crisis scenarios with clear responsibilities and roles is vital. How will your project manage earthquake, fire or other natural hazard events if the site is impacted? What if your key supplier is unable to deliver materials? Are you and your partners prepared for potential cyber-attacks? How will you resume construction or erection if there is an unexpected interruption in the project revenue?
Having a plan is just the beginning
Preparedness also includes actions such as investing in backup generators, having a list of alternative suppliers, access to emergency response equipment and training workers on site through practice fire drills for example, to ensure they know what to do and where to go in the event of a natural disaster.
Contributors: Kyösti Korventausta, Pekka Miettinen and Jan Roald Olsen /If