UNDERWRITING CRITERIA
GENERAL INFORMATION - 1
• NAME OF PROPOSER;
• RELATIONSHIP OF PROPOSER TO PROJECT;
• IS THERE A CONTRACTUAL RESPONSIBILITY TO INCLUDE
THE INTERESTS OF OTHER PARTIES?
• IF SO, NAME THESE PARTIES (SEE NEXT SLIDE);
• LOCATION OF CONTRACT SITE;
• DESCRIBE THE CONTRACT SITE TOPOGRAPHY;
• RESULTS OF ANY GEOTECHNIC AND HYDROLOGY
INVESTIGATIONS CARRIED OUT NAME(S) OF ENGINEERS;
• DESCRIPTION OF PROJECT;
• COPIES OF PLANS, SPECIFICATIONS AND APPLICABLE
CONTRACT DOCUMENT CLAUSES WOULD BE OF PARTICULAR
VALUE TO UNDERWRITER;
• PARTICULARS OF ANY FREE-ISSUE MATERIALS TO BE
PROVIDED TO THE CONTRACTOR AND VALUE THEREOF;
CONSTRUCTION HIERACHY
PRINCIPAL
PROJECT MANAGER
ENGINEERS AND
ARCHITECT
EARTHWORKS
CONTRACTOR
PILING AND SUPPORT
SUB-CONTRACTOR
CIVIL CONTRACTOR
STRUCTURAL
CONTRACTOR
ELECTRICAL &
MECHANICAL
CONTRACTOR
SITE SERVICES
SUB-CONTRACTOR
ROOFING
SUB-CONTRACTOR
LIFTS AND
ELEVATOR
SUB-CONTRACTOR
UNDERWRITING CRITERIA
GENERAL INFORMATION - 2
• IS THE PROJECT A TURNKEY PROJECT OR WILL IT BE
TAKEN OVER IN SECTIONS WHEN COMPLETE;
• WILL THE PROJECT BE GIVEN TO ONE CONTRACTOR OR
WILL IT BE FRAGMENTED IN OTHER WORDS WILL SEPARATE
CONTRACTS BE AWARDED TO CIVIL, STRUCTURAL,
ELECTRICAL AND MECHANICAL CONTRACTORS;
• WILL SITE PREPARATION INVOLVE BUILDINGS DEMOLITION
• IF SO, PROVIDE PARTICULARS OF WORK ENTAILED, WITH
PARTICULAR REFERENCE TO BUILDINGS AND POTENTIALLY
HAZARDOUS SUBSTANCES THAT MAY HAVE BEEN STORED;
• THE OVERALL CONTRACT PERIOD FROM………TO………;
• A BAR CHART SHOWING VARIOUS ACTIVITIES WOULD BE
BENEFICIAL TO PREMIUM COMPUTATION;
• THE FULL CONTRACT VALUE INCLUDING FREE-ISSUE
MATERIALS;
• THE VALUE OF EACH ENGINEERING DISCIPLINE;
• THE SECURITY PRECAUTIONS TO BE UNDERTAKEN TO
PREVENT THEFT, MALICIOUS DAMAGE ETC.;
UNDERWRITING CRITERIA
CIVIL WORKS – 1
• THE VALUE OF CIVIL WORKS;
• ANY SPECIAL PRECAUTIONS TO BE TAKEN IN VIEW OF
GEOTECHNIC OR HYDROLOGY FINDINGS;
• DESCRIBE THE FOUNDATIONS ESPECIALLY WHETHER THEY
INCLUDE PILES AND THEIR TYPE STRIP, RAFT ETC.;
• IS THE POLICY TO PROVIDE FOR PILING, IF SO TYPE OF
PILES ENVISAGED AND EXPECTED DEPTH OF PILES;
• NAME OF PILING CONTRACTOR;
• PROVIDE THE DEPTH OF EXCAVATIONS;
• TO WHAT EXTENT WILL THERE BE REMOVAL OF SUPPORT
(LATERAL AND/OR OTHERWISE) TO ADJACENT PROPERTY OR
BUILDINGS;
• IF TEMPORARY AND PERMANENT SUPPORT TO BE INSTALLED
WHO WILL UNDERTAKE THIS WORK;
• NAME THE SUPPORT CONTRACTOR;
• WILL THERE BE ANY ON-SITE MANUFACTURE OR CASTING
OF PRESTRESSED COMPONENTS;
UNDERWRITING CRITERIA
CIVIL WORKS – 2
• PROXIMITY OF SITE TO SEA OR INLAND WATERWAYS;
• IF A RIVER OR DAM PROVIDE THE 50 YEAR FLOOD
HISTORY, IS THERE A POSSIBILITY OF THE SITE BEING
FLOODED FROM THIS WATER SOURCE;
• DESCRIBE THE PRECAUTIONS TO PREVENT FLOODING;
• DEPENDING ON HYDROLOGY REPORT, WHAT PRECAUTIONS
ARE TO BE TAKEN TO HANDLE THE INGRESS OF WATER,
FROM AN UNDERGROUND SOURCE;
• ALSO, GIVE DETAILS OF STANDBY PUMPING
ARRANGEMENTS;
UNDERWRITING CRITERIA
CIVIL WORKS – 3
• IF THE CIVIL WORKS COMPRISES SHAFT SINKING
TUNNELLING OR OTHER UNDERGROUND WORK THEN
DESCRIBE:
– THE DIAMETER OF THE SHAFT OR TUNNELL,
– THE PROPOSED DEPTH OF THE SHAFT OR LENGTH OF THE
TUNNELL AND WHETHER THE SHAFT OR TUNNELL WILL BE
LINED,
– THE PRE-EXCAVATION GROUND INTEGRITY INVESTIGATIONS, A
COPY OF THE REPORT WOULD BE NECESSARY PLUS THE
ENGINEER’S RECOMMENDATIONS,
– PARTICULARS OF THE METHOD OF PROBING AHEAD OF THE
WORKING FACE DURING EXCAVATION IS A MUST;
• FOR ANY RAISEBORING OR TUNNELL BORING WORK THE
DIAMETER OF THE RAISEBORE HEAD OR TUNNELL BORING
HEAD MUST BE GIVEN PLUS DETAILS AS REQUIRED IN THE
SECOND THIRD AND FOURTH PARAMETER ABOVE.
PROBING AHEAD OF THE WORKING
FACE
• THIS TYPE OF RADIAL DRILLING AHEAD OF THE WORKING
FACE IS TO IDENTIFY THE NATURE OF THE GROUND
CONDITIONS AND THE PRESENCE OF WATER
• TO BE EXPECTED AS THE TUNNEL OR SHAFT CONTINUES
•
SIDE ELEVATION
END ELEVATION
DRILLING OUTWARDS 30 TO 45 DEGREES FROM THE STRAIGHT LINE
UNDERWRITING CRITERIA
STRUCTURAL WORKS
• THE STRUCTURE TO BE DESCRIBED FULLY GIVING :
– THE TYPE OF THE STRUCTURE IE. FACTORY, WAREHOUSE,
OFFICE BLOCK, HOSPITAL OR TENEMENT BUILDING ETC.,
– THE NATURE OF THE STRUCTURE WHETHER IT IS OF
CONCRETE, WITH BRICK INFILLS OR A BASIC STEEL
STRUCTURE WITH CONCRETE LANDINGS WITH BRICK INFILL
ETC.,
– THE NUMBER OF BASEMENTS,
– DETAILS OF ANY PROTOTYPE OR UNTRIED FEATURES EMBODIED
IN THE DESIGN OF THE STRUCTURE, WHETHER STRUCTURAL OR
CONSTRUCTION METHOD. IS THE SELECTED CONTRACTOR
FAMILIAR WITH THIS METHODOGY,
– THE NUMBER OF FLOORS,
– THE TYPE OF FINISHES,
– DETAILS WHEN ELECTRICALS AND MECHANICALS WILL BE
INSTALLED;
• DESCRIBE THE MEASURES TO PREVENT THE STRUCTURE
FROM FLOODING AND WHAT PUMPING ARRANGEMENTS WILL
BE PRESENT TO HANDLE THE INGRESS OF WATER.
UNDERWRITING CRITERIA
ELECTRICAL & MECHANICAL WORKS
• DESCRIBE THE ELECTRICALS AND MECHANICALS TO BE
INCORPORATED INTO THE WORKS IE BOILERS, POWER SUPPLY
TRANSFORMERS AND SWITCHGEAR, AIR CONDITIONING AND/OR
MANUFACTURING MACHINERY EG TO MANUFACTURE WIDGETS;
• WHETHER THERE ARE ANY UNTRIED FEATURES OR PROTOTYPES OR
WHETHER THE MACHINERY IS STANDARD OF THE SAME TYPE AND
SIZE CURRENTLY OPERATING IN MANY FACTORIES;
• GIVE PARTICULARS OF THE INSTALLATION PROCESS AND TESTING
METHODS;
• WILL PARTS OF THE MACHINERY BE TAKEN INTO OPERATION
BEFORE THE PLANT AS A WHOLE IS COMMISSIONED, IN OTHER
WORDS WILL THERE BE BENEFICIAL USE BEFORE TAKE-OVER, IF
SO, MUST INSURANCE CONTINUE AFTER BEING TAKEN INTO USE?
IS COVER TO INCLUDE ELECTRICAL AND MECHANICAL BREAKDOWN?
• IS THE FEEDSTOCK INFLAMABLE OR IS THERE AN EXPLOSION
HAZARD
• DESCRIBE THE TESTING PROCEDURE PARTICULARLY THE RUNNING
TEST AND SAFETY PRECAUTIONS DURING TESTING
WHAT DETERMINES A PROTOTYPE
OR UNTRIED FEATURE
• The cylinder on the left is the standard cylinder
that has been manufactured for many years and has
stood the test of time. All that has been done to
manufacture the cylinder on the right is to
increase size, otherwise, everything else is the
same, thus it is a prototype with untried
features. Accordingly, the stresses and strains
will be multiples of the original.
• In other words a failure waiting
to happen.
UNDERWRITING CRITERIA
MAINTENANCE PERIOD
• GIVE DETAILS OF THE MAINTENANCE REQUIREMENTS OF
THE CONTRACT, DOES THE CONTRACT CALL FOR
• MAINTENANCE VISITS ONLY,
• LIMITED MAINTENANCE PROVIDING FOR DAMAGE
CONSEQUENT ON PRIOR DEFECTS OF MATERIALS,
WORKMANSHIP, DESIGN PLAN OR SPECIFICATION
OCCURRING DURING CONSTRUCTION AT THE CONTRACT
SITE,
• WIDER FORM OF MAINTENANCE ALLOWING FOR DAMAGE
RESULTING FROM ALL PRIOR DEFECTS OF MATERIALS,
WORKMANSHIP, DESIGN PLAN OR SPECIFICATION;
• DOES THE CONTRACT ALLOW FOR SUBROGATION RIGHTS IN
THE EVENT OF DEFECTIVE MATERIALS, DESIGN, PLAN OR
SPECIFICATION OR OFF-SITE WORKMANSHIP.
GENERAL CONSIDERATIONS
THIRD PARTY LIABILITY - 1
• LIMIT OF INDEMNITY (INCLUSIVE OR EXCLUSIVE OF
EXTENSIONS – R00,000,000;
• PROPERTY DAMAGE EXCESS
• RISK LOCATION RELATIVE TO:
– ADJACENT PROPERTIES
– EXISTING PUBLIC SERVICES OF WATER, SEWERAGE,
ELECTRICITY OVERHEAD LINES OR UNDERGROUND CABLES
– EXISTING PROPERTY ADJACENT TO CONTRACT WORKS SITE
• IS THERE TO BE ANY BLASTING, IF SO, GIVE DETAILS
• DEPTH OF EXCAVATION
• WILL THE EXCAVATION AFFECT THE SUPPORT OF ADJACENT
THIRD PARTY BUILDINGS
• EXPERTISE OF DESIGN ENGINEER AND CONTRACTOR
• ARE THE WORKING METHODS STANDARD AND WILL THERE BE
ANY METHODS OF WORK UNFAMILIAR TO THE CONTRACTOR
GENERAL CONSIDERATIONS
PUBLIC LIABILITY - 2
• ONE MUST THEN CONSIDER THE NECESSITY TO INCLUDE
ANY OR ALL OF THE FOLLOWING EXTENSIONS OF COVER:
–
–
–
–
–
ARREST, ASSAULT, DISCHARGE AND DEFAMATION
EMERGENCY MEDICAL EXPENSES
PREVENTION OF ACCESS
LEGAL DEFENCE COSTS
TRESSPASS OR NUISANCE;
• REMOVAL OF SUPPORT (LATERAL OR VERTICAL) COULD BE
AN EXTENSION, HOWEVER THE TERMS OF THIS COVER
DIFFERS CONSIDERABLY FROM THE BASIC COVER, THUS IT
IS DESIREABLE TO ISSUE A SEPARATE SECTION OR
POLICY. THIS COVER WILL BE DISCUSSED SEPERATELY.
PREMIUM COMPUTATION
CONTRACT WORKS – GENERAL - 1
• UNDERWRITING IS A SCIENCE AND NOT
MERELY A RULE OF THUMB;
• THE UNDERWRITER WHO RELIES ON GUESSWORK
MAY BE LUCKY FOR A PERIOD BUT WILL SOON
COME SHORT;
• ONE CANNOT ASSUME THAT A SINGLE RATE WOULD APPLY TO ALL
AND ANY PROJECT, NO MATTER HOW SLIGHT, THERE ARE ALWAYS
DIFFERENCES WHICH COULD MAKE A VAST DIFFERENCE TO THE
RATE CHARGED;
• ACCORDINGLY EACH RISK MUST BE UNDERWRITTEN ON ITS OWN
MERITS AND PECULIARITIES WITH EACH ASPECT BEING GIVEN
INDIVIDUAL CONSIDERATION;
• WE THEN CALCULATE INDIVIDUAL RATES FOR THE CIVIL,
STRUCTURAL,ELECTRICAL & MECHANICAL AND LIABILITY RISKS;
• NO, I AM NOT GOING TO GIVE YOU BASIS RATES, BUT I WILL
SUGGEST METHODS OF CALCULATION. THE BASIS RATES ARE FOR
EACH UNDERWRITING HOUSE TO DETERMINE THEMSELVES.
PREMIUM COMPUTATION
CONTRACT WORKS – GENERAL - 2
• IT MUST BE APPRECIATED THAT PERILS OF THE
ENVIRONMENT HAVE A DIFFERENT IMPACT ON EACH OF THE
CONSTRUCTION DISCIPLINES;
• FOR EXAMPLE, EXCESSIVE RAINFALL MAY NOT BE AS
CRITICAL TO A PARTLY CONSTRUCTED STRUCTURE AS IT
WOULD TO FOUNDATION EXCAVATIONS, ON THE OTHER HAND
WIND MAY NOT CAUSE MUCH DAMAGE TO AN EXCAVATION AS
IT WOULD TO A STRUCTURE NOT ENTIRELY BRACED OR
STEEL BEING LIFTED INTO POSITION A FURTHER PROBLEM
WOULD BE WHEN A STRUCTURE IS NOT FULLY CLAD THUS
CAUSING A WIND TUNNELL WITHOUT ANY EXIT;
• FIRE IS A HAZARD MORE SERIOUS WHERE THE BUILDING
IS NEARING COMPLETION OR WHERE MACHINERY HAS BEEN
INSTALLED OFTEN PACKING MATERIALS ARE NOT REMOVED
FROM SITE. FIRE IS NOT THAT SERIOUS WHEN RELATED
TO EXCAVATIONS OR FOUNDATIONS ONE COULD EXPECT
MINIMAL DAMAGE;
PREMIUM COMPUTATION
CONTRACT WORKS – CIVIL WORKS 1
• It is usual for there to be a specific rate % for each
project type e.g.. ROADS, RAILWAY SYSTEMS, DAMS, SHAFT
SINKING, AIRPORT RUNWAYS/APRONS, TUNNELLING AND THE
LIKE;
• THE APPLICABLE RATE X (SAY 2.5%) MUST THEN BE
APPORTIONED TO RISK CATEGORIES, FOR EXAMPLE, (THESE %
ARE JUST AN ILLUSTRATION AND ARE NOT REALISTIC)
STORM/WIND 45% FIRE/LIGHTNING/EXPLOSION 5%
COLLAPSE/LANDSLIDE 40% THEFT/MALICIOUS DAMAGE 10%;
• NEXT ONE MUST DECIDE ON THE EXTENT OF THE RISK
APPLICABLE TO EACH CATEGORY, THUS STORM AND WIND ARE 45%
OF 2.5%= 1.125% BUT THE WORK IS BEING UNDERTAKEN DURING
THE DRY SEASON THEREFORE THIS RISK IS REGARDED AS
MINIMAL SAY 25% OF THE NORM, OUR RATE FOR THIS PORTION
IS THUS 25% 1.125% = 0.281%;
• THE SAME CALCULATION IS CARRIED OUT FOR EACH OF THE
OTHER CATEGORIES OF THE RATE X;
PREMIUM COMPUTATION
CONTRACT WORKS – CIVIL WORKS 2
• THE NEXT PART OF THE CALCULATION IS TO TAKE INTO
ACCOUNT THE PERIOD ON RISK, THIS MAY NOT ONLY BE
THE CONSTRUCTION PERIOD, BUT THE RISK MAY CONTINUE
UNTIL TAKE-OVER OF THE COMPLETED PROJECT AS IN THE
CASE OF A TURNKEY PROJECT;
• IT MUST BE REMEMBERED THAT IF TAKE-OVER IS TO BE
DELAYED UNTIL FINAL COMPLETION, THEN THE CIVIL
RISK WILL BE EXPOSED FOR A PERIOD THAT MUST BE
DETERMINED (DURING CONSTRUCTION AND THEREAFTER
UNTIL TAKEOVER);
• FINALLY THERE MUST BE A CHARGE FOR THE MAINTENANCE
PERIOD DEPENDING ON THE NATURE OF MAINTENANCE
COVER REQUIRED IN TERMS OF THE CONTRACT;
• THE CUMULATIVE RATE IS THEN APPLIED TO THE CIVIL
PORTION OF THE CONTRACT VALUE TO PRODUCE A
PREMIUM.
PREMIUM COMPUTATION
CONTRACT WORKS – STRUCTURAL WORKS 1
• There is a specific rate % for each project type e.g..
RESIDENTIAL BUILDINGS, OFFICE BLOCKS, HOTELS, HOSPITALS,
SHOPPING MALLS, BRIDGES, FACTORY PREMISES, WATER TOWERS
CHIMNEYS AND THE LIKE;
• THE APPLICABLE RATE X (SAY 1%) MUST THEN BE APPORTIONED
TO RISK CATEGORIES, FOR EXAMPLE, (THESE % ARE JUST AN
ILLUSTRATION AND ARE NOT REALISTIC) STORM/WIND 20%
FIRE/LIGHTNING/EXPLOSION 30% COLLAPSE/LANDSLIDE 35%
THEFT/MALICIOUS DAMAGE 15%;
• NEXT ONE MUST ONE MUST DECIDE ON THE EXTENT OF THE RISK
APPLICABLE TO EACH CATEGORY, THUS FIRE ETC. ARE 30% OF
X(X BEING SAY 1%) (30%X)= 0.3% BUT THE WORK IS BEING
UNDERTAKEN OUT OF THE LIGHTNING SEASON AND ALL PACKING
MATERIALS ARE REMOVED FROM THE BUILDING THEREFORE THIS
RISK IS REGARDED AS MINIMAL SAY 20% OF THE NORM, OUR
RATE FOR THIS PORTION IS THUS 20% OF 0.3% =0.06%;
• THE SAME CALCULATION IS CARRIED OUT FOR EACH OF THE
OTHER CATEGORIES OF THE RATE X;
PREMIUM COMPUTATION
CONTRACT WORKS – STRUCTURAL WORKS 2
• THE NEXT PART OF THE CALCULATION IS TO TAKE INTO
ACCOUNT THE PERIOD ON RISK, THIS MAY NOT ONLY BE
THE CONSTRUCTION PERIOD, BUT THE RISK MAY CONTINUE
UNTIL TAKE-OVER OF THE COMPLETED PROJECT AS IN THE
CASE OF A TURNKEY PROJECT;
• IT MUST BE REMEMBERED THAT IF TAKE-OVER IS TO BE
DELAYED UNTIL FINAL COMPLETION, THEN THE
STRUCTURAL RISK WILL BE AT RISK FOR AN EXTENDED
PERIOD WHICH MUST BE DETERMINED ESPECIALLY IF
MACHINERY IS TO BE INSTALLED BEFORE TAKE-OVER OF
THE COMPLETED STRUCTURE THUS AN ADDITIONAL CHARGE
FOR THE EXTENDED PERIOD AFTER CONSTRUCTION IS
WARRANTED;
• FINALLY THERE MUST BE A CHARGE FOR THE MAINTENANCE
PERIOD DEPENDING ON THE NATURE OF MAINTENANCE
COVER REQUIRED IN TERMS OF THE CONTRACT;
• THE CUMULATIVE RATE IS THEN APPLIED TO THE
STRUCTURAL PORTION OF THE CONTRACT VALUE TO
PRODUCE A PREMIUM.
PREMIUM COMPUTATION
CONTRACT WORKS – ELECTRICAL &
MECHANICAL WORKS - 1
• UNLIKE CIVIL AND STRUCTURAL RATING, THE ELECTRICAL
AND MECHANICAL RATE IS BUILT UP OVER A NUMBER OF
FACTORS, THESE ARE:
–
–
–
–
–
–
–
HANDLING AND STATIC TESTING
TESTING AND RUNNING
FIRE AND SPECIAL PERILS DURING CONSTRUCTION
FIRE AND SPECIAL PERILS DURING TESTING
ENVIRONMENT
BENEFICIAL USE IF REQUIRED IN TERMS OF CONTRACT
MAINTENANCE ONCE AGAIN BASED ON THE REQUIRED COVER;
• EACH OF THESE RATE COMPONENTS HAS ITS OWN SPECIFIC
RATE WHICH EXCEPT FOR THE HANDLING AND STATIC
TESTING RATE ARE ADJUSTED TO TAKE IN TO ACCOUNT
THE PARTICULAR PERIOD OF COVER AND RISK FACTOR.
EACH OF THESE RATE COMPONENTS ARE EXPLAINED AS
FOLLOWS:
PREMIUM COMPUTATION
CONTRACT WORKS – ELECTRICAL &
MECHANICAL WORKS - 2
• HANDLING AND STATIC TESTING: THIS RATE COMPONENT
ALLOWS FOR PRE ERECTION STORAGE ON SITE, MOVEMENT
FROM STORAGE TO POINT OF ERECTION, HOISTING ONTO
FOUNDATIONS, ASSEMBLY THEN NON ENERGISED TESTING
• TESTING AND RUNNING: IT IS AT THIS STAGE THAT
POWER IS FIRST APPLIED TO THE MACHINE AND
FEEDSTOCK INTRODUCED. EFFECTIVELY THIS COVER
EQUATES TO MACHINERY BREAKDOWN COVER. THE PERIOD
IS USUALLY RESTRICTED TO 30 DAYS ON WHICH THE
MACHINERY IS OPERATED FOR TESTING PURPOSES. IT IS
ASSUMED THAT ALL MANUFACTURERS SAFETY REQUIREMENTS
AND COMMISSIONING PROCEDURES WILL BE ADHERED TO
AND THAT SAFETY DEVICES WILL NOT BE OVERRIDDEN OR
NULLIFIED. IT IS USUAL THAT WHERE THERE ARE ANY
UNTRIED FEATURES OR PROTOTYPES THAT TESTING COVER
WILL BE EXCLUDED;
• TESTING COVER IS USUALLY ONLY GIVEN ON NEW
MACHINERY;
PREMIUM COMPUTATION
CONTRACT WORKS – ELECTRICAL &
MECHANICAL WORKS - 3
• FIRE AND SPECIAL PERILS: THESE RISKS ARE NO
DIFFERENT TO THOSE GIVEN UNDER A FIRE OR ASSETS
POLICY, ACCORDINGLY, THE RATE SHOULD BE SIMILAR TO
THE STANDARD FIRE POLICY. THIS COMPONENT IS
DIVIDED INTO TWO CATEGORIES, NAMELY DURING
CONSTRUCTION AND THEN DURING TESTING AND RUNNING.
A LESSER RATE SHOULD BE APPLIED TO THE
CONSTRUCTION PERIOD POSSIBLY 50% OF FIRE & PERILS
RATE, WHEREAS THE FULL RATE SHOULD BE APPLIED TO
THE TESTING PERIOD. IN BOTH INSTANCES THE RATE
SHOULD BE ADJUSTED FOR THE PERIOD OF COVER;
• ENVIRONMENT: THIS COMPONENT TAKES INTO
CONSIDERATION THE RISKS OF THEFT, MALICIOUS DAMAGE
GEOTECHNIC AND HYDROLOGY RISKS AND A VARIETY OF
OTHER MINOR PERILS.
UNDERWRITING CRITERIA
PUBLIC LIABILITY - 1
• THIS SECTION OF THE POLICY PROVIDES FOR LIABILITY TO
THIRD PARTIES IN RESPECT OF LOSS OF OR DAMAGE TO
PROPERTY OR PERSONAL INJURIES OR DEATH OF PERSONS NOT
BEING EMPLOYEES OR THE FAMILY OF THE INSURED PARTY;
• WE ARE NOT TALKING ABOUT A SEPARATE POLICY, BUT AS A
SECTION TO A CONSTRUCTION POLICY, THUS ANY LIABILITY
INCURRED SHOULD ORIGINATE AT THE CONTRACT SITE IN
CONNECTION WITH SITE ACTIVITIES DURING THE PERIOD OF
INSURANCE;
• TO PROVIDE FOR ANY WIDER COVER A GENERAL LIABILITY
POLICY SHOULD BE TAKEN OUT IN THE ACCIDENT DEPARTMENT;
• THERE ARE TWO BASES OF COMPUTING PUBLIC LIABILITY
PREMIUMS EITHER ON:
– LIMIT OF LIABILITY,
– OR CONTRACT VALUE;
• NEITHER BASIS CAN BE CONSIDERED SUPERIOR TO THE OTHER,
EFFECTIVELY THE PREMIUM SHOULD BE THE SAME;
UNDERWRITING CRITERIA
PUBLIC LIABILITY - 2
• RECOGNISING THAT THERE ARE TWO ACCEPTABLE BASES,
WHAT FACTORS SHOULD BE TAKEN INTO CONSIDERATION IN
COMPUTING THE PREMIUM;
• ALL THOSE LISTED HEREUNDER WILL EITHER BE
PROMINENT IN THE PREMIUM CALCULATION OR OF LITTLE
OR NO EFFECT, EACH MUST BE CONSIDERED ON MERITS:
– IS THE SITE A GREEN FIELDS OR BROWN FIELDS SITE, IS
THERE A POSSIBILITY OF DAMAGE TO EXISTING PROPERTY
EITHER ON-SITE OR ON SITES ADJACENT TO THE CONTRACT
SITE,
– IS THE RISK LOCATION IN/OUT OF TOWN – ARE THERE ANY
PUBLIC SERVICES IN THE VICINITY,
– ARE ANY EXPLOSIVES TO BE USED,
– DEPTH OF EXCAVATION/ GEOTECHNIC RISKS,
– EXPERTISE AND TRACK RECORD OF CONTRACTOR AND DESIGN
ENGINEER,
– WORKING METHODS AND DESIGN, PLAN OR SPECIFICATION,
– RISK MANAGEMENT;
– THE POTENTIAL RISK OF SPREAD OF FIRE TO ADJACENT
PROPERTIES EITHER ON SITE OR IN THE PROXIMITY THERETO
UNDERWRITING CRITERIA
THIRD PARTY LIABILITY - 3
• EXTENSIONS OF COVER
• ARE THE SELECTED EXTENSIONS OF COVER TO BE WITHIN
THE OVERALL LIMIT OF INDEMNITY OR ARE THEY TO HAVE
SEPARATE LIMITS OF INDEMNITY? IF SO, PLEASE
PROVIDE THE REQUIRED LIMITS
•
•
•
•
•
•
•
EXTENSION OF COVER
ARREST,ASSAULT, DISCHARGE
OR DEFAMATION
EMERGENCY MEDICAL EXPENSES
PREVENTION OF ACCESS
LEGAL DEFENCE COSTS
TRESSPASS OR NUISANCE
LIMIT OF INDEMNITY
R00,000,000
R
000,000
R 0,000,000
R 0,000,000
R00,000,000
PREMIUM COMPUTATION
PUBLIC (THIRD PARTY) LIABILITY - 1
• THE CALCULATION BEGINS WITH A BASIC RATE % WHICH
IS A FUNCTION OF THE LIMIT OF INDEMNITY WHICH
ENVISAGES A 12 MONTH CONTRACT PERIOD, THE BASIC
RATE DIFFERS ACCORDING TO WHETHER IT IS TO BE
APPLIED TO THE CONTRACT VALUE OR THE LIMIT OF
INDEMNITY;
• THE FIRST ADJUSTMENT TAKES INTO CONSIDERATION THE
PERIOD OF THE CONTRACT BY ADJUSTMENT UPWARDS OR
DOWNWARDS FOR LONGER OR SHORTER PERIODS FROM TAKEOVER OF SITE UNTIL FINAL HANDOVER OF THE PROJECT;
• THE NEXT ADJUSTMENTS TAKE INTO CONSIDERATION THOSE
PREVIOUSLY MENTIONED WHICH ARE AS FOLLOWS:
PREMIUM COMPUTATION
PUBLIC (THIRD PARTY) LIABILITY - 2
– IS THE SITE GREEN FIELDS OR BROWN FIELDS IS
THERE A POSSIBILITY OF DAMAGE TO EXISTING
PROPERTY EITHER ON-SITE OR ON SITES ADJACENT TO
THE CONTRACT SITE;
– IS THE RISK LOCATION IN/OUT OF TOWN – ARE THERE
ANY PUBLIC SERVICES IN THE VICINITY;
– ARE ANY EXPLOSIVES TO BE USED;
– DEPTH OF EXCAVATION/ GEOTECHNIC RISKS;
– EXPERTISE AND TRACK RECORD OF CONTRACTOR AND
DESIGN ENGINEER;
– WORKING METHODS AND DESIGN, PLAN &
SPECIFICATION;
– RISK MANAGEMENT;
• FINALLY THE EXTENSIONS MUST BE ADDRESSED:
PREMIUM COMPUTATION
PUBLIC (THIRD PARTY) LIABILITY - 3
–
–
–
–
–
ARREST, ASSAULT, DISCHARGE AND DEFAMATION,
EMERGENCY MEDICAL EXPENSES,
PREVENTION OF ACCESS,
LEGAL DEFENCE COSTS,
TRESSPASS OR NUISANCE.
• THE COMPUTATION OF THE REMOVAL OF SUPPORT RISK IS
UNDERTAKEN ON MUCH THE SAME BASIS, BUT THE BASIC
RATE IS MUCH HIGHER THAN FOR STANDARD LIABILITIES;
• WE HAVE NOT MENTIONED THE RISKS APPLICABLE TO
IMPLOSION OF BUILDINGS BEFORE NOW, HOWEVER, THESE
ARE MUCH MORE ONEROUS THAN ORDINARY LIABILITIES OR
REMOVAL OF SUPPORT LIABILITIES, BUT WE DO NOT
BELIEVE THESE RISKS TO BE APPROPRIATE TO THIS
DISCUSSION.
PREPARING A QUOTATION
• IT IS IMPORTANT FOR THE UNDERWRITER TO BE AWARE OF
HOW THE QUOTATION IS PRESENTED, YOU LIVE BY YOUR
WRITTEN WORD, OR LACK THEREOF;
• CLEARLY, IF THE INTERMEDIARY HAS ASKED FOR A
CERTAIN EXTENSION AND THIS ASPECT HAS NEITHER
NEGATIVELY NOR POSITIVELY BEEN ADDRESSED, IT CAN
BE ARGUED THAT THE REQUEST HAS BEEN ACCEPTED;
• THE FOLLOWING SUGGESTED QUOTATION WORDING MAY
ASSIST IN EXPRESSING CLEARLY THE INTENTION;
• AS AN INTERMEDIARY YOU TOO SHOULD DEFINE CLEARLY
THE NATURE AND EXTENT OF COVER YOU ARE REQUESTING,
THE ONUS IS THEN ON THE UNDERWRITER TO ACCEPT OR
REJECT YOUR REQUEST BY WRITTEN COMMENT IN THE
QUOTQTION PRESENTED.
SUGGESTED QUOTATION WORDING
WORKS PLUS PUBLIC LIABILITY - 1
• XYZ INSURANCE COMPANY LIMITED (THE INSURER)
• 25 SUMMER PLACE, GLORIOUS COVE
• INSURER’S CONTACT PERSON:
• TELEPHONE NUMBER:
E-MAIL ADDRESS
• DATE OF QUOTATION:
JOHN DOE
011 398 0000
DOEJ@XYZINS.CO.ZA
1ST JULY, 2010
• CLIENT:
ABC MANUFACTURING LIMITED
• INTERMEDIARY:
SMITH AND JONES BROKERS - R SMITH
• INSURED PROJECT: NEW ELECTRIC MOTOR MANUFACTURING
FACILITY FOR ABC MANUFACTURING
• PROJECT VALUE:
R25,500,000
»
»
»
»
CIVIL WORKS R5,000,000
STRUCTURAL WORKS R7,500,000
ELECTRICAL/MECHANICAL WORKS R10,240,000
PRELIMINARY & GENERAL R2,760,000
SUGGESTED QUOTATION WORDING
WORKS PLUS PUBLIC LIABILITY - 2
• POLICY WORDING:
– XYZ INSURANCE COMPANY LIMITED CONTRACT WORKS WORDING
OR ANY OTHER WORDING AS MAY BE AGREED BY THE COMPANY
(XYZ INS CO LTD) (THE INTERMEDIARY MAY HAVE SUBMITTED
A POLICY WORDING AS PART OF HIS QUOTATION REQUEST,
YOU MUST COMMENT THEREON AS TO ITS ACCEPTABILITY OR
OTHERWISE AND REFER TO AN ACCEPTABLE WORDING)
• THE INSURED PARTIES:
– THE PRINCIPAL:
• ABC MANUFACTURING LIMITED
– THE SITE CONTRACTOR:
• MLM CONTRACTORS (PTY) LIMITED
– SUB-CONTRACTORS:
• EMPLOYED ON THE CONTRACT SITE (EMPLOYED BY THE
CONTRACTOR(S) OR NOMINATED BY THE PRINCIPAL) BUT ONLY TO
THE EXTENT OF LOSS, DAMAGE OR LIABILITY ORIGINATING AT
THE CONTRACT SITE ARISING OUT OF THEIR SITE INVOLVEMENT
EXCLUDING ANY PROFESSIONAL ACTIVITY OR OFF-SITE
MANUFACTURING OR MANUFACTURING GUARANTEES
SUGGESTED QUOTATION WORDING
WORKS PLUS PUBLIC LIABILITY - 3
• THE INSURED PARTIES (CONTINUED):
– ANY OTHER NAMED PARTY PROPOSED TO AND ACCEPTED BY THE
INSURER SUCH AS PROJECT MANAGERS, MANUFACTURERS,
SUPPLIERS OR PROFESSIONALS BUT ONLY TO THE EXTENT OF
LOSS, DAMAGE OR LIABILITY ORIGINATING AT THE CONTRACT
SITE, EXCLUDING ANY PROFESSIONAL ACTIVITY OFF-SITE
MANUFACTURING PROCESS OR MANUFACTURERS GUARANTEES;
• BASIS OF INDEMNIFICATION:
– CONTRACT WORKS
• THE INSURED PROPERTY
• EXPEDITING COSTS
–
–
–
–
–
LIMIT OF INDEMNITY
R25,500,000
50% OF AGREED CLAIM EXCEEDING R100,000 OR
WHERE LOSS DOES NOT EXCEED R100,000
ESCALATION
DURING CONTRACT PERIOD
15%
DURING PERIOD OF DAMAGE REINSTATEMENT 15%
50,000
SUGGESTED QUOTATION WORDING
WORKS PLUS PUBLIC LIABILITY - 4
– CURRENCY FLUCTUATION
– DEMOLITION AND DEBRIS REMOVAL
• ASSOCIATED WITH DAMAGE TO WORKS
• WITHOUT DAMAGE TO THE WORKS
–
–
–
–
–
–
–
–
PROFESSIONAL FEES
FIRE BRIGADE CHARGES
PUBLIC AUTHORITIES CHARGES
PUBLIC AUTHORITIES REINSTATEMENT
OFF-SITE STORAGE NOT AT MNFRS.
WORK AWAY
REMOVAL TO A PLACE OF SAFETY
RECORDS AND PLANS
• CLAIMS PREPARATION COSTS
20%
R00,000,000
R00,000,000
R
R
R
R
R
R
R
R
0,000,000
0,000,000
0,000,000
0,000,000
0,000,000
0,000,000
0,000,000
0,000,000
R 0,000,000
SUGGESTED QUOTATION WORDING
WORKS PLUS PUBLIC LIABILITY - 5
– THIRD PARTY LIABILITY
– LIMIT OF INDEMNITY
R00,000,000
• INCLUDED IN LIMIT OF INDEMNITY
– LEGAL DEFENCE COSTS
R 0,000,000
– EMERGENCY MEDICAL EXPENSES
R
000,000
– TRESSPASS OR NUISANCE
R 0,000,000
– ARREST ASSAULT DISCHARGE
DEFAMATION
R
000,000
WHERE A ZERO HAS BEEN PLACED OPPOSITE AN ITEM THIS
MEANS THAT NO COVER IS TO BE GIVEN FOR THAT ITEM.
NOTE TO UNDERWRITER
THE LIMITS FOR THE EXTENSIONS SHOWN ABOVE ARE NOT
NECESSARILY SUB LIMITS INCLUDED IN THE OVERALL LIMIT OF
INDEMNITY. IF UNDERWRITTEN AS ADDITIONAL LIMITS THE
WORDS “INCLUDED IN LIMIT OF INDEMNITY” SHOULD BE OMITTED
AND THE WORDS “ADDITIONAL TO LIMIT OF INDEMNITY” ADDED
SUGGESTED QUOTATION WORDING
WORKS PLUS PUBLIC LIABILITY - 6
• THE PROPERTY INSURED:
– THE PERMANENT WORKS BEING ALL WORKS AND PROPERTY AS
DESCRIBED IN THE CONTRACT DOCUMENTS AS THE CONTRACT
WORKS AND ANY TEMPORARY WORKS CREATED OR INSTALLED IN
ORDER TO CONSTRUCT THE PERMANENT WORKS;
• PERIOD OF COVER:
– COVER COMMENCES WITH THE HANDING OVER OF THE CONTRACT
SITE TO THE CONTRACTOR, OR THE DELIVERY OF MATERIALS
AND OTHER THINGS FOR INCORPORATION INTO THE PROJECT;
DURING ANY PERIOD OF STORAGE ON OR ABOUT THE CONTRACT
SITE AWAITING INCORPORATION, CONSTRUCTION OR ERECTION
– DURING ANY PERIOD OF OFF-SITE STORAGE AT ANY SITE
AGREED BY THE INSURER WHICH SHALL NOT INCLUDE
SUPPLIERS OR MANUFACTURERS PREMISES,
– WHILST BEING CONSTRUCTED, ERECTED OR INSTALLED,
SUGGESTED QUOTATION WORDING
WORKS PLUS PUBLIC LIABILITY - 7
• PERIOD OF COVER: PERIOD OF COVER (CONTINUED):
– DURING ANY PERIOD OF CONTRACTUAL BENEFICIAL OCCUPATION OF
ANY COMPLETED OR PARTIALLY COMPLETED WORKS DECLARED TO AND
ACCEPTED (IN WRITING) BY THE INSURER NOT EXCEEDING
MONTHS
DURING ANY CONTRACTUAL MAINTENANCE PERIOD COVERING
DAMAGE:
OCCURRING DURING CONTRACTUAL VISITS BY THE CONTRACTOR OR
MANUFACTURER FOR THE PURPOSE OF CALIBRATION ADJUSTMENT OR
MAKING GOOD DEFECTS OR DAMAGE DUE TO CONSTRUCTION OR
ERECTION OR MAKING GOOD ANY DAMAGE DONE DURING SUCH
CONTRACTUAL VISITS
DAMAGE DUE TO PRIOR DEFECTS OR DEFECTIVE CONDITIONS BUT
EXCLUDING THE DEFECTIVE CONDITION ITSELF, WHICH SHOULD
FORM THE SUBJECT OF A MANUFACTURER’S GUARANTEE OR
PROFESSIONAL INDEMNITY;
SUGGESTED QUOTATION WORDING
WORKS PLUS PUBLIC LIABILITY - 8
• THE DEDUCTIBLES:
• IN RESPECT OF EACH AND EVERY CLAIM ARISING OUT OF
OR IN CONNECTION WITH ANY ONE EVENT OR OCCURRENCE
OR SERIES OF OCCURRENCES ARISING OUT OF OR IN
CONNECTION WITH ANY ONE EVENT, THE INSURED SHALL
BEAR THE FIRST:
– PERIL
EXCESS
– COLLAPSE
R0,000
– STORM, WIND, TEMPEST, FLOOD, SNOW, R0,000
HAIL, SLEET, FROST
SUBSIDENCE, LANDSLIP
R0,000
DEFECTIVE DESIGN, PLAN,
R0,000
SPECIFICATION
FIRE, LIGHTNING, EXPLOSION
R0,000
THEFT, MALICIOUS DAMAGE
R0,000
SUGGESTED QUOTATION WORDING
WORKS PLUS PUBLIC LIABILITY - 9
• RATE AND PREMIUM BASED ON CONTRACT VALUE:
– CONTRACT WORKS
– THIRD PARTY LIABILITY
0,00%
0,00%
R000,000
R 00,000
• TERMS AND CONDITIONS OF QUOTATION:
• 1. THIS QUOTATION HOLDS GOOD FOR 90 DAYS FROM THE
DATE SHOWN AS THE “DATE OF QUOTATION”;
• 2. THE QUOTATION IS BASED ON THE UNDERWRITING
INFORMATION SUPPLIED BY THE INTERMEDIARY WHICH
SHALL FORM THE BASIS HEROF EXCEPT AS EXCLUDED
HEREIN SHOULD THERE BE ANY CHANGES IN THE
INFORMATION SUPPLIED THE COMPANY RESERVES THE
RIGHT TO AMEND THIS QUOTATION ACCORDINGLY;
• 3. THE DEFECTS EXCEPTION ENVISAGED HEREBY IS THE
‘COSTS ADDITIONAL’ ‘DE5’ ,LEG2’ ETC.;
CONTRACTOR’S LIABILITIES
• A CONTRACTOR CAN INCUR LIABILITIES FROM MANY
SOURCES THUS HE NEEDS A PACKAGE OF LIABILITY
COVERS OVER AND ABOVE THAT GIVEN UNDER A CONTRACT
WORKS OR CONSTRUCTION POLICY. IT CAN EVEN BE SAID
THAT A COMPREHENSIVE LIABILITY PACKAGE SHOULD
INCLUDE HIS POTENTIAL CONSTRUCTION RISKS
LIABILITIES. ACCORDINGLY, THE CONSTRUCTION POLICY
SHOULD EXCLUDE THE CONTRACTOR’S LIABILITIES,
HOWEVER, WHERE OTHER PARTIES ARE INVOLVED ON THE
CONSTRUCTION SITE THEY MAY NEED TO BE COVERED FOR
CONSTRUCTION LIABILITIES.
• THE QUESTION THEN ARISES, SHOULD THE CONSTRUCTION
POLICY WAIVE SUBROGATION RIGHTS AGAINST THE
CONTRACTOR?
CONTRACTOR’S LIABILITY POLICY -1
• LET US EXAMINE THE RECOMMENDED COMPONENTS TO A
COMPREHENSIVE CONTRACTOR’S LIABILITY POLICY:
– IT IS UNUSUAL FOR THIS TYPE OF POLICY TO BE
UNDERWRITTEN IN THE CONSTRUCTION OR ENGINEERING
DEPARTMENT IT IS MORE AN ACCIDENT DEPARTMENT RISK,
– FIRSTLY, WE MUST UNDERSTAND THAT THESE COVERS CAN
EITHER BE BASED ON “CLAIMS MADE” OR “CLAIMS INCURRED”
• THE FORMER BASIS RECOGNISES THAT ANY CLAIM LODGED
AGAINST THE INSURED DURIUNG A PARTICULAR PERIOD OF
INSURANCE, IRRESPECTIVE OF WHEN THE TRIGGERING EVENT
OCCURRED, SHALL BE REGARDED AS VALID AS LONG AS IT FALLS
WITHIN THE AMBIT OF THE POLICY,
• ON THE OTHER HAND ON A CLAIMS INCURRED BASIS ANY CLAIM
LODGED AGAINST THE INSURED MUST THEN REVERT TO THE
POLICY IN FORCE AT THE TIME THAT THE TRIGGERING EVENT
OCCURRED;
CONTRACTOR’S LIABILITY POLICY -2
• THE FOLLOWING ARE THE MORE COMMON SECTIONS TO A
COMPREHENSIVE Contractor’s Liability Policy:
– PUBLIC LIABILITY -GENERAL AND CONTRACTING LIABILITIES
– PRODUCTS LIABILITY –PRODUCTS MANUFACTURED OR SUPPLIED
– EMPLOYERS’ LIABILITY –INJURY OR SICKNESS ARISING OUT
OF EMPLOYMENT,
– PROFESSIONAL INDEMNITY –BREACH OF PROFESSIONAL
ACTIVITY OR DUTY,
– MOTOR EXCESS OF LOSS LIABILITY –DUE TO LOSS OR
ACCIDENT DURING THE PERIOD OF THE POLICY,
– PRODUCTS GUARANTEE –LIABILITY FOR PRODUCTS SUPPLIED,
SOLD ,INSTALLED ETC.,
– PRODUCT RECALL –WHERE SUCH PRODUCT MAY CAUSE INJURY
OR DAMAGE,
– CARRIERS LIABILITY –DAMAGE ARISING OUT OF THE
CARRIAGE OF GOODS INCLUDING CONSEQUENTIAL LOSS,
CONTRACTOR’S LIABILITY POLICY -3
• LIABILITY SECTIONS CONTINUED:
– PLANT HIRE LIABILITY –LEGAL LIABILITY FOR LOSS OR
DAMAGE IN TERMS OF A HIRE AGREEMENT INCLUDING
CONSEQUENTIAL LOSS,
– PURE ECONOMIC LOSS –CLAIMS MADE DURING THE PERIOD OF
INSURANCE OTHER THAN FOR PROFESSIONAL SERVICES FOR
COMPENSATION IN TORT, DELICT OR STATUTE;
– THE EXTENSIONS OF COVER ARE SIMILAR TO THOSE UNDER
THE MORE SPECIFIC CONSTRUCTION POLICY LIABILITY
SECTION;
– WHERE A MORE SPECIFIC POLICY INCLUDING LIABILITIES
HAS BEEN TAKEN OUT THE CONTRACTOR’S LIABILITY POLICY
WILL ONLY PROVIDE LIABILITY FOR DIFFERENCES IN COVER
OR LIMIT OF INDEMNITY, IT WILL NOT BE BROUGHT IN
– TO CONTRIBUTION WITH THE MORE SPECIFIC POLICY;
CONSTRUCTION PLANT INSURANCE - 1
• WHAT COMPRISES PLANT UNDER A CONSTRUCTION POLICY?
• MOBILE PLANT AND EQUIPMENT:
MOBILE CRANES, CRAWLER CRANES, DUMP TRUCKS,
BULLDOZERS, ROAD SCRAPERS, BACKACTORS, EXCAVATORS,
ROAD TANKERS (WATER, FUEL OR BITUMEN), ROAD ROLLERS;
• NON MOBILE PLANT AND EQUIPMENT:
– CONCRETE BATCH PLANT, CONCRETE MIXERS AIR
COMPRESSORS, ELECTRICITY GENERATING PLANT, MINI SUBSTATIONS, CONVEYOR SYSTEMS, TOWER CRANES, WELDING
GENERATORS AND TRANSFORMERS;
• MINING PLANT AND EQUIPMENT:
DRAGLINES, EXCAVATORS, JUMBO DRILL RIGS, MINING
SCOOPS, DUMP TRUCKS AND MINE WINDERS LONG WALL COAL
CUTTERS, MINING SCOOPS AND TUNNELL BORING MACHINES;
CONSTRUCTION PLANT INSURANCE - 2
• CLASSES OF OWNERSHIP:
– CONTRACTORS WHO OWN PLANT FOR CONTRACTING WORK;
– PLANT OWNED FOR OWN USE SUCH AS MINING OPERATIONS,
INDUSTRIAL WORKS AND SERVICE INDUSTRIES;
– PLANT HIRE COMPANIES FOR HIRE TO CUSTOMERS;
• VIRTUALLY EVERY PROJECT REQUIRES PLANT OF ONE TYPE
OR ANOTHER, LET US CONSIDER THE VARIOUS CATEGORIES
OF PLANT:
• CONSTRUCTION CONTRACTORS:
– BUILDING CONTRACTORS – CONCRETE BATCH PLANT, CRANES
MOBILE, CRAWLER AND TOWER, CONCRETE MIXERS, CONCRETE
ESCALATORS, PUMPS CONCRETE AND WATER, EXCAVATORS,
BACKACTORS AND THE LIKE
– ROAD CONSTRUCTION CONTRACTORS – THESE CONTRACTORS USE
A LARGE VARIETY OF PLANT SUCH AS, SCRAPERS,
EXCAVATORS, ROLLERS, BULLDOZERS, BACKACTORS, MOBILE
CRANES,AIR COMPRESSOR SETS, PAVING MACHINES ETC.;
CONSTRUCTION PLANT INSURANCE - 3
• MINING OPERATIONS (MAINLY OPENCAST):
– EXCAVATORS, DRAGLINES, JUMBO DRILLS, EARTH MOVING
TRUCKS, MINING SCOOPS, CONVEYOR SYSTEMS, CRUSHERS,
CRANES, COMPRESSORS, DIESEL GENERATING PLANT ETC.
– IN SOME INSTANCES THE PLANT MAY INCLUDE MINE WINDERS
– OR TUNNELL BORING MACHINES;
• PLANT HIRE COMPANIES:
– THEIR PURPOSE IS AS A SERVICE TO CONSTRUCTION, MINING
AND INDUSTRY, TO PROVIDE PLANT AND MACHINERY AS
REQUIRED FOR A VARIETY OF JOBS. SOMETIMES THESE HIRE
COMPANIES ARE A DIVISION WITHIN A CONSTRUCTION, MINING
OR INDUSTRIAL COMPANY, THE PURPOSE OF WHICH IS TO
SEPARATE THE COSTLY AND ONEROUS OWNERSHIP OF PLANT AND
MACHINERY FROM THEIR CORE BUSINESS, WHETHER THIS BE
CONSTRUCTION, MINING OR OTHER INDUSTRIAL ACTIVITY;
CONSTRUCTION PLANT INSURANCE – 4
THE NEED FOR INSURANCE
• THIS TYPE OF PLANT & EQUIPMENT IS GENERALLY HIGH
RISK, SUSCEPTIBLE TO IMPACT, FIRE, THEFT AND
ELEMENTAL PERILS. WE ARE NOT SUGGESTING THAT THE
USERS DO SO NEGLIGENTLY, CARELESSLY OR WITHOUT
REGARD FOR POSSIBLE DANGER OR DAMAGE. PLANT IS
USUALLY OPERATED BY A DEDICATED OPERATOR OR
OPERATORS, THUS THE ONUS FOR ANY UNDUE OPERATION
OF THE PLANT RESULTING IN DAMAGE COULD BE PEGGED
AT THE DOOR OF AN INDIVIDUAL. IT MUST BE
APPRECIATED THAT THIS TYPE OF PLANT HAS LARGE
QUANTITIES OF FUEL OIL AND HYDRAULIC OIL BOTH OF
WHICH ARE HIGHLY INFLAMABLE;
• DEPENDING ON THE TERRAIN IN WHICH IT WORKS
TOPPLING OVER OR OVERTURNING IS A VERY REAL RISK;
• IN VIEW OF THE ELEMENT OF RISK WHICH IS HIGH &
VARIED IT WOULD BE UNWISE NOT TO INSURE THE PLANT.
CONSTRUCTION PLANT INSURANCE – 5
THE INSURANCE POLICY COVER
• THE COVER IS SIMILAR FOR ALL CLASSES OF OWNERSHIP
• AS THIS EQUIPMENT IS ESSENTIALLY FOR OUTDOOR USE,
IT QUALIFIES FOR WHAT CAN BE TERMED ‘ALL RISKS’
COVER. THIS DOES NOT MEAN THAT THERE ARE NO TERMS
AND CONDITIONS APPLICABLE TO THE INSURANCE, INDEED
THERE ARE LIMITING FACTORS TO THE COVER. THE COVER
EMBRACES:
–
–
–
–
–
–
–
ELECTRICAL AND MECHANICAL BREAKDOWN (OPTIONAL COVER)
FIRE LIGHTNING EXPLOSION
ELEMENTAL PERILS
FLOOD
THEFT MALICIOUS DAMAGE
IMPACT COLLISION OVERTURNING
UNINTENTIONAL OVERLOADING
CONSTRUCTION PLANT INSURANCE – 6
THE INSURANCE POLICY EXCEPTIONS
• ALTHOUGH WE REFER TO THE COVER AS BEING ‘ALL RISKS’,
NEVERTHELESS THERE ARE SOME EXCEPTIONS THESE ARE AS
FOLLOWS:
–
–
–
–
–
–
–
–
–
–
WEAR AND TEAR AND GRADUAL DETERIORATION;
PENALTIES FOR DELAY AND GUARANTEES OF PERFORMANCE;
LOSS OF USE;
TYRES AND TUBES;
EXPENDABLE PARTS AND TOOLS;
THEFT NOT IDENTIFIABLE WITH A SPECIFIC INCIDENT;
TANDEM OR MULTIPLE LIFTS;
EXISTING DEFECTS, WILFUL ACTS OR NEGLIGENT ACTS;
EXPERIMENTS OR INTENTIONAL OVERLOADING;
WHILST BEING OPERATED BY A PERSON:
• UNDER THE INFLUENCE OF INTOXICATING LIQUOR OR DRUGS,
• AUTHORISED BY THE OWNER OR HIS RESPONSIBLE PERSON WHO IS NOT
QUALIFIED TO OPERATE THE PLANT
– ELECTRICAL OR MECHANICAL BREAKDOWN (IF OPTION NOT
REQUIRED);
CONSTRUCTION PLANT INSURANCE – 7
HIRED-IN PLANT POLICY AMENDMENT
• THE POLICY WORDING IS GENERALLY SIMILAR WHETHER
COVERING OWNED PLANT OR HIRED-IN PLANT, TO ACHIEVE
THE ADJUSTMENT TO THE STANDARD POLICY THE
FOLLOWING MEMORANDA ARE INCLUDED:
– A) THE INSURED’S LEGAL LIABILITY UNDER ANY HIRING
AGREEMENT TO PAY COMPENSATION FOR PHYSICAL LOSS OF OR
DAMAGE TO ANY INSURED HIRED-IN MACHINERY WHILST UNDER
HIS CUSTODY OR CONTROL AT THE INSURED’S PREMISES
DESCRIBED IN THE SCHEDULE HERETO;
– B) THE INSURED’S LEGAL LIABILITY UNDER ANY HIRING
AGREEMENT TO PAY CONTINUING HIRE CHARGES IN
CONSEQUENCE OF PHYSICAL LOSS OF OR DAMAGE TO THE
INSURED HIRED-IN MACHINERY DESCRIBED IN THE SCHEDULE
HERETO FOLLOWING INDEMNIFIABLE LOSS OR DAMAGE
PROVIDED FOR IN A) ABOVE;
• AS PREVIOUSLY STATED THE POLICY REQUIRES THAT ANY
HIRING AGREEMENT SHALL BE NO MORE ONEROUS THAN THE
CPHA CONDITIONS.
CONSTRUCTION PLANT INSURANCE – 6
HIRED IN/OUT PLANT & MACHINERY
• THIS PLANT AND EQUIPMENT IS HIRED IN/OUT UNDER
SPECIFIC HIRING CONDITIONS. INSURERS PREFER THE
CONDITIONS AS PUBLISHED BY THE PLANT HIRE
ASSOCIATION KNOWN AS THE CPHA CONDITIONS. THE
CPHA CONDITIONS ARE CONSIDERED TO BE THE MOST FAIR
FROM BOTH THE OWNER’S AND THE HIRER’S POINTS OF
VIEW. IN FACT, A POLICY COVERING HIRED PLANT
OFTEN INCLUDES A MEMORANDUN WHICH STATES:
– “THIS INSURANCE IS BASED ON HIRING AGREEMENTS NO MORE
ONEROUS THAN THOSE PUBLISHED BY THE CONTRACTOR’S
PLANT HIRE ASSOCIATION, SHOULD PLANT HAVE BEEN HIRED
UNDER OTHER HIRING AGREEMENTS THEN ANY LOSS OR DAMAGE
COVERED UNDER THIS POLICY WILL BE ADJUSTED AS IF THE
CPHA CONDITIONS HAD BEEN IN FORCE”
CONSTRUCTION PLANT INSURANCE – 7
RISK ASSESSMENT
• THE INFORMATION REQUIRED EMBRACES THE FOLLOWING:
– IS THE PLANT OWNED OR HIRED IN;
– IF HIRED IN, THE APPLICABLE CONDITIONS OF HIRE;
– THE TYPE OF HIRED IN PLANT AND THE HIRE CHARGE FOR THE
PERIOD OF HIRE;
– WHETHER ANY HIRED IN ITEM HAS A REPLACEMENT VALUE EXCEEDING
R------ (NOT ALL INSURERS REQUIRE THIS)
– FOR OWNED PLANT A FULL SCHEDULE OF PLANT TO BE INSURED AND
THE NEW REPLACEMENT VALUE OF EACH ITEM;
– DETAILS OF TOWER CRANES AND OTHER CRANES OWNED OR HIRED IN
TOGETHER WITH COPIES OF THEIR LAST INSPECTION REPORT;
– WHETHER THERE ARE TO BE ANY TANDEM OR MULTIPLE LIFTS,
DETAILS THEREOF,INSURERS RESERVE RIGHT OF EVALUATION;
– AGE OF ROPES AND SLINGS AND LATEST INSPECTION REPORT;
– WHETHER LIFTING APPARATUS FITTED WITH LOAD GUAGES;
– CERTIFICATE OF COMPETENCY OF CRANE OPERATORS;
– EXPERIENCE OF RIGGERS WHO WILL CONTROL LIFTING;
– DETAILS OF LOSSES OVER LAST THREE YEARS.
CONSTRUCTION PLANT INSURANCE – 8
CPHA HIRE CONDITIONS
THE FOLLOWING IS A RESUME OF THE CPHA HIRE AGREEMENTS
• THE HIRER MAY NOT CEDE ASSIGN NOR SUBLET THE AGREEMENT
IN ANY WAY;
• THE OWNER HAS AT ANY TIME THE RIGHT OF ACCESS TO SITE TO
EXAMINE THE HIRED-IN PROPERTY;
• THE HIRER MUST ENSURE THAT OR AT HIS OWN COST CREATE A
SUITABLE WORKING TABLE FOR THE SAFE OPERATION OF ANY
HIRED IN CRANE, FAILING WHICH THE AGREEMENT SHALL BE
NULL AND VOID;
• THE HIRER IS OBLIGED TO NOTIFY THE OWNER OF ANY DEFECTS
IN THE PLANT AT THE TIME OF DELIVERY OR ANY DEFECTS THAT
MAY DEVELOP DURING THE HIRE PERIOD, THE PLANT SHALL
CEASE TO BE USED, ANY DAMAGE THAT MAY OCCUR DUE TO
CONTINUED USE SHALL BE FOR THE COST OF THE HIRER;
• THE PLANT IS TO BE USED ONLY WITHIN ITS RATED CAPACITY,
IN THE CASE OF CRANES NO TANDEM LIFTS, UNLESS AGREED TO
CONSTRUCTION PLANT INSURANCE – 9
CPHA HIRE CONDITIONS
• THE OWNER’S OPERATOR BECOMES THE SERVANT OF THE
HIRER WHO HAS THE ABSOLUTE CONTROL OF HIS ACTIONS;
• RISK OF LOSS OR DAMAGE PASSES TO THE HIRER ONLY ON
DELIVERY TO SITE UNLESS THE HIRER HAS ARRANGED
TRANSIT OF THE PROPERTY TO SITE FROM THE OWNER’S
PREMISES IN WHICH CASE THE HIRER IS RESPONSIBLE;
• THE HIRER INDEMNIFIES THE OWNER FOR ALL LIABILITY
ARISING OUT OF THE USE OF THE PLANT BY THE HIRER;
• THE HIRER SHALL BE RESPONSIBLE FOR ON-GOING HIRE
CHARGES DUE TO INCLEMENT WEATHER OR NORMAL
MAINTENANCE OR REPAIRING PUNCTURES AND THE LIKE
• THE HIRER SHALL NOT BE LIABLE FOR ON-GOING HIRE
CHARGES DUE TO UNAVAILABILITY OF ANY OWNER’S
OPERATOR OR DUE TO BREAKDOWN FROM INHERENT DEFECT;
• THE HIRER ACCEPTS LIABILITY FOR DIRECT & CONS LOSS
CONSTRUCTION PLANT INSURANCE –10
CPHA HIRE CONDITIONS
• THE HIRER IS RESPONSIBLE FOR THE INSURANCE DURING
THE HIRE PERIOD;
• ANY BREACH OF CONDITIONS OF THE AGREEMENT OR ACT
OF INSOLVENCY OR BEING PLACED UNDER JUDICIAL
MANAGEMENT THE OWNER MAY REPOSSES THE PLANT ON
HIRE AND WILL BE ENTITLED TO THE HIRE FEES DUE FOR
THE FULL AND UNEXPIRED HIRE PERIOD;
• IN THE CASE OF CRANES AND MOBILE PLANT HIRE FEES
WILL BE BASED ON TIME SHEETS PREPARED BY THE PLANT
OPERATOR AND SIGNED BY THE HIRER;
• THERE IS NO OBLIGATION ON THE OWNER TO SUPPLY
SLINGS, IF THESE ARE SUPPLIED NO RESPONSIBILITY IS
ACCEPTED BY THE OWNER WHO HAS NO CONTROL OVER USE;
• TYRES AND TUBES ARE THE RESPONSIBILITY OF HIRER;
• PLANT MAY BE RECALLED FOR REPAIR BY THE OWNER.
EMPLOYER’S LIABILITY - 1
• EMPLOYER’S LIABILITY:
• TO WHOM DO THE EMPLOYERS HAVE A POTENTIAL
RESPONSIBILITY TO PAY COMPENSATION FOR INJURIES OR
DISEASE DUE TO THEIR OCCUPATION,UNDER WHAT LAW:
– PRIOR TO 1994 ALL EMPLOYEES EARNING LESS THAN A
SPECIFIED AMOUNT, SPECIFIED IN TERMS OF THE WORKMANS
COMPENSATION ACT (WCA), WERE CLASSED AS ‘WORKMEN’.
THEY OR THEIR DEPENDANTS COULD CLAIM COMPENSATION
UNDER THE ACT, BUT HAD NO LEGAL RIGHT TO SUE THEIR
EMPLOYERS;
– THOSE WORKMEN EARNING IN EXCESS OF THE PRESCRIBED
AMOUNT WERE IN TERMS OF THE ACT CLASSED AS ‘NONWORKMEN’
– ‘NON WORKMEN’ WERE PRECLUDED FROM CLAIMING
COMPENSATION FOR OCCUPATIONAL INJURIES OR DISEASE,
UNDER THE WORKMAN’S COMPENSATION ACT, BUT WERE ABLE
TO CLAIM COMPENSATION FROM THEIR EMPLOYERS FOR SUCH
INJURIES OR DISEASE, ACCORDINGLY, MOST EMPLOYERS TOOK
OUT EMPLOYER’S LIABILITY INSURANCE
EMPLOYER’S LIABILITY - 2
– IN 1994 THE COMPENSATION FOR OCCUPATIONAL
INJURIES AND DISEASES ACT (130 OF 1993) WAS
PROMULGATED, COMMONLY KNOWN AS THE ‘COID ACT’;
– IN TERMS OF THE ACT ALL EMPLOYEES (THE BENEFITS
ARE ‘PEGGED’ TO BE A DEFINED INCOME LEVEL) AND
PRECLUDES EMPLOYEES FROM CLAIMING COMPENSATION
FROM THEIR EMPLOYERS FOR INJURIES OR DISEASE
ARISING OUT OF THEIR OCCUPATION, ONLY IN
EXCEPTIONAL CASES WHERE EMPLOYMENT IS NOT
CLASSIFIED AS ‘EMPLOYEES’ ARE THEY FREE TO SUE
THEIR EMPLOYER FOR COMPENSATION UNDER COMMON
LAW FOR SUCH INJURIES OR DISEASES;
– THE ‘COID ACT’ DEFINITION OF ‘EMPLOYEE’
INCLUDES APPRENTICES AND LEARNERS, BUT NOT
THOSE CONTRACTED TO CARRY OUT WORK FOR THE
EMPLOYER OR THEIR SUB-CONTRACTORS;
– CONSEQUENTLY EMPLOYERS LIABILITY CLAIMS ARE
RARE
EMPLOYER’S LIABILITY - 3
• UNDER A MODERN EMPLOYER’S LIABILITY POLICY, DEATH AND
BODILY INJURY INCLUDES DISEASE OR ILLNESS. THIS COVER IS
UNLIKE PUBLIC LIABILITY POLICIES IN THAT PROPERTY DAMAGE
IS NOT INCLUDED;
• IT IS IMPORTANT TO UNDERSTAND THAT UNDER THE USUAL
EMPLOYERS LIABILITY, INJURY OR ILLNESS MUST OCCUR DURING
THE PERIOD OF INSURANCE. THE CLAIM MAY BE MADE AND THE
INSURER’S LIABILITY ARISE MANY YEARS AFTER THE CAUSE OF
THE ACTION, EVEN AFTER THE ORIGINAL INSURER IS OFF RISK.
THIS EQUATES TO A CLAIMS INCURRED WORDING. THE INSURER
WHO WAS ON RISK AT THE TIME THE CAUSE OCCURRED IS THE
INSURER RESPONSIBLE FOR THE CLAIM.
EMPLOYER’S LIABILITY - 4
IT IS RECOMMENDED THAT THIS CHAPTER (8) OF THE IISA
CONSTRUCTION INSURANCE STUDY BOOK BE CAREFULLY READ
• THE COID ACT PROVIDES FOR COMPENSATION FOR DISABLEMENT
CAUSED BY OCCUPATIONAL INJURIES OR DISEASES SUSTAINED OR
CONTRACTED BY EMPLOYEES IN THE COURSE OF THEIR
EMPLOYMENT, OR DEATH FROM SUCH INJURIES OR DISEASE.
– DISABLEMENT INCLUDES CONVENTIONAL BODILY INJURY UNDER A
CONVENTIONAL EMPLOYER’S LIABILITY POLICY;
– DISABLEMENT AS DEFINED BY COID MEANS TEMPORARY PARTIAL
DISABLEMENT TEMPORARY TOTAL DISABLEMENT, PERMANENT
DISABLEMENT OR SERIOUS DISFIGUREMENT;
– COID AFFORDS A MORE COMPREHENSIVE COVER THAN A NORMAL
EMPLOYER’S LIABILITY POLICY. UNDER AN EMPLOYER’S LIABILITY
POLICY, THE EMPLOYER HAS TO BE NEGLIGENT BEFORE A VALID
CLAIM CAN ARISE. COID DOES NOT REQUIRE NEGLIGENCE ON THE
PART OF THE EMPLOYER. IT IS SUFFICIENT FOR THE DISABLEMENT
TO BE AS A RESULT OF AN ACCIDENT NOT NECESSARILY DUE TO
NEGLIGENCE. THUS COID HAS A WIDER APPLICATION.
PROJECT 3
TO BE PRESENTED AT NEXT SESSION
• An Employee, let us call him Joe, while working on
a machine in the production shop and, not wearing
a safety belt slips and falls to the ground some 4
metres below and breaks his leg, it is a compound
fracture. He is incapacitated for six weeks while
the bone heals, he cannot attend work, but returns
to work at the beginning of the seventh week,
although, the sore on his leg has not completely
healed. Some three weeks later, when the sore
still has not healed he visits his Doctor again
and the Doctor identifies that gangrene has set in
and is at an advanced stage, unfortunately, the
only remedy is to amputate his leg.
• How will he be compensated under the Coid Act,
would he have been treated any different under a
Employer’s Liability Policy? What would the Coid
Act Commissioner say about the lack of Safety
belt?
PROFESSIONAL INDEMNITY INSURANCE
1
• THIS IS A CLASS OF LIABILITY INSURANCE;
• THE LAW RELATING TO DEFECTS IN BUILDINGS AND
STRUCTURES AS WELL AS THAT RELATING TO ECONOMIC
LOSS HAS BECOME ONEROUS TO CONTRACTORS, ENGINEERS,
ARCHITECHTS, SURVEYORS AND OTHER PROFESSIONALS;
• AS A CONSEQUENCE PROFESSIONAL INDEMNITY INSURANCE
HAS BECOME OF GREAT SIGNIFICANCE TO PROFESSIONAL
BODIES;
• THE COVER IS ON A CLAIMS MADE BASIS IN OTHER WORDS
IF A CLAIM IS FIRST MADE AGAINST AN INSURED SOME
TIME AFTER THE OCCURRENCE OF THE EVENT THAT GAVE
RISE TO THE CLAIM, THEN THE INSURER WHO IS
CURRENTLY ON RISK SHALL BECOME LIABLE TO INDEMNIFY
THE INSURED FOR THE CLAIM
PROFESSIONAL INDEMNITY INSURANCE
2
• THE PRIMARY FUNCTION OF THE POLICY IS TO PROVIDE
FOR FINANCIAL OR ECONOMIC LOSS IN OTHER WORDS
LOSSES NOT ACCOMPANIED BY PHYSICAL DAMAGE OR
BODILY INJURY;
• IT IS IMPORTANT TO FULLY DESCRIBE ALL THE
ACTIVITIES OF THE INSURED IN THE RECITAL CLAUSE AS
THE INDEMNITY APPLIES TO THE STATED BUSINESS AND
NO OTHER FOR EXAMPLE ‘DESIGN AND CONSTRUCT
CONTRACTORS’, ARCHITECHTS, DESIGN ENGINEERS ETC.;
• IT IS A LEGAL LIABILITY POLICY, THUS THE INSURER’S
OBLIGATION TO INDEMNIFY ONLY BECOMES PAYABLE ONCE
THE INSURED HAS BEEN FOUND TO BE LEGALLY LIABLE;
• PROFESSIONAL INDEMNITY IS NOT A CONTRACT BASED ON
MORAL OR COMMERCIAL CONSIDERATIONS
PROFESSIONAL INDEMNITY INSURANCE
3
• COVER IS BASED ON BREACH OF PROFESSIONAL DUTY;
• THE CLAIM HAS TO BE MADE (AS PREVIOUSLY DISCUSSED)
DURING THE PERIOD OF INSURANCE;
• COVER ENVISAGES CLAIMS ARISING OUT OF ‘NEGLIGENT
ACTS, ERRORS OR OMISSIONS’ THESE WORDS HAVE NEVER
BEEN DEFINED, SOME LEGAL CASES TAKE THE VIEW THAT
THEY REFER TO NEGLIGENCE ONLY, THERE ARE, OF
COURSE, OTHER INTERPRETATIONS;
• IN THE CASE WIMPY CONSTRUCTION UK LTD. VS
POOLE(1984) IT WAS HELD THAT THE TERM” OMISSION
ERROR OR NEGLIGENT ACT” COVERED AN OMISSION OR
ERROR WITHOUT NEGLIGENCE, EVEN THOUGH AN ANCILLARY
CLAUSE IN THE POLICY REFERRED TO NEGLIGENT ACT,
ERROR OR OMISSION
PROFESSIONAL INDEMNITY INSURANCE
4
• THE DESIGN AND CONSTRUCT POLICY WORDING EXCLUDES
ANY LIABILITY ARISING DUE TO THE INSURED
(CONTRACTOR) HAVING GIVEN AN EXPRESS WARRANTY OR
GUARANTEE THAT INCREASES THE INSURED’S LIABILITY.
THIS EXCLUSION DOES NOT APPLY TO LIABILITY WHICH
WOULD HAVE ATTACHED IN THE ABSENCE OF SUCH EXPRESS
WARRANTY OR GUARANTEE;
• THE P.I. POLICY REFERS NOT ONLY TO THE INSURED
NAMED IN THE SCHEDULE , BUT ALSO TO PREDECESSORS
IN BUSINESS OR ANY EMPLOYEE OF THE INSURED;
• WHEN BUSINESSES AMALGAMATE OR SPLIT UP, THE
APPLICATION OF THE PREDECESSORS TO BUSINESS CLAUSE
CAN GIVE RISE TO DIFFICULTIES;
• WHERE THERE HAS BEEN A RECENT AMALGAMATION OR
SPLIT IT IS IMPORTANT TO ASCERTAIN EXACTLY WHAT
THE LIABILITIES OF THE NEW AND OLD BUSINESSES ARE.
PROFESSIONAL INDEMNITY INSURANCE
5
• NEGLIGENCE BY EMPLOYEES OF THE INSURED OR
EMPLOYEES OF PREDECESSORS IN BUSINESS IS ALSO
COVERED. MISTAKES BY EMPLOYEES ARE THE MOST
FREQUENT CAUSE OF CLAIMS UNDER A P.I. POLICY;
• THE P.I. POLICY ALSO PROTECTS THE INSURED AGAINST
ANY LIABILITY HE MAY INCUR ARISING OUT OF THE USE
OR EMPLOYMENT OF AGENTS;
• THIS SUBJECT IS MAINLY A PUBLIC LIABILITY COVER
AND WILL BE COVERED MORE EXTENSIVELY BY THE PUBLIC
LIABILITY COURSE, WE THEREFORE, DO NOT INTEND TO
GO FURTHER INTO THIS SUBJECT.
BUILDING DEFECTS INSURANCE
1
• OTHERWISE KNOWN OVERSEAS AS DECENNIAL LIABILITY;
• IT HAS ITS ORIGINS IN NAPOLEONIC LAW;
• IT ONCE AGAIN GAINED POPULARITY AFTER THE FIRST
WORLD WAR WHEN CONSIDERABLE CONSTRUCTION WAS
TAKING PLACE IN EUROPE;
• THE POLICY COVERS INHERENT DEFECTS IN BUILDING
STRUCTURES WHICH ONLY BECOME MANIFEST AFTER THE
COMPLETION OF CONSTRUCTION, WHERE THIS THREATENS
THE STABILITY OF THE STRUCTURE DUE TO DESIGN PLAN
SPECIFICATION MATERIALS OR WORKMANSHIP LANDSLIP
SUBSIDENCE OR HEAVE IS ALSO COVERED;
• THE COVER IS BASED ON THE DESIGN PLAN AND
SPECIFICATION BEING FULLY DIVULGED TO INSURERS FOR
APPROVAL BY THEIR CONSULTANTS AND THAT GEOTECHNIC
AND HYDROLOGY TESTS ARE CARRIED OUT ON THE SITE
AND THE RESULTS ARE GIVEN TO INSURERS FOR APPROVAL
• COVER MUST BE APPLIED FOR BEFORE COMMENCEMENT
BUILDING DEFECTS INSURANCE
2
• THE PRIMARY COVER EXCLUDES WATERPROOFING OF THE
BUILDING ENVELOPE, HOWEVER, THIS DOES NOT EXCLUDE
DAMAGE TO THE STRUCTURE AS A CONSEQUENCE OF FAULTY
WEATHER PROOFING;
• INSURER’S CONSULTANTS MUST BE GIVEN ACCESS TO SITE
THROUGHOUT THE CONSTRUCTION PERIOD;
• AFTER PRACTICAL COMPLETION A FURTHER INSPECTION OF
THE ASPECTS THAT REQUIRED RECTIFICATION OR
ATTENTION, ONCE SATISFACTORY COMPLETION HAS
OCCURRED, BUILDING DEFECTS COVER CAN BE CONFIRMED;
• COVER GENERALLY EXCLUDES FIRE AND ALLIED PERILS,
DAMAGE DUE TO ALTERATIONS, MODIFICATIONS OR
EXTENSIONS INADEQUATE MAINTENANCE OR WHERE THE
DESIGN LOAD HAS BEEN EXCEEDED;
• THIS COVER DOES NOT TAKE PRECEDENCE TO THE
MAINTENANCE COVER AFFORDED BY THE CONSTRUCTION
POLICY.
CONSEQUENTIAL LOSS
DUE TO CONSTRUCTION ACCIDENTS
• THERE ARE A VARIETY OF CONSEQUENTIAL LOSS COVERS
THAT MAY BE TRIGGERED BY CONSTRUCTION RISKS, BOTH
THE EMPLOYER AND THE CONTRACTOR CAN BE EXPOSED TO
LOSSES AS A RESULT OF CONSTRUCTION ACCIDENTS;
• THE COVERS ENVISAGED ARE:
–
–
–
–
INCREASED COST OF WORKING – CONTRACTORS,
ADVANCE LOSS OF RENT – EMPLOYERS AND DEVELOPERS,
ADVANCE LOSS OF INTEREST – EMPLOYERS AND DEVELOPERS,
ADVANCE PROFITS/DELAYED START UP.- EMPLOYERS
• WE WILL EXAMINE EACH OF THESE INDIVIDUALLY
INCREASED COST OF WORKING
• ACCIDENTS ON SITE CAN CAUSE DELAYS IN COMPLETION
OR EVEN IN A WORST CASE SCENARIO THE TOTAL LOSS OF
CONSTRUCTED WORKS, SAY BY FIRE OR FLOOD ETC.
ACCORDINGLY THE CONTRACTOR MAY BE AT A LOSS DUE TO
HAVING TO CONTINUE TO REMUNERATE WORKERS AND PAY
CONTINUING HIRE CHARGES FOR PLANT AND MACHINERY
DAMAGED IN THE EVENT. THE CONTRACTOR WILL AS A
RESULT BE OUT OF POCKET AS HE WILL NOT BE ABLE TO
RECOUP THE INCREASED COSTS. COVER FOR SUCH LOSSES
IS AVAILABLE IN THE MARKET BUT SUBJECT TO A TIME
EXCLUSION AND INDEMNITY PERIOD, THE PREMIUM CHARGE
IS NOT CHEAP.
ADVANCE LOSS OF RENT OR INTEREST
• THIS COVER IS MAINLY DIRECTED AT EMPLOYERS, BEING
PROPERTY OWNERS OR DEVELOPERS, WHO MAY SUFFER RENT
LOSSES DUE TO DELAYED OR NON COMPLETION OF THE
WORKS. PART OF THE FEASABILITY STUDY BEFORE
ENTERING INTO ANY CONTRACT FOR CONSTRUCTION, OR
EVEN PURCHASING THE LAND, THE EMPLOYER EVALUATES
THE OVERALL COST TO HIM AND AT WHAT POINT HE WILL
START TO RECEIVE EARNINGS FROM HIS INVESTMENT. IT
MUST BE REMEMBERED THAT HE IS EITHER USING HIS
OWNN FINANCE OR HE IS TAKING OUT LOANS TO COVER
THE COST OF DEVELOPMENT IN EITHER CASE HE IS
EITHER LOSING INTEREST ON VESTED CAPITAL OR HE IS
PAYING INTEREST ON THE LOAN. THE CONSTRUCTION
PERIOD IS THUS VITAL TO HIS POTENTIAL COST
ADVANCE PROFITS OR DELAYED
START-UP - 1
• THIS COVER IS ALLIGNED MAINLY TO PRODUCTION
PROCESSES. INVESTORS WHO PUT MONEY INTO A VENTURE
DO SO FOR THE PURPOSE OF INCREASING THEIR WEALTH
THROUGH SUCH INVESTMENT, ACCORDINGLY, THEY EXPECT
THE EARNINGS OF THE VENTURE TO COMMENCE ON
SCHEDULE;
• THE VENTURE MAY BE AN INDUSTRIAL MANUFACTURING
PROCESS, MINING OR A CHEMICAL OR PETRO-CHENICAL
FACILITY;
• IRRESPECTIVE OF THE NATURE OF THE VENTURE, WHEN
THE OPERATIONS RUN LATE, THIS BRINGS ABOUT AN
UNEXPECTED LOSS TO THE INVESTOR. HAPPILY, HE CAN
INSURE AGAINST THIS EVENTUALITY UNDER AN ADVANCE
PROFITS POLICY;
• THE ADVANCE PROFITS POLICY IS ONLY TRIGGERED BY AN
INDEMNIFIABLE EVENT UNDER THE CONSTRUCTION POLICY.
ADVANCE PROFITS OR DELAYED
START-UP - 2
• THE SUM INSURED UNDER THIS POLICY IS A FIXED
AMOUNT BASED ON THE EXPECTED EARNINGS OF THE
BUSINESS DURING THE PERIOD OF INDEMNITY SAY 12
MONTHS, THE COVER IS SUBJECT TO AVERAGE.
• THERE IS, HOWEVER, A DEDUCTIBLE APPLICABLE TO THE
INDEMNITY, THIS IS A TIME EXCLUSION WHICH IS
USUALLY QUITE LENGTHY FOR COMPLEX PRODUCTION
PROCESSES AND MINING, THIS COULD EXTEND TO THREE
MONTHS, MOST STANDARD TRIED AND TESTED PROCESSES
WOULD HAVE A 1 TO 3 WEEK EXCLUSION PERIOD, BUT
NEVER LESS THAN 3 DAYS.
• SOME PROCESSES SUCH AS PETRO-CHEMICAL RISKS HAVE
AN EXCLUSION OF COVER DURING THE FIRST 7 DAYS OF
TESTING, IN OTHER WORDS ANY ACCIDENT OR FAILURE
DURING THE FIRST 7 OPERATING DAYS, WHILE COVERED
UNDER THE WORKS POLICY WOULD NOT QUALIFY FOR
INDEMNITY UNDER THE ADVANCE PROFITS POLICY.
ADVANCE PROFITS OR DELAYED
START-UP - 3
• CLEARLY, THE COVER MUST BE BASED ON A REALISTIC
COMPLETION DATE (DATE ON WHICH COMMERCIAL
PRODUCTION IS EXPECTED TO COMMENCE).
• THE CLIENT HAS AN OBLIGATION TO KEEP THE INSURER
INFORMED ON OCCURRENCES AND EVENTS THAT MAY HAPPEN
OR OCCUR THAT WOULD DELAY OR RETRACT THE
COMPLETION DATE, THUS AFFECTING THE COVER UNDER
THE POLICY. THE INSURER IS GIVEN ACCESS TO THE
CONSTRUCTION SITE AT ANY REASONABLE TIME TO ENSURE
THE WORK IS BEING UNDERTAKEN UNDER GOOD
ENGINEERING PRACTICES AND TO QUANTIFY THE
COMPLETION DATES OF INDIVIDUAL COMPONENTS AND THE
INTEGRITY OF THE PROJECT AS A WHOLE.
• THE INSURER ALSO HAS THE RIGHT TO TAKE OVER AND
CONTROL ANY REPAIR OR REPLACEMENT PROCEDURE TO
ENSURE THAT THE WORK IS UNDERTAKEN EXPEDITIOUSLY
AND TO PROPER STANDARDS OF ENGINEERING EXCELLENCE.
BONDS - 1
• CONTRACTORS ARE INVARIABLY REQUIRED TO PROVIDE
CERTAIN TYPES OF BOND OR GUARANTEE. THE PROVIDERS
OF THESE BONDS OR GUARANTEES ARE EITHER A BANK OR
INSURANCE COMPANY. THE MOST USUAL BONDS ARE:
– PERFORMANCE BONDS:
THIS IS ONE OF THE MOST
IMPORTANT BONDS GIVEN BY A CONTRACTOR, IT IS
FURNISHED BY THE CONTRACTOR BEFORE THE START OF THE
CONTRACT. ITS SOLE PURPOSE IS TO PROTECT THE
EMPLOYER AGAINST BREECH OF CONTRACT BY THE
CONTRACTOR;
– BID OR TENDER BOND: THIS BOND IS SUBMITTED BY THE
CONTRACTOR WITH HIS BID OR TENDER, THUS SHOWING THE
EMPLOYER THAT HIS BID IS REASONABLE AND IF ACCEPTED
THE CONTRACTOR WILL SIGN A CONTRACT TO PERFORM THE
WORK INCLUDING ANY BOND REQUIREMENTS. THE BOND IS
FORFEITED IN FAVOUR OF THE EMPLOYER IF THE CONTRACTOR
FAILS TO PERFORM THE WORKS SPECIFIED IN THE TENDER
POINTS TO BE AWARE OF – 1
SITE PREPARATION AND CLEARANCE
• SOUNDS QUITE INNOCUOUS DOESN’T IT???
• NOT TOO SERIOUS IF IT INVOLVES REMOVAL OF
UNDERGROWTH AND THE LIKE FOR THE MAKING OF A ROAD;
• WHAT IF THE SITE CLEARANCE EMBRACES BUILDING
DEMOLISHMENT OR MACHINERY DISMANTLING OR REMOVAL??
• SAY FOR EXAMPLE THE BUILDINGS WERE PREVIOUSLY USED
FOR THE MANUFACTURE OF CHEMICALS OR THE MACHINERY
WAS THAT OF A PETRO-CHEMICAL WORKS, HOW ABOUT A
TANK FULL OF INFLAMABLE MATERIALS, NOW THE
POSSIBILITY OF LOSS OR DAMAGE OR LIABILITY BECOMES
QUITE SERIOUS HOW ABOUT THE CONTRACTOR’S WORKERS
THEY TOO ARE AT RISK;
• SHOULD A REQUEST FOR SITE PREPARATION AND
CLEARANCE COVER BE RECEIVED, INVESTIGATE FULLY THE
EXTENT THEREOF AND UNDERSTAND THE RISKS INVOLVED.
POINTS TO BE AWARE OF – 3
HIGH RISE BUILDINGS
• THE NUMBER OF BASEMENTS – REMEMBER THE DEEPER THE
EXCAVATION THE GREATER THE RISK OF COLLAPSE AND
REMOVAL OF SUPPORT TO ADJACENT PROPERTY;
• WHAT SUPPORT WILL BE INSTALLED TO PREVENT COLLAPSE
– ASK FOR DETAILS OF THE NATURE OF TEMPORARY AND
PERMANENT SUPPORT,
• HAVE BOREHOLES BEEN SUNK TO ESTABLISH THE LEVEL OF
THE WATERTABLE AND SITE GEOLOGY ASK FOR COPIES OF
REPORTS
– WHAT IS THE ANTICIPATED VOLUME OF WATER INFLOW?
– INVESTIGATE THE PUMPING ARRANGEMENTS TO HANDLE THE
NORMAL INGRESS OF WATER AND STANDBY PUMPING ARRANGEM,
– ENQUIRE ABOUT PUMPING ARRANGEMENTS TO HANDLE
INCREASED FLOW OF WATER FOLLOWING STORM OR DUE TO
INCREASED FLOW OF UNDERGROUND WATER;
• ENQUIRE ABOUT THE SUPERSTRUCTURE WILL THIS BE
STEEL FRAMED OR REINFORCED CONCRETE OR A
COMBINATION OF BOTH;
• REMEMBER, THE GREATER THE NUMBER OF FLOORS THE
GREATER THE RISKS, ESPECIALLY THIRD PARTY LIABILIT
POINTS TO BE AWARE OF – 2
ROAD CONSTRUCTION
• WHAT IS THE LENGTH OF THE ROAD
• WILL THE ROAD BE SINGLE OR DOUBLE CARRIAGEWAY
• OBTAIN DETAILS OF THE LAYERWORKS BASE COURSE PLUS ??
LAYERS
• AT WHAT INTERVALS WILL THE LAYERWORKS BE SEALED
(REMEMBERING ONE BITUMEN TANKER CAN SEAL 1KM OF DOUBLE
LANE ROAD)
• WHAT IS THE NATURE OF THE TERRAIN IT WILL BE CROSSING
– IS IT GENTLY UNDULATING OR IS THE TERRAIN HILLY
– WILL THERE BE LARGE CUT AND FILL OPERATIONS
– WILL THE ROAD CROSS ANY FLOOD PLAINS
• WHAT STRUCTURES WILL BE CONSTRUCTED
– IF INVOLVING CULVERTS THE NUMBER NATURE AND SIZE
– IF BRIDGES ARE TO BE CONSTRUCTED
• WILL THESE BE CONSTRUCTED BY CONVENTIONAL METHODS OR WILL THEY
BE INCREMENTALLY LAUNCHED WILL THE BRIDGES INVOLVE INSTALLATION
OF PILES
• WILL THERE BE ANY RIVER OR OTHER WET CROSSINGS
• WHAT UNUSUAL HAZARDS MAY BE EXPECTED OR UNUSUAL
OPERATIONS
POINTS TO BE AWARE OF – 4
SHAFT SINKING
• IS THE SHAFT TO BE VERTICAL OR INCLINE;
• OBTAIN DETAILS OF THE PRE SINKING EXPLORATORY WORK
AND NATURE OF THE SHAFT COLLAR;
• REVIEW THE GEOTECHNIC REPORT;
– IDENTIFY ANY AREAS OF POOR ROCK CONDITIONS;
• REVIEW THE HYDROLOGY REPORT;
– ASK FOR DETAILS OF THE EXPECTED INGRESS OF WATER;
– ASK FOR PARTICULARS OF PUMPING ARRANGEMENTS AND
DETAILS OF ADDITIONAL PUMPS TO HANDLE AN INCREASED
FLOW;
• ENQUIRE AS TO THE DIAMETER OF THE SHAFT;
• WILL THE SINKING PROCESS BE BY CONVENTIONAL
DRILLING, BLASTING AND GRUBBING?
• WILL THE SHAFT BE LINED AND AT WHAT POINT WILL
THIS OCCUR?
• IF THERE ARE QUESTIONABLE GEOTECHNIC CONDITIONS
ARE THERE ANY PROCEDURES TO PREVENT COLLAPSE?
RISK ASSESSMENT
SOME CAUSES OF LOSS OR DAMAGE
•
•
•
•
•
•
•
•
•
•
•
•
•
•
FIRE
LIGHTNING
EXPLOSION
SUBSIDENCE LANDSLIDE COLLAPSE HEAVE
EARTHQUAKE
WATER DAMAGE
WIND
FROST AND SNOW
FALLING IMPACT OVERTURNING
ELECTRICAL OR MECHANICAL BREAKDOWN
SEASONAL CHANGE
RIOT CIVIL COMMOTION MALICIOUS DAMAGE
THEFT OR ANY ATTEMPT THEREAT
DEFECTIVE DESIGN PLAN SPECIFICATION OR SUPERVISION
RISK ASSESSMENT
SOME CAUSES OF LOSS OR DAMAGE
• SITE HUTS AND STORAGE AREAS
• These are areas where a variety of claims can
arise, such as:
– Water Damage
– Fire
– Theft
• How and why do these areas promote claims?
– Storage conditions may not be ideal for water
sensitive products such as refractory bricks
– It is not unusual for site huts to be erected in
close proximity to one another thus the spread of
fire from one hut to another etc.
– Small components and Electrical cable are a target
for thieves, especially those items that can be sold
easily.
– Even though there is a competent Storeman goods still
find their way out of the back door.
RISK ASSESSMENT
SOME CAUSES OF LOSS OR DAMAGE
• Fire break
•
•
•
Main storage area for small & sensitive items
cable drums
Steel
• Engineers’ Office Storeman’s office Drawing office
RISK ASSESSMENT
SOME CAUSES OF LOSS OR DAMAGE
no firebreak grass growing up to site huts
Site huts in close proximity
RISK ASSESSMENT
PHYSICAL HAZARDS OF CONSTRUCTION
• UNDER THIS HEADING WE ARE CONSIDERING THE HAZARDS
ASSOCIATED WITH THE CONSTRUCTION OF THE WORKS;
• CONSTRUCTION INSURANCE EMBRACES A VAST VARIETY OF
CONSTRUCTION PROJECTS. THESE INCLUDE:
– BUILDINGS, WATER TOWERS, CHIMNEY STACKS, COOLING
TOWERS, BRIDGES AND THE LIKE;
– SHAFT SINKING AND EQUIPPING, UNDERGROUND DEVELOPMENT
– ROADS, TUNNELS, AIRPORT RUNWAYS, RAILWAY LINES ETC.;
– CROSS COUNTRY AND UNDER SEA PIPELINES, DAMS, HARBOUR
WORKS, RESERVOIRS, HYDRO POWER TUNNELS AND VENTS;
– MAJOR AND MINOR ELECTRICAL AND MECHANICAL WORKS
COMPRISING:
• PETROCHEMICAL WORKS, POWER STATIONS, ENGINEERING MACHINE
SHOPS, STEEL SMELTERS AND MILLS, ALUMINIUM SMELTERS ETC
• SUGAR MILLS, FLOUR MILLING, FROZEN FOODS & OTHER FOOD
INDUSTRY
• RADIO & TELEVISION STATIONS, AIRPORT FLIGHT CONTROL
SYSTEMS
RISK ASSESSMENT
PHYSICAL HAZARDS OF CONSTRUCTION
METHODS
• SOME OF THE MAIN FACTORS AFFECTING RISK, PRIMARILY
IN CIVIL AND STRUCTURAL CONSTRUCTION, REVOLVE
AROUND SOIL CONDITIONS, HYDROLOGY, ELEMENTAL
PERILS AND, OF COURSE, THE QUALITY AND EXPERTISE
OF AVAILABLE LABOUR;
• TURNING NOW TO ELECTRICAL AND MECHANICAL WORKS,
PROBABLY THE GREATEST RISKS OCCUR IN HANDLING,
ASSEMBLY, INCORRECT ELECTRICAL CONNECTIONS, FAULTY
MATERIALS, FAULTY WORKMANSHIP OR DUE TO STORM
(WIND);
• FIRE, LIGHTNING, CARELESSNESS, NEGLIGENCE AND LACK
OF SKILL AFFECT ALL MANNER OF CONTRACT WORKS.
• MANY OF THE RISKS ARE NOT CONFINED TO DAMAGE TO
THE CONTRACT WORKS BUT CAN ALSO HAVE THIRD PARTY
CONNOTATIONS.
RISK ASSESSMENT
SOME HAZARDOUS OPERATIONS
• EXCAVATION AND/OR DE-WATERING – COLLAPSE OF SIDES,
AFFECTING THE SITE AND POSSIBLY REMOVING SUPPORT
TO ADJACENT PROPERTY – DAMAGE TO WORKS & LIABILITY
• WELDING - INAPPROPRIATELY CODED WELDER – EXPLOSION
AND/OR FIRE – DAMAGE TO WORKS & POSSIBLY INJURY OR
DEATH TO MEMBERS OF THE LABOUR FORCE
• INAPPROPRIATE DESIGN OF TEMPORARY AND PERMANENT
SUPPORT – AFFECTING WORKS AND POSSIBLY ADJACENT
PROPERTY
• POURING CONCRETE AT INAPPROPRIATE TIMES – CONCRETE
BEING AFFECTED BY FROST OR HIGH TEMPERATURE
• CRANES NOT BEING SITED ON FIRM GROUND – CRANE &
WORKS
• LACK OF CONTROL WHEN HOISTING PROPERTY BY CRANE –
LIABILITY AND WORKS
RISK ASSESSMENT
SOME HAZARDOUS OPERATIONS
• PACKING MATERIALS NOT REMOVED FROM THE STRUCTURE
• SPONTANEOUS COMBUSTION OR A CARELESSLY DISCARDED
CIGARETTE CAN START A FIRE;
• REMEMBER THAT STAIRWELLS AND LIFT SHAFTS CAN
CREATE A CHIMNEY EFFECT THUS SPREADING FIRE;
• IF PVC CLAD ELECTRICAL CABLES HAVE BEEN INSTALLED,
THE WATER FROM THE FIREFIGHTING CAN CARRY THE ACID
FROM THE BURNING CABLES INTO THE CONCRETE AND SO
RENDERING THE CONCRETE POROUS AND INEFFECTIVE AS
THE CEMENT HAS BEEN DISSOLVED;
• CONSTRUCTION NEAR TO WATERWAYS CAN RESULT IN FLOOD
OR SUBSIDENCE OR CLAY CONDITIONS SO REDUCING THE
SUPPORTIVE CAPACITY OF THE GROUND
RISK ASSESSMENT
THE CONSTRUCTION PROCESS
• INSECURE FOUNDATIONS, IF THE FOUNDATIONS START
SUBSIDING THE SUPPORT OF THE BUILDING BECOMES
COMPROMISED AND OVER A PERIOD OF TIME THE BUILDING
WILL SHOW CRACKS AND IF NOT ATTENDED TO, COLLAPSE
CAN OCCUR – STELLENBOSCH BUSINESS SCHOOL;
• WORK IN HAZARDOUS AREAS SUCH AS CHEMICAL PLANTS
CAN RESULT IN FIRE EXPLOSION OR VAPOUR CLOUD IF
WORK IS NOT CARRIED OUT IN A MANNER TO AVOID THIS
TYPE OF LOSS. (THE FLIXBOROUGH, UK DISASTER);
• FROM THE FOREGOING IT WILL BE APPRECIATED THAT THE
HAZARDS ARE NUMEROUS AND CAN OCCUR AT ANY TIME.
CAUSES OF LOSS OR DAMAGE
• FIRE – GENERALLY DUE TO ACTS OF MAN, SMOKING, WELDING,
INFLAMABLE MATERIALS, LACK OF FIREFIGHTING EQUIPMENT
LEFT ENERGISED WHEN UNATTENDED - HEATERS;
• EXPLOSION – BLASTING, TESTING OF MACHINERY, ROGUE PIPES
OR TUBES;
• SUBSIDENCE, HEAVE, LANDSLIP, COLLAPSE, VIBRATION OR
UNDERMINING – GENERALLY RELATED TO GEOLOGICAL OR SOIL
CONDITIONS, USUALLY FOLLOWING EXCAVATIONS;
• EARTHQUAKE – THERE ARE MANY KNOWN EARTHQUAKE AREAS
AROUND THE WORLD, BUT THE IMPORTANT AREA IN SOUTH AFRICA
IS THAT OF THE WESTERN CAPE;
• WATER DAMAGE – FLOOD, STORM, WATER COURSES, UNDERGROUND
WATER, ROADS AND PIPE/CABLE TRENCHES BECOME WATERCOURSES
CAUSES OF LOSS OR DAMAGE
• WIND – THE POTENTIAL FOR WIND DAMAGE IN SOUTH
AFRICA CAN BE MANAGED, UNLIKE USA, CHINA, AND MANY
OTHER AREAS THROUGHOUT THE WORLD, OUR MOST
HAZARDOUS AREAS ARE ADJACENT TO THE COAST;
• FROST AND SNOW – FROST IS PARTICULARLY DANGEROUS
TO FRESHLY LAID CONCRETE, IF PROPER PRECAUTIONS
ARE TAKE THE RISKS ARE MINIMISED, FROST AND SNOW
ARE PARTICULARLY HAZARDOUS TO MACADEMISED ROAD
WORKS ESPECIALLY THE SEALING LAYER IF SNOW OR
FROST OCCURS SOON AFTER THE TAR SEALANT HAS BEEN
APPLIED – CRUMBLING OF THE TAR WOULD IN ALL
PROBABILITY BE THE RESULT; (OR TAMBO 2ND RUNWAY)
• BREAKDOWN DURING TESTING – USUALLY DUE TO INHERENT
DEFECT, FAULTY ERECTION OR INCORRECT WIRING;
CAUSES OF LOSS OR DAMAGE
• FALLING IMPACT OVERTURNING OR OVERBALANCING – THESE
PERILS ARE PARTICULARLY HAZARDOUS IN THE HANDLING OF
MACHINERY AND COMPONENTS THEREOF OR STRUCTURAL
STEELWORK. MOST DAMAGE OCCURS WHEN USING CRANE PLANT;
(PIPES BEING HOISTED AT JHB SUN & TOWERS)
• CRIME RISKS – THEFT AND ATTEMPTED THEFT CAN AND DO OCCUR
ON CONTRACT SITES AS FOR ANY OTHER LOCATION, SITE
SECURITY NEEDS TO BE OF THE HIGHEST INTEGRITY COLLUSION
BETWEEN SITE SUB-CONTRACTORS EMPLOYEES IF NOT CONTROLLED
CAN LEAD TO LOSSES ANOTHER PROBLEM IS THAT OF LOCAL
CIVICS, ESPECIALLY WHEN THE CONTRACT WORKS SPREADS OVER
A LARGE AREA, SAY A ROAD OR RDP HOUSING AND OTHER
FACILITIES;((WHEELBARROWS – BRASS FITTINGS(SUGAR MILL) –
CIVICS))
• DESIGN PLAN AND SPECIFICATION – DESIGN SPECIFICATION
REQUIRING PARTICULAR CONSTRUCTION TECHNIQUES WHERE THE
CONSTRUCTION METHODOLOGY MAY BE UNKNOWN TO THE
CONTRACTOR THUS REULTING IN DAMAGE, SIMILAR
CONSIDERATIONS APPLY TO PROTOTYPES EXAMPLE SIGNALLING
CABLE SISHEN SALDAHNA RAIL LINE
CAUSES OF LOSS OR DAMAGE
• It can take months from the date of acquiring a
green fields site until construction work
commences. In many cases, existing buildings on
the site have to be demolished before construction
work can begin. The construction period for major
civil engineering projects, such as freeways and
dams, is often between three and five years,
whereas the construction and commissioning of a
power station can take up to 8/10 years. The
following paragraphs outline briefly the nature of
each process, each of which has its own potential
hazards
CAUSES OF LOSS OR DAMAGE
DEMOLITION
• This can take many forms, depending on the nature of the
building, its location, and proximity to busy
thoroughfares. In some cases, some part of the structure
may be left standing, to be incorporated into the new
works. This may need special consideration by the
contract works underwriter, in view of the usual
exclusion of existing structures. Surrey House, M & F
Centre – Facades (National Monuments)
• If the location is remote, the job may be done quickly
by the use of explosives. The operatives must be
experienced in the use of explosives, and all safety
regulations must be complied with.
• In most cases, the use of explosives, or even mechanical
means, is not practical or safe because of the presence
of the general public. If the site is in a derelict
area, a crane jib and ball can be used to pull down
walls, or an earth moving machine with hawser attached
can be employed.
CAUSES OF LOSS OR DAMAGE
DEMOLITION CONTINUED
• In recent years, it has become fairly common
practice to demolish high rise buildings using the
implosion method. Highly specialised skills are
required, and underwriters will tend to focus on
the track record of the demolition contractors,
and any deviation from the techniques successfully
used by them in the past. As this type of
operation normally takes place in heavily built-up
areas, the contractor needs to obtain the full cooperation of the authorities and traffic police to
warn and safeguard the occupants of surrounding
buildings and the general public. In addition,
steps are generally necessary to provide physical
protections for the buildings closest to the
contract site. (Matla Chimney Stack)
CAUSES OF LOSS OR DAMAGE
DEMOLITION CONTINUED
• Underwriters need to protect their interests by
employing a suitably qualified structural engineer
to evaluate the methods and techniques to be used
by the demolition contractor. Such engineers, in
conjunction with the demolition contractor’s
engineer, should undertake a survey of buildings
in the explosion zone of the demolition to
establish existing cracks and other defects,
photographs should be taken as evidence.
Protective covers should be placed over air
conditioning intakes of adjacent buildings (within
the dust zone). (Customs House, Johannesburg)
CAUSES OF LOSS OR DAMAGE
GROUND WORKS
• Ground work differs from all other construction work in
that very little is constructed. The insurer must
remember that the prime purpose of the work is the
excavation of material to form spaces and, if they are
refilled by accident, considerable expenditure may be
necessary to re-excavate the space. The work involved
may be sub-divided into:
• earth moving such as cut and fill operations or fill
only operations;
• mass excavation can form part of a construction
contract, or be let as a separate contract, or as a main
sub-contract where the sub-contractor may or may not be
required to arrange his own insurance.
• trenching or water diversionary works including
canalising of waterways;
• tunnelling and shaft sinking which may embrace
underground development works);
• piling.
• Let us look at each process separately.
CAUSES OF LOSS OR DAMAGE
EARTHMOVING
• Earth moving normally forms part of a major
project such as road building or may be the
preliminary to the construction of a large
industrial complex or power plant. Earth moving
will also form a large part of the work involved
in the construction of an earth embankment dam.
• In most African countries, the major risk in this
type of work is the removal of construction
material by heavy rainfall or flooding,
particularly in the case of large road projects,
where the logistics and cost of replacing the
material can be time consuming and costly and
involve considerable labour and plant usage.
– NATAL NORTH COAST HOUSING TERRACES WASHED AWAY
• The cost of salvaging and repairing large and
expensive items of plant that have been flooded
can also result in substantial claims, usually
under a plant insurance policy. Koeberg scrapers
CAUSES OF LOSS OR DAMAGE
MASS EXCAVATION
• Mass excavation is normally associated with foundation
works or the construction of basements utilising methods
(including dewatering) already described. In all cases,
except shallow excavations where the soil conditions
allow the use of a reasonably unsupported batter
(slope), some support to the sides of the excavation
will be necessary. Concrete diaphragm wall constructions
in a bentonite slurry, or walls of close concrete piling
constructed before excavation begins should be self
supporting. In the case of sheet steel pile cofferdams,
within which excavation is to take place, there is
always the risk of some instability. This may be caused
by not driving the piling to a sufficient depth so that
the toe is uncovered during excavation, by the flow of
ground water scouring beneath the toe, or by ground or
ground water pressure where no walling beams and cross
strutting have been employed in a single skin cofferdam.
REMOVAL OF SUPPORT
•
IF LATERAL (SIDEWAYS) SUPPORT IS REMOVED, THE BUILDING WILL SLIDE INTO
EXCAVATION, HOWEVER, IF VERTICAL SUPPORT IS REMOVED THEN THE BUILDING
WILL COLLAPSE INTO THE EXCAVATION.
•
•
•
•
•
•
•
•
•
•
•
•
REMOVAL OF
LATERAL SUPPORT
GROUND AND BUILDING WILL
COLLAPSE OR SLIDE
EXCAVATION
REMOVAL OF
VERTICAL SUPPORT
GROUND WILL COLLAPSE
INTO EXCAVATION
WITH BUILDING
THUS WE SHOULD TALK ABOUT “REMOVAL OF SUPPORT” AND NOT ‘REMOVAL OF LATERAL SUPPORT’
CAUSES OF LOSS OR DAMAGE
MASS EXCAVATION
• Whatever the method of supporting the sides of the
excavation, however, there is always the risk of
inundation due to heavy rain or floodwater, or the
complete breakdown of the dewatering pumps. Deep
excavations may require complex internal strutting
and other support work resulting in a considerable
restriction of the operational area. As a
consequence, there is a distinct possibility of
damage to these temporary works arising from the
use of constructional plant or during further
excavation. Such damage could be costly to repair
by reason of additional expense in the avoidance
of further damage in the course of restoration or
by the debris-removal operations being extensive.
A careful assessment should be made of the total
value of the constructional plant which may be in
use within the excavation at any one time.
LUDERITZ HARBOUR – WAVE SWELLS +5M DESIGNED FOR
SWELLS OF -3M SHEET PILES LOOSENED AND COLLAPSED
CAUSES OF LOSS OR DAMAGE
TRENCHING
• As with mass excavation, the main hazards with
trenching are collapse of the sides or inundation
of the trench. Frequently, trench collapses are
caused by the complete absence of shoring and
strutting to the trench sides because of the firm
cohesive nature of the soil in which the trench is
excavated. However, these soils are liable in
abnormal weather conditions to become unstable and
collapse. Trenches may also become filled with
water, snow, sand, dust, mud and other detritus
requiring careful re-excavation or dewatering.
• In view of the seriousness of the hazard in such
work, the insurers may wish to impose a warranty
as to the maximum length of trench exposed at
anyone time. LAW REQUIRES TRENCH +1M TOBE BRACED
TRENCHES FOR PIPES OR CABLES
• When trenches are excavated during or near to the
Rainy season it is recommended that the trench
sides are shored up or supported to prevent
collapse
SHORING
»
SHAFT SINKING
SHEAVE WHEELS
KIBBLE WINDER
DOUBLE DRUM
WINDER FOR STAGE
HEADGEAR
SHAFT COLLAR
SHAFT
SHAFT LINING
GRAB FOR
LOADING
KIBBLE
MULTI DECK SINKING STAGE
KIBBLE FOR REMOVING WASTE ROCK
CAUSES OF LOSS OR DAMAGE
SHAFT SINKING
•
Trial bore holes along the route will only give a partial
indication of the hazards to be met. More accurate hydrology
and geological information will be gleaned by radial drilling
(probing ahead of the working face), thus identifying the exact
nature of ground conditions and expected water conditions
before driving the next stage of the excavation. Although there
are always inherent risks in the use of explosives and working
below ground level, the results of any serious difficulties are
likely to be more expensive to the contractor in terms of delay
and remedial works than to the insurer in terms of a claim. The
insurer will, however, need to consider such delay if his
policy should contain a consequential loss section (advance
profits or delayed start-up) The presence of ground water or
water bearing strata may be dealt with either by the method of
freezing the surrounding areas using refrigeration pipes, or by
curtain grouting in advance of tunnelling operations Curtain
grouting, if effectively carried out, has the advantage of
being a permanent protection, whereas any breakdown in the
refrigeration process could result in the flooding of the
tunnel. It is normal for the tunnel lining to be constructed as
the tunnelling proceeds and there is always the possibility of
damage to this lining if inadvertently too large an explosive
charge is used. DU TOIT’S KLOOF TUNNEL – MUD RUSH – FREEZING
MUD TO CONTINUE EXCAVATION – NO CLAIM PRINCIPAL’S COST
CAUSES OF LOSS OR DAMAGE
SHAFT SINKING
• Shaft-sinking is generally associated with mining
operations, which, because of the vast depths to
which they now mine mainly gold (up to and in
excess of 3 kilometres, there are now plans to
sink shafts to 4 kilometres) requiring highly
specialised skills. The development of a mine can
include vertical and incline shafts as well as
horizontal and incline tunnels. These shafts are
generally sunk from the surface, however because
of the great depths to which mining operations are
now carried out it is usually more advisable to
develop sub-vertical or sub-incline shafts at a
point considerably below ground level to minimise
the drop from surface to the shaft bottom, thus
eliminating stretching the rope and causing
bounce.
CAUSES OF LOSS OR DAMAGE
SHAFT SINKING
• Shafts are not only excavated by drilling,
blasting and grubbing but can also be excavated by
raise-boring, which also has its dangers.
Experience has shown that the most effective size
of a raise-bore is 6 metres (diameter) or less.
This type of operation requires very specific
geologic investigation as well as hydrology
identification as the work will be undertaken in
virgin ground with little or no knowledge of the
ground conditions.
CAUSES OF LOSS OR DAMAGE
SHAFT SINKING CONTINUED
• There are certain terms and exceptions usual to
this type of risk due to the nature of the
unknowns of the geology and hydrology of the area.
For example, the Western area of Gauteng is mainly
a dolomite area, which acts as a sponge full of
water due to all the voids, cracks and fissures.
It is quite amazing when boring in to this rock as
to the amount of water that can flow. Accordingly,
the underwriter must be aware of the risks to
limit or exclude if he is to write risks in this
area. In a like manner there are many other areas
in South Africa that have peculiar rock strata
that need to be addressed, the risks become more
extensive when underwriters expand their horizons
into Africa, where the geological and hydrology
conditions are unknown.
• SOUTH DEEP SHAFT FILLED TO ABOUT 250/300M IN LESS
THAN AN HOUR. GROUTING & FITTING AND REMOVING PLUG
CAUSES OF LOSS OR DAMAGE
SHAFT SINKING CONTINUED
• The usual conditions to be included in insurance
policies covering shaft sinking are:
• (a) a requirement for radial drilling (probing)
ahead of the working face;
• (b) excluding the pumping of water or damage due
to the quantity of water in-flow exceeding that
which was established during investigations by
test-boring in the area of the excavation;
• (c) the cost associated with fitting and removing
a concrete plug to stem the flow or ingress of
water into the excavation works; (South Deep
Shaft)
• (d) to exclude the cost of restoring the designed
diameter (neat line) of the shaft due to overbreak
(a condition caused by excessive use of explosives
or inappropriate drilling of blast holes);
• (e) restoring collapse exceeding 1 or more metres
(at the discretion of the underwriter) from the
tangent of the neat lines of the excavation.
CAUSES OF LOSS OR DAMAGE
SHAFT SINKING CONTINUED
• It is usual during shaft sinking for
unstable rock areas to be reinforced by
rock bolts or cable rock ties, sometimes
steel mesh is fixed to the bolts or ties,
which is then gunited to establish a firm
surface, nevertheless, collapses still
occur. The cost of reinstating the
collapsed material can be fairly expensive
and underwriters may wish to limit their
financial exposure. Accordingly, it is not
unusual for an exclusion to be included in
the policy limiting the cost of
reinstating the collapsed material to the
amount of fill required to reinstate the
length of the rock bolt or rock tie.
CAUSES OF LOSS OR DAMAGE
SHAFT SINKING CONTINUED
• Shaft sinking is a highly specialised
activity and the underwriter who thinks he
has the competency to know it all is
fooling no one but himself. It is
imperative, if one wishes to participate
in shaft sinking Insurance, that the
underwriter employs an experienced mining
consultant to evaluate geotechnical and
hydrology investigation reports and then
the excavation programme and methodology
of work proposals. ORIGINAL POSITION OF
SOUTH DEEP SHAFT – COLLAPSE AND RESITING
CAUSES OF LOSS OR DAMAGE
SHAFT SINKING CONTINUED
• A tunneling project basically involves the
creation of a self-supporting or artificially
supported space or void within a section of a
ground mass, which prior to excavation was in a
stabilised state of local equilibrium. The
stresses and pressures disturbed by the excavation
will be transferred to the tunnel surfaces. If
these stresses or pressures are not effectively
relieved or checked, it is inevitable that there
will be problems for the contractor and
consequently losses for the insurer.
• Exposure to air, and possibly water, may initiate
chemical and other weathering processes not
previously present, which lining, grouting and
other work must take into account.
RISK ASSESSMENT
SHAFT SINKING HAZARDS - 1
• Although Shaft Sinking has been practiced
for more than 100 years, despite
considerable development of scientifically
based methods of site investigation and
design, it remains substantially an art.
The success of any shaft sinking project
will depend largely upon the accuracy with
which the site investigations can predict
ground conditions, the adequacy of the
consulting engineer's planning and design
to meet the actual conditions, and the
preparedness and ability of the contractor
to deal with the hazards encountered.
RISK ASSESSMENT
SHAFT SINKING HAZARDS - 2
• The prediction of ground conditions is
based on careful geological mapping from
the surface, and subsurface exploration by
boreholes and, in the case of incline
shafts by excavating adits at selected
points along the shaft route carried out
during the planning of the project. Where
hazardous ground is predicted, it is now
common practice for more detailed
exploration to be carried out during
construction by probing ahead of the
tunnel face with long boreholes. The
geological features of the site are among
the most important factors in assessing
the risk.
RISK ASSESSMENT
SHAFT SINKING HAZARDS - 3
• A shaft sinking project basically involves the creation
of a self-supporting or artificially supported space or
void within a section of a ground mass, which prior to
excavation was in a stabilised state of local
equilibrium. The stresses and pressures disturbed by the
excavation will be transferred to the shaft surfaces. If
these stresses or pressures are not effectively relieved
or checked, it is inevitable that there will be problems
for the contractor and consequently losses for the
insurer.
• Exposure to air, and possibly water, may initiate
chemical and other weathering processes not previously
present, which lining, grouting and other work must take
into account. The permeability of the ground mass, the
water table and variations brought about by temporary
surface conditions should be investigated.
RISK ASSESSMENT
SHAFT SINKING HAZARDS - 4
• However, the contractor can rarely be
entirely confident as to the conditions
expected as local weathered zones, faults,
fissures, dykes, discontinuities,
aquifers, voids, made up ground and even
past mine workings can seriously upset
predictions and, with conditions very
different from those of the surrounding
rock mass, present unexpected hazards of
inundations. Especially when compressed
air is used, the risks of fire and
explosion can be very serious in all
shafts
RISK ASSESSMENT
SHAFT SINKING HAZARDS - 5
•
•
•
•
•
•
•
•
The hazards to be expected in shaft sinking are:
rockfalls and rockbursts;
collapse of tunnel sides;
inrush of water;
inrush of soil or broken rock;
fire and explosion;
heave or subsidence of ground surface.
In shaft sinking, falls are usually due to broken or
crushed rock, often associated with faults. In certain
rocks containing expansive clay minerals, enormous
pressures, particularly at great depth, can be expected
on the shaft sides causing collapse. Below the water
table, heavy flows of water and loose materials are
usually associated with faulted or broken rock or with
cavernous rock such as limestone. Explosive gases are
often found in coal-bearing shales. Toxic gases can
occur in volcanic rocks.
RISK ASSESSMENT
SHAFT SINKING HAZARDS - 6
• The difficulties of dealing with flooding are greatly
increased if the water is encountered at the
considerable depths to which many shafts are sunk.
Insurers must make appropriate enquiries about
provisions for pumping and grouting.
• The considerable vertical distances involved in this
type of shaft sinking can greatly increase the risk of
damage to constructional plant, as well as to the works.
Any equipment that may be accidentally dropped could
easily sustain and inflict considerable damage. Much
heavy equipment is used in shaft sinking, for example,
the kibbles used for removing rock to the surface may be
carrying 15 tonnes or so. With some mines, once the
initial sink and shaft collar have been completed and
the headgear structure has been built, a sophisticated
system for winding can be installed and this usually
incorporates many elaborate safety precautions.
PILED FOUNDATIONS
• PILE CAP
• WEAK GROUND
• PILES CONCRETE
• OR STEEL
• BEARING STRATUM
PILED FOUNDATIONS
• Where the maximum bearing strength of the ground
is less than the applied load, subsidence will
occur. Some means must therefore be adopted to
increase the bearing capacity of the ground and
the normal method is to use bearing piles.
• Bearing piles, as distinct from sheet piles, are
nothing more than columns under the ground
reaching down to a firm stratum or if this is too
deep, relying for their support on the friction
grip of the ground (otherwise known as friction
piles).
• The methods of piling and types of bearing pile
used are numerous, embracing a number of
proprietary systems. However, basically they may
be divided into two main types:
• Driven – steel or concrete
• Bored - concrete
PILED FOUNDATIONS
• DRIVEN PILES
• Driven piles or displacement piles as they are
sometimes known, are defined as those which
displace the ground through which they are being
driven.
• Driven steel piles take the form of steel beams (H
piles) or tubes or box sections driven into the
ground, the tubes and box sections are usually
filled with concrete.
H section Steel pile Typical box section steel pile
PILED FOUNDATIONS
• DRIVEN PILES CONTINUED
• Alternatively the piles may be made of pre-cast
concrete, often pre-stressed, suitably
strengthened to withstand the blows from the
driving hammer. Piles formed by driving pre-cast
hollow concrete sections or steel tubes, (either
extracted later or left in situ) in which concrete
is then used to make up the shaft, these are known
as “driven cast-in-situ” piles.
• Pile driving equipment consists of a piling frame,
which has the function of guiding the pile at its
correct alignment from first pitching in position
to its final penetration, a driving hammer and a
multi-drum winch for handling the hammer, lifting
a pile and also to operate the travelling, slewing
and raking gear on the rig. There are many
designs of custom-made driving rigs available.
PILED FOUNDATIONS
• DRIVEN PILES CONTINUED
• Often piles are driven by means of purpose adapted
site cranes on which are mounted “leaders”, which
are the essential parts of a piling frame
consisting of stiff steel beams usually of
channel, box or tubular section.
• BORED PILES
• These are formed by boring a hole in the ground
and, if necessary, inserting a steel lining (which
is often retracted later) to prevent the sides
from collapsing. After boring the hole, steel
reinforcement is inserted and the hole filled with
concrete
PILED FOUNDATIONS
• BORED PILES continued
• Power driven auger rotary drills are suitable for
installing bored piles in clay soils and a wide range of
machines are available. For drilling through sands,
gravels and loose rock formations, the pile boreholes
may require continuous support by means of a casing
which is driven to the required depth into the ground
and the material within the casing is removed by
grabbing or auger drilling tools.
• Small diameter piles of up to 600mm diameter requiring
continuous support by lining tubes (casing) may be bored
using simple tripod rigs. The leading tube has a
sharpened cutting edge and is driven down under the
impact of a heavy drill stem. In clays, the soil which
jams inside the tube is prised out by spade when the
cutter is raised to the surface; in ground lacking in
cohesion the cutter is provided with a flap valve to
retain excavated material which is emptied at ground
level merely by releasing the flap.
PILED FOUNDATIONS
• PILE CAPS
• The purpose of a pile cap is to spread the load
imposed upon it onto a group of piles so that, as
far as possible, the load is shared equally
between the piles. A pile cap also accommodates
deviations (within specified tolerances) from the
intended position of piles and by rigidly
connecting all the piles in one group by a massive
block of concrete, the ill-effects of one or more
less than fully effective piles are overcome by
redistributing the loads.
• A piling contractor’s work is usually confined to
the installation of the piles themselves. Cutting
them down to level and constructing pile caps is
normally undertaken by the main contractor.
PILED FOUNDATIONS
• PILE CAPS CONTINUED
• Pile caps are constructed in many shapes and
sizes, some large and spread over a number of
piles e.g. in heavy foundations for reaction
vessels in process plants or boiler and generating
equipment in power stations, and others quite
small supporting single light duty columns or
small items of machinery. The minimum number of
small diameter piles permitted on an isolated pile
cap is three; caps for single piles must be
interconnected by ground beams in two directions
and for twin piles by ground beams at right angles
to the common axis of the pair.
PILED FOUNDATIONS
• PILE CAPS CONTINUED
• Excavation work for large pile caps is often
extensive, as not only may the foundation area be
widely spread, it may also be deep with pile cutoff levels several metres below the surface. Dewatering may well be necessary and also protection
of excavation sides by timbering, trench sheeting
or sheet piling.
PILED FOUNDATIONS
• PILE TESTING
• The test used almost exclusively on sites for
checking compliance with specification
requirements is known as the maintained load (ML)
test in which the load is increased in stages to a
multiple of the working load, usually 1,5 times or
twice, and the time settlement curve is recorded
at each stage of loading and unloading. Pile
testing rigs and arrangements take several days to
set up and prepare and the test itself takes
several days to complete. Failure is relatively
rare, but where a test reveals an unsatisfactory
condition it is usually a fairly simple matter to
drive a replacement pile or piles and modify the
pile cap accordingly (such work would not normally
be considered indemnifiable under a CAR Policy)
CAUSES OF LOSS OR DAMAGE
PILING
• Piling work has already been mentioned
briefly, but it is included in the
category of ground works because some
piles are of such large diameter and depth
that they virtually become shafts or deep
excavations. Piles in this category would
be of cast-in-situ concrete.
EXCAVATION AND EARTHWORKS
• Most construction projects involve excavation and
earthworks of some description. These operations,
are usually carried out at the beginning of a
project or at the commencement of each new
construction phase within a project.
• The green line shows the ground profile before the
commencement of earthworks and the blue line shows
the required ground profile after the earthworks.
EXCAVATION AND EARTHWORKS
• BULK EARTHWORKS
• The main purpose of bulk earthworks is to alter
the shape of existing ground within the boundary
of the site. This is achieved by cutting into
higher ground and filling hollows so as to create
a new profile on site.
• The majority of projects commence with a general
shaping of the ground before foundation
excavations commence. Of course, the filled areas
will be compacted to an acceptable density. The
larger the site area the greater usually the
extent of earthworks, and with long construction
sites , e.g. roadworks, earth moving can form a
major proportion of the total project.
EXCAVATION AND EARTHWORKS
• EXCAVATIONS FOR TRENCHES AND FOUNDATIONS
• Excavation involves not only digging a hole or
trench in the ground, but also, upholding the
sides to prevent collapse. One simple method of
preventing collapse is to slope (batter) the sides
of an excavation, but this has the disadvantage of
using a larger area of ground at the top of the
hole which increases disproportionately with every
metre of depth. This would not be ideal for
foundation excavations as a neat vertical profile
is required.
CAUSES OF LOSS OR DAMAGE
FOUNDATIONS
• These are intended to carry the weight of a
building to the ground on which the building rests
in such a way as to avoid uneven settlement of the
structure. In the case of high rise buildings,
they also act as an anchor to the structure
against wind loads. The soil, foundations and
superstructure are interrelated, although insurers
sometimes consider them separately. In all
foundation work, investigation of the ground is an
essential prerequisite of sound design.
CAUSES OF LOSS OR DAMAGE
FOUNDATIONS
• Preliminary information regarding the subsoil is
mostly obtained by trial bore holes the science of
soil mechanics - enabling the nature of the soil's
strata to be known and assessment of the most
satisfactory method of construction to be made.
There are many methods available to improve soil
stability. Problems with subsequent foundation
work are sometimes encountered when patches of
unexpected material are found that had not been
revealed by the trial bores. Preliminary
information regarding the subsoil is mostly
obtained by trial bore holes the science of soil
mechanics - enabling the nature of the soil's
strata to be known and assessment of the most
satisfactory method of construction to be made.
There are many methods available to improve soil
stability. Problems with subsequent foundation
work are sometimes encountered when patches of
unexpected material are found that had not been
revealed by the trial bores.
CAUSES OF LOSS OR DAMAGE
FOUNDATIONS
• Where the load on the foundations is high, there
is a tendency for the soil beneath to be forced
downwards and outwards causing heaving on the
surface and allowing the foundations to sink. The
depth and type of the foundations should therefore
be such that the weight of the soil coupled with
the shear resistance of the soil will prevent this
from occurring. The foundations for very tall
modern buildings can be extremely elaborate and
can often be considered as a civil engineering
project within a building contract. EAST LONDON
HOTEL
CAUSES OF LOSS OR DAMAGE
FOUNDATIONS CONTINUED
• Failure of foundations have, however, been known
to occur and the cost of rectifying differential
settlement to a high rise building can be
considerable. Difficulties also arise where the
new structure is to be much higher than the
surrounding buildings because the new foundations
will go considerably below those of adjoining
properties with the consequent risk of subsidence
and cracking to third party property. Brick
buildings can usually tolerate a certain amount of
differential movement but rigid monolithic frames
or flexible frames with light stone facings are
sensitive to movement.
CAUSES OF LOSS OR DAMAGE
FOUNDATIONS CONTINUED
• Moisture changes in the ground. These may occur
naturally, for example, as a result of changes in the
climate or in the water table (the level of standing
water in the sub-soil) on reclaimed land, or they may
result from a contractor's activities, such as
dewatering or the diversion of an underground water
course. Such activities in connection with one contract
may affect water levels on neighbouring sites. As a
result, for example, clay under foundations may dry out
and shrink, or ground that supports foundations may be
washed away by diverted water. There is also a problem
when dry clay becomes moisturised and begins to swell,
this may damage foundations due to the heaving effect of
the moisturised clay.
• Insufficient compactness of the ground. Mass movement of
ground may take in areas of mining or on filled or madeup ground. STELLENBOSCH BUSINESS SCHOOL
• General movement. The upper strata of clay soils tend to
move downhill on sloping sites and landslips tend to
occur on slopes previously considered stable as a result
of work carried out on adjoining land. HOTEL BANTRY BAY
RISK ASSESSMENT
AIRPORTS
• This work is normally divided into two categories,
called land side and air side.
• Land side work includes the construction,
alteration and repair of buildings, the
installation and servicing of machinery and other
work where there is no possibility of contact with
the operation of the aircraft. This work is
assessed in the same way as general building work
at any other location. Interesting construction
method first extension international side OR Tambo
• Unusual design at some prestige locations around
the world can produce construction problems and
possibly increase hazards. Airports have also
become targets for acts of terrorism and, as a
consequence, extension works could be vulnerable
to damage.
RISK ASSESSMENT
AIRPORTS CONTINUED
• Air side work, however, can include the construction or
extension of runways and aprons, the installation of
airport lighting or Air Traffic control Systems and the
provision of fuelling facilities. The potential third
party exposure in these cases requires special
consideration.
• Owing to the increasing weight, value and passengercarrying capacity of modern jet aircraft FOR EXAMPLE THE
AIRBUS A380, the contractor is often asked to obtain a
third party policy with an exceptionally high limit of
indemnity. The premium for such cover may well be
completely disproportionate to the contract price.
• To assess the risks adequately, the site plan showing
the areas of operation and their proximity to the main
runways has to be considered in relation to the funnel
diagram, showing the maximum permitted angles and
heights for aircraft approach
RISK ASSESSMENT
AIRPORTS CONTINUED
• Airports are usually built on flat, open
ground and are therefore exposed to wind
and water damage. Runways and other
expanses of concrete are susceptible to
frost and snow damage. OR TAMBO 2ND
RUNWAY
• The risk of loss of, or damage to, the
works on an airport situated inland during
such processes as drainage, grading,
laying of aggregate and casting of
concrete for the runways may be regarded
as normal, but there may also be a high
risk of damage to expensive items of
constructional plant, such as large paving
machines and concrete batching plants.
RISK ASSESSMENT
AIRPORTS CONTINUED
• Many airports are built in coastal areas
and frequently an extension of the runway
to cope with larger and heavier aircraft
necessitates work in the sea. Examples of
this are Kai Tak Airport, Hong Kong where
the runway extension was carried out by
means of reclamation in the harbour. Such
work is subject to entirely different
perils that will be described under
Seaworks in later discussions.
• Entirely new airports constructed on
virgin sites present no unusual features
until the first runway begins operation,
when the risk may be divided into the land
side and air side categories described
above