qatar construction and infrastructure_presentations digest

7/27/2019 Qatar Construction and Infrastructure_presentations Digest

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QATAR CONSTRUCTION ANDINFRASTRUCTURE

RISK MANAGEMENT FORUM9 MAY 2013

Doha, State of Qatar


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MARSH 123 May 2013

AgendaConstruction & Infrastructure Risk Management Forum

8.00 9.00 Registration & welcome coffee

9.00 9.10 Welcome Address Robert Makhoul,CEO Marsh MENA

9.10 9.40 Keynote Address Ahmed Salem Al-KuwariContracts and Projects Controls

Director, Lusail

9.40 10.20 Managing risk on major infrastructure programs Terry Krause,Vice President/Principal Program

Manager, CH2MHill

10.20 11.00 Risk allocation in construction contracts within the current

environment in Qatar

Simon Harvey,

Partner, Pinsent Masons

11.00 11.30 Coffee Break11.30 12.10 Risk, indemnity and insurance... Connecting the dots Gaurav Bhatnagar, Marsh MENA

Infrastructure Practice Leader

12.10 12.50 Professional negligence in design and supervision - what can gowrong? How far does insurance go?

Martin Stubbs,

Construction Professional Indemnity

Specialist, Marsh

13.00 14.30 Lunch (French Brasserie Restaurant, 3rd

Floor)14.30 15.10 Inherent Defects Insurance - how it works

in practice and legal requirements specific to QatarPatrick Eyer,

Senior Underwriter, Swiss Re

15.10 16.40 Panel discussion

16.40 17.00 Closing remarks Edwin Charnaud, MarshGlobal Infrastructure Practice Leader


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QATAR CONSTRUCTION & INFRASTRUCTURERISK MANAGEMENT FORUM

MANAGING RISK ON MAJORINFRASTRUCTURE PROGRAMS

Terry Krause,Vice President/Principal Program Manager,CH2MHill


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3

3

Risk Management Principles

Role of Key Participants:

Employer

Programme Manager

Developing Programme Risk Register Risk Management:

Pre-Contract Award

Post-Contract Award

Presentation Outline


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4

Risk Management PrinciplesTopics covered in this section:

Risk Management definiton

Risk Management Process

Risk Management Approach A Code of Practice

Ability to influence Risk Use of programme management to deliver major

infrastructure projects


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5

Risk Management Employers roleTopics covered in this section:

Emplyers role according to the Code of Practice

Typical Employer Issues Impacting Major

Programmes

Empolyers representative Employer bahaviour impacts PMs ability to deliver

programme increases programme risk


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6

Risk Management Programmes Manager roleTopics covered in this section:

PMs role: To manage Employer behaviour and

expectations that can negatively impact the delivery

of the programme, the PMs first and on-going tasks

are

Team chartering

Delivery Plan development

Typical contents of Risk Management Plan


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7

Developing a Programme Risk RegisterTopics covered in this section:

Critical task: Develope Risk Register

Three steps to produce Risk Register

Identify

Quantify and measure Develop and implement a Mitigation Plan

Examples of typical Risk Register and Risk Register

Scoring


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8

Risk Mitigation Pre-Award of Construction

ContractsTopics covered in this section:

Responsibility of both Emplyer and PM

Feasibility Study

Site Investigation

Preliminary Design Form of Contract


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9

Risk Mitigation Post-Award of Construction

ContractsTopics covered in this section:

Employ a competent Engineer to manage and administer

the construction contracts the PM can assume this role

Provide independent (of the contractor) Employer oversight -

this can also be provided by the PM

Continue to proactively manage risk and regularly update riskregister through to completion contractors to submit

detailed risk registers and use these to identify omissions in

programme-wide risk register


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10

Thank you

Terry L. Krause, P.E., BCEEProgramme Manager

CH2M HILL INTERNATIONAL

IDRIS Programme Management OfficeThe Public Works Authority (Ashghal)

E-Mail [email protected]


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RISK ALLOCATION IN CONSTRUCTIONCONTRACTS WITHIN THE CURRENT

ENVIRONMENT IN QATARSimon HarveyPartner, Pinsent Masons


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Introduction

Level of competition is increasing truly international

playing field

Increasing levels of sophistication on all sides Greater understanding of risk; not necessarily allocated to

party best able to manage it

ECA support key for players in BoT space Qatar is a key market: programme? Unfavourable Contract

terms?

Saudi Arabia also very demanding Contract terms

Kuwait BoT / PPP route


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13

General Observations

Conditions of contract features significant Owner bias

Slowly addressing more oppressive Contract terms

Contracts commonly awarded to low bid with no qualificationsto the form of contract

Performance security gives Owner significant leverage post

award Classic theory: risk should be allocated to the party that is best

able to manage it or mitigate its effects. If risk of the event

occurring lies within the control of the Owner or is best

managed by the Owner, the risk will be priced into the bid of the

Contractor, the cost of delivery


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14

Topics delivered during presentation

Legal perspective on Tender process

Ground conditions for EPC risk allocation

Standards of Care for Design and Construction

Retention, bonding and guarantees

LDs and Liability Caps

Disputes resolution

Arbitration issues in Qatar / QFC

Insurers view on risk allocation in EPC contracts


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15

Thank you

Simon Harvey

Partner for Pinsent Masons LLP

D: +971 4 373 9682

M: +971 50 600 4143

Ext: 419682

[email protected]

www.pinsentmasons.com www.Out-Law.com


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Combining the experience, resources and international reach

of McGrigors and Pinsent Masons

Pinsent Masons LLP is a limited liability partnership registered in England & Wales (registered number: OC333653) authorised and regulated by the

Solicitors Regulation Authority, and by the appropriate regulatory body in the other jurisdictions in which it operates. The word partner, used in relation tothe LLP, refers to a member of the LLP or an employee or consultant of the LLP or any affiliated firm who is a lawyer with equivalent standing and

qualifications. A list of the members of the LLP, and of those non-members who are designated as partners, is displayed at the LLPs registered office: 30

Crown Place, London EC2A 4ES, United Kingdom. We use Pinsent Masons to refer to Pinsent Masons LLP and affiliated entities that practise under the

name Pinsent Masons or a name that incorporates those words. Reference to Pinsent Masons is to Pinsent Masons LLP and/or one or more of thoseaffiliated entities as the context requires. Pinsent Masons LLP 2012

For a full list of our locations around the globe please visit our websites:

www.pinsentmasons.com www.Out-Law.com


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MARSH 1723 May 2013


RISK, INDEMNITY AND INSURANCE...CONNECTING THE DOTS

Gaurav BhatnagarMarsh MENA Infrastructure Practice Leader


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MARSH 1823 May 2013

Connecting the dots

Managing Risk

Risk allocation in Contract

Indemnity Insurance

What is the insurance approach ?

Procurement strategy

Articulated in contract

3D Execution = Define , Design, Deliver

Whilst indemnity principles may be well understood, insurance

provisions are seldom reviewed in detail.


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MARSH

FEED Detailed Design Transit/Construction/

Erection

Installations

Maintenance

Operation

months

$

DamageNon

Damage

Financial

$

Risk Build up / Time


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MARSH 2023 May 2013

Damage Risks

Fire, Explosion

Earthquake, Flood

Tsunami, Cyclone

Water

Subsidence

Lightning

Sandstorm

Faulty

Design/Material/Workmanship

SRCC

Theft

Accidental damage

Manpower shortage

Material shortage e.g. cement, steel

Port blockage

Supply chain management

Technology

Negligence in Design

Unforeseen ground conditions

Environmental

War or Civil War Potable water shortage

Strike

Non - Damage Risks


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MARSH 2123 May 2013

Professional LiabilitiesConstruction Risk

Insured

Risks

Increased

costs

Authorities

requirements

Changes

in scopeDefectivework

Latecompletion

Insured Risks

- CAR / EAR

- TPL

- Contractors Plant

- Marine Cargo

- Workers insurance

Voluntary

assumption of risk

- Indemnities- PI?

- Decennial Liability?

Negligence

In Reality


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MARSH 2223 May 2013

Insurance Perspective - Viewed by Project Phases

ConstructionConstruction

Risks Mostly Familiar

Issues:

Deductible mismatch

Damage to Existing

Property not considered

Sum Insured does not

include free issue

materials, owners costs

Defective Design Coverage

Limitations

Phased Handover

requirement not understood

and as a result Cover does

not cater for Items Put in

Use

OperationalTesting Commissioning

Risks Mostly

Familiar

Issues:

Damage post PAC

where root cause pre-

existing

No damage, but

inherent defect.

Extended

maintenance cover

does not match

defects liability period

Risks Mostly Familiar

Issues:

T&C coverage not fit for

purpose

Satisfaction of T&C clause

criteria not managed

Design or workmanship

issues manifest during

T&C, and after handover

Delays in Project andcontractor keen to

handover. Insurers not

keen to keep extending

construction insurance.

Conflicting interests.

Operational


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MARSH 2323 May 2013

Summary

Be clear about the cover you are actually purchasing!

Not just a tick in the box, consider the extent of actual risk transfer to insurers

A tailor made product will ultimately provide the optimum coverage and price

We design and place highly customised and unique programmes, constantly

challenging the insurance market to adapt to clients requirements

When things go wrong (losses), the quality of both the insurance product and

broker/advisory support (if a broker was involved) will be the acid test.

Thank you! Any Questions?


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MARSH

Contact

Gaurav Bhatnagar

Managing Director

Infrastructure Practice Leader

Marsh MENA

Dubai, United Arab Emirates

Mobile: +971 50 554 9621

Direct: +971 4 212 [email protected]


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QATAR CONSTRUCTION & INFRASTRUCTURE

RISK MANAGEMENT FORUM

PROFESSIONAL NEGLIGENCE IN DESIGNAND SUPERVISION - WHAT CAN GO

WRONG? HOW FAR DOES INSURANCE GO?Martin StubbsConstruction Professional Indemnity Specialist, Marsh


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MARSH 2623 May 2013

Agenda

Project Professional Indemnity Insurance

Coverage in brief

Types of cover What it does not cover

PI and Decennial Liability

Are all PI policies the same

The value of price or the price of value

Are you prepared to pay the price of

cheap cover

What can go wrong


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MARSH 2723 May 2013

Professional Indemnity (PI) Insurance - Coverage in brief

In the simplest terms a PI policy indemnifies the

construction professional (Consultant or Design andConstruct Contractor) against the cost of rectifying anegligent error or omission.

Coverage applies to the costs of rectifying defectswhether or not physical damage has occurred(ie something doesnt work as intended).


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MARSH 2823 May 2013

Professional Indemnity (PI) Insurance

Presentation highlights: Coverage in Brief: PI policies are written on a claims made basis

Coverage in Brief: retroactive coverage

Coverage in Brief: four conditions to trigger a claims made policy

Types of cover: Annual PI vs. Project PI

What does PI not cover? Comparison of PI and Decennial Liability

Many PI policies (annual and project specific) issued in the Middle East containvery restrictive terms and conditions

Why PI cover costs so much? Cheap just a tick in the box policies are veryrestrictive in their terms and conditions.

Typical exclusions: consequential losses, costs of redesign, insured undertakingphysical construction liabilities and more...


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MARSH

Thank you!

Martin Stubbs

Construction Professional

Indemnity Specialist, Marsh

Marsh Ltd.

Tower Place East

London

EC3R 5BU

T: +44 207 357 1000Email:

[email protected]

Scott Davies

FINPRO Senior Client

Executive

Marsh Middle East & North

Africa

Dubai, United Arab Emirates

T: +971 4 212 9164

[email protected]


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MARSH 3023 May 2013



INHERENT DEFECTS INSURANCE - HOW ITWORKS IN PRACTICE AND LEGAL

REQUIREMENTS SPECIFIC TO QATARPatrick EyerSenior Underwriter, Swiss Re


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Patrick Eyer | May 2013 | Doha

Corporate Solutions

3131

Examples of losses and origins of Inherent Defects

IDI Coverage and Value provided

Legal situation in Qatar

Insurance covers relating to Projects

Summary

Contents of the presentation


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Corporate Solutions

Presentation Highlights

Inherent Defects Affected parts and Responsibility Allocation

Causes of Inherent Defects

Faulty Design

Faulty Construction / Materials

Reasons for obtaining IDI cover

IDI / decennial insurance covers the cost of repairing, restoring or strengthening ofthe insured building which is damaged or threatened by an inherent structural defect.

Elements of IDI cover and essential definitions

Types of occupancies that can be covered and underwriting base

IDI cover and legal framework in Qatar

Translation into International IDI

C t S l ti


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Corporate Solutions

3333

IDI and other Insurances relating to projects

Construction period Maintenanceperiod

Practical Completion date /

Issue of certificate of approval

Inherent Defects Insurance, 10 years

Contractor All Risks (CAR) policy

Technical Inspection

Property Insurance (Fire, Explosion, Natural perils etc.), annual cover

C t S l ti


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Corporate Solutions

3434

IDI is a First Party cover to indemnify physical damage or threat of

imminent collapse resulting from a defect inherent in the structural

elements to the property insured as opposed to damage arising from any

external cause

Agreement of terms happens at the inception of construction policy

Coverage incepts at the completion of construction and upon receipt of a

certificate of approval from the technical inspection agency confirming that

the building represents a normal risk for inherent defects insurance

This is a long term policy and non cancellable. Provision has to be made

for inflation during the period. The benefits can be transferred to parties

who may have an insurable interest

Insurance provides cover even if liable designer / contractor does not existanymore.

Yet, financial stability and stable long term outlook of ID-Insurer should be

given attention, too.

Summary

Corporate Solutions

C t S l ti


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Corporate Solutions

35

Thank you

Corporate Solutions

aPatrick EyerSenior Underwriter

Swiss ReZurich, SwitzerlandDirect: +41 43 285 2198Mobile: +41 79 823 [email protected]

Corporate Solutions


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Corporate Solutions

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Legal notice

2013 Swiss Re. All rights reserved. You are not permitted to create any

modifications or derivatives of this presentation or to use it for commercial or

other public purposes without the prior written permission of Swiss Re.

Although all the information used was taken from reliable sources, Swiss Re does

not accept any responsibility for the accuracy or comprehensiveness of the

details given. All liability for the accuracy and completeness thereof or for any

damage resulting from the use of the information contained in this presentation isexpressly excluded. Under no circumstances shall Swiss Re or its Group

companies be liable for any financial and/or consequential loss relating to this

presentation.

36


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MARSH 3723 May 2013



PANEL DISCUSSIONCONTRACT DISPUTES

Edwin Charnaud (Moderator)Marsh Global Infrastructure Practice Leader

Robert MusgroveCEO, Qatar International Court and Dispute Resolution Centre

Biju VarugheseSenior Manager Procurement & Contracts, Msheireb Properties

Michelle NelsonPartner, Pinsent Masons

Todd VandenhaakVice President, Marsh Risk Consulting


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MARSH 3823 May 2013

CLOSING

REMARKSEdwin CharnaudMarsh Global InfrastructurePractice Leader

QATAR CONSTRUCTION &INFRASTRUCTURE


> Welcome Address

> Keynote Address

> Managing risk on majorinfrastructure programs?

> Risk allocation in construction

contracts within the currentenvironment in Qatar

> Coffee break

> Risk, indemnity and insurance...Connecting the dots

> Professional negligence in designand supervision - what can gowrong? How far does insurancego?

> Lunch

> Inherent Defects Insurance - howit works in practice and legalrequirements specific to Qatar

> Panel discussion ContractDisputes

>> Closing remarks


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