Safety First - Insurance of Construction Projects

Courtesy - By Shujaath Ahmed Khan

Safety at work and Safe driving is beneficial

As lot of construction activity is taking place around the world (USA -America, UK -Britain, India, China, United Arab Emirates, Bahrain, Sultanate of Oman, Kuwait, Qatar, Latin America, Canada, Brazil,Malaysia, Indonesia, Spain, Australia, Newzealand, African countries, Asia, Europe, Turkey, Taiwan, Japan, Eriteria, Sudan, Egypt, Jordan, Yemen, Syria, Netherland, Switzerland, Sweden, Italy etc.). The following information will be useful to the Principals, Contractors, sub-contractors and other interested parties.

Contractors All-Risks, Erection All-Risks, Marine Insurance, Marine In-land Transit Insurance, Liability Insurance, Commercial General Insurance, Motor/Vehicle Insurance, Workmen Compensation, Property All- Risks Insurance, Plant and equipment all risks insurance,Group Life Insurance, Personal Accident Insurance, Money Insurance, Fidelity Guarantee Insurance, Engineering Insurance, Accident class, Medical Insurance, Fire Insurance, Project Insurance, Marine "A" Risk Insurance, Storage Risks, Contractors free supplies, Principals surrounding Property Insurance are some of the important insurances having exposure in any Construction Projects. Under Motor Vehicle Insurance, if the Motor vehicle is going on the road it is better to take a road risk policy. Whereas not going on road we need to have plant and equipment all risks insurance. Under Medical Insurance if the the injury is work related it is picked up by the Workmen compensation policy and if it is not work related then it will be picked up by the Medical Policy. Marine insurance can be taken in isolation or as a project Marine Insurance. If the heavy Machinery is working at site then we have to take a tools of trade extension in case of Motor Insurance Policy.

In most of the Civil Engineering or Machinery Erection Projects the Project Management faces the problem of fixing the responsibility for insuring the risks to which the project is exposed and for administering the insurance policies. The Project Manager and the Risk Manager has to assess the risks they face in the Project and shall have to make a decicion on the extent of insurance covers needed. Even when the other parties are obliged to insure various risks relating to the Project ultimately the cost will have to be borne by the Employer directly or indirectly.

2. THE EMPLOYER'S RISKS:

2.1. The Employer has the highest stake in completing the Project and hence in its insurance covers.

2.2. In most of the cases, contracts can be better dealt with by the Employer assuming the responsibility for insurance. The Employer should foresee contingencies such as insolvency of the contractor, default by the Contractors, suspension/ termination of the Contractor replacing him with another Contractor etc while providing the insurance requirements.

2.3. The factors in favour of the Employer carrying the insurable risks are:

(a) The Employer has to pay the premium either directly or indirectly (costs built in the contract price). By combining the insurance requirements of various Contractors the volume of premium will be high enough to secure better insurance terms from the market.
(b) The Employers has the highest stake in completing the project since his investment is exposed to the perils
(c) The Contractors tend to cover their exposure only
(d) Cover can be continued with the Fire Insurers for the completed sections
(e) No gaps or grey areas as in the policies procured by the Contractors
(f) Employer is protected in case of insolvency or termination of the Contractor and apponintment of another to complete the contract
(g) Employer is protected against under-insurance if the insurances are properly arranged
(h) Employer's insurance can take care of common facilities and utilities which may be used by many contractors
(i) Employer can cover the risks of price escalation and replacement escalation where as the Contractors will be unwilling to cover such escalation in price
(j) Coordination and completion of restoration works following a major loss to works carried out by different contractors will be easy if the indemnity is provided by one insurer
(k) Following major losses it may not be possible to replace a machinery with another one of the same kind due to changes in technology. Employer's policy will be able to deal with the situation better in such a contingency

(l) Employer is familiar with the local law and the import and customs law. Hence he can arrange protection needed to meet their reqirement.
(m) If the Employer purchases the materials and supplies the same to the Contractor for Erection disputes may not arise between the Marine Insurer (of the Employer) and the Construction Risk Insurer as to when the damage occurred (when the materials are not checked as soon as they land or at the site) if both risks are covered by the same insurer
(n) Administration of the insurance function will be easier and less expensive if the Employer effects policies including the interest of the Contractors and manages the risk using one centralised office for the whole project. Coordination will be easier with this type of centralised administration. This will also avoid time and effort spent on actions for recovery by different Insurers insuring different interests of the same subject matter affected.

2.4. Even if the responsibility for managing the risks is passed on to the Contractors and the Employer is named as an insured, the Employer will continue to carry the following risks:

2.4.1. MATERIAL DAMAGE AND LIABILITY:

(a) Loss, damage or liability arising out of faulty design of the works by the Engineer
(b) Loss or damage arising out of or aggrevated by the "excepted risks" such as the war, hostilities (whether war be declared or not), invasion, act of foreighn enemies, revolution, insurrection or military or usurped power,civil war, riot, commotion or disorder, ionising radiations or contaminations by radio-activity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel, radio-active toxic explosive or other hazardous properties of any explosive, nuclear assembly or nuclear component thereof, pressure waves caused by air craft or other aerial devices travelling at sonic or super sonic speeds, or any other operation of the forces of nature as an experienced contractor could not foresee, or reasonably make provision for (force majeure)
(d) Loss or damage arising out of riot, strike or civil commotion or disorder
(e) Loss or damage to the works or part of the works taken in to use or is occupied by the Employer
(f) Non disclosure or misdescription of any material fact affecting the risk or any material changes affecting the risk
(g) Loss or damage arising out of or aggrevated by wilful act or wilful negligence of the insured (Employer) or his responsible representative
(h) Loss or damage arising out of or aggrevated by cessation of work whether total or partial
(i) Loss or damge occuring after commencement of tests on the second hand machinery installed

2.4.2. MATERIAL DAMAGE SECTION:

In addition to the above risks mentioned in paragraph 2.4.1, the following risk are also to the account of the Employer even if the responsibility for insurance is passed on to the contractor:

(a) Financial, consequential and trade losses such as the loss of anticipated profits due to delayed completion of the project, additional capital to be invested due to escalationin the project cost, penalties, fines, failure to secure special priviledges from the authorities due to delays (eg. concessional customs duties available during a period), loss of the targeted market etc.
(b) Faulty design or defective material if these are supplied by the Employer
(c) Loss or damage to materials supplied by the Employer due to normal wear and tear, corrosion oxidation or other normal atmospheric conditions

2.4.3. THIRD PARTY LIABILITY:

In addition to the above risks mentioned in paragraph 2.4.1, the Employer is exposed to the following risks in case of bankruptcy or closure of the Contracting Company the following risk are also to the account of the Employer even if the responsibility for insurance is passed on to the Contractor, unless each of the following risks is adequately insured by the party directly liable for the loss under specific policies such as the Workmen Compensation Insurance Property All Risks Insurance, Aviation Liability Insurance or the Motor Vehicle Insurance.

(a) Legal liability to pay compensation for damages consequent up on accidental bodily injury to or illness of third parties not connected with the project work (whether fatal or not) and accidental loss of damage to property belonging to third parties occuring in direct connection with the erection, construction or testing on the insured project work and happening on or in the immediate vicinity of the of the site during the period of the cover
(b) Legal liability to pay similar compensation for damages to one party involved in the construction work caused by another party involved in the same contract work
(c) Liability consequent upon bodily injury to or illness of Employees or Workmen of the Principal, Contractors or any other Firm connected with the Project
(d) Liability consequent up on loss of or damage to property belonging to or held in care, custody or control of the the Principal, Contractors and any other Firm connected with the Project
(e) Liability consequent up on any accident caused by vehicles licensed for general road use or by waterborne vessel or craft
(f) Liability assumed by agreement unless such liability would have attached also in the absence of such agreement

(A) DAMAGE TO MATERIALS USED IN THE PROJECT:

Construction Projects involving Civil Engineering Works and Machinery Erection are exposed to the following risks:

1. Materials forming part of the construction work:

(a) Construction/ Erection Risks while carrying out exploratory and/ proto type testing works such as drilling of test bore holes, exploratory excavations etc

(b) Storage risks at the suppliers' and manufacturers' premises for imported and locally supplied materials which have already been sold but not delivered to the Contractor/ Principal
(c) Marine/ transit risks from the suppliers'/ manufacturers' premises to the site of erection for materials to be imported including the risks of incidental & or intermidiate storages
(d) Storages in bonded warehouses and/ or Project warehouses near the port of entry
(e) Transits to and from the fabricators premises outside the construction site (for materials procured by the Contractor/ Principal and sent for fabrication/ assembly/ further process prior to Erection at site)
(f) Risks during storage and fabrication/ assembly/ process at the intermediate fabricators premises mentioned in (d) above
(g) Off site storages and inland transit from such storage locations to the site
(h) Storage at site
(i) Storage risks of materials procured for contracted/ subcontracted work but in custody of the Principal/ Contractor waiting to be handed over to the Contractor/ Sub-Contractor
(j) Normal construction/ erection risk at site
(k) Risks due to defective material and/ or defective workmanship
(l) Risks due to faulty design
(m) Completed portion of the work handed over to the Contractor but not handed over to the Principal
(n) Completed sections taken over by the Principal but not taken in to use due to delay in completion of other sections
(o) Risks during testing of each section of the Machinery on load
(p) Integrated final testing of the complete line of Machinery on full load resulting in achievement of commercial production
(q) The period of test run on load
(r) Risks during the Period Of Maintenance
(s) Risks during the Period Of Guarantee

2. Materials used for or inconnection with the Project but not forming part of the work (temporary works not fully written of in the Project, Constructional Plant, Equipment and Machinery and Temporary Buildings such as Stores, Labour Camp etc):

(a) Risks during transit from the storage premises of the owner to the site of Erection/ Construction
(b) Risks during storage off site
(c) Transit to and from such storage location to site and back daily/ periodically
(c) Risks during storage at site.

3. Unless specifically insured a normal Contractors/ Erection All Risks Policy will indemnify the Insured the cost of rectifying or replacing the item affected to the extent insured provided the loss did not occur due to any excepted peril. Such cover is provided for items 1(g) and 1(i) above if only the total contract value is declared for insurance. Even for these the following losses and/ or costs are not covered unless specifically agreed at the inception of the policy:

(a) Architects, Surveyors and Consulting Engineers Fees to be incurred for reinstating the damaged property
(b) Riot, strike and civil commotion risks
(c) Cost of removal of debris following an indemnifiable damage to the contract work
(d) Express freight (other than air freight) for replacements/ spares following an occurrence
(e) Overtime, night work and holiday wages for repairs/ replacements following an occurrence
(f) Air freight for replacements and spare parts to be procured following an occurrence
(g) Additional customs duties for replacements/ spares to be procured following an occurrence
(h) Escalation in prices of replacements/ spares to be procured following an occurrence (escalation may be due to inflation, incresed demand, reduced supply, increased cost of production, exchange rate fluctuation, original discounts not available for replacements etc; estimation of this should be based on the replacement cost of the project following a major catastrophic loss at the end of the construction period)
(i) Escalation in the cost of the project due to the reasons stated in (h) above (limit of indemnity being the Escalated Project Value)
(j) Cost of new parts for repairing second hand machinery and equipments
(k) Loss of or damage to existing or surrounding property (not forming part of the contract work) caused by the construction work
(l) Cost of removal of debris following land slides/ erosions and the cost of repairing the erroded slopes
(m) Cost of replacement with newer/ improved model of the machine in the place of the destroyed (total loss) machine when the same model or its equivalent is not produced any more
(n) Financial losses such as the loss of expected profits to be generated caused by the delay in completion of the project on account of an indemnifiable material loss or damage
(o) Guarantee for the works following the maintenance period (5 years or 10 years guarantee for Buildings and Civil Engineering Works and additional 1 or 2 years guarantee for Machinery)
(p) Loss of or damage to the Material Handling Equipments and other Machinery when they are being used for the Construction/ Erection activity after such equipments have been installed unless such equipments are insured as "Construction Plant and Machinery" for the period they will be used for the erection work by the Contractor or the Principal. Such equipments should also be insured as part of the Contract Work (the Contract Work sum insured also should include the value of such equipments) if such equipments will be taken over by the Principal as a part of the Main Project). An example is a gantry crane installed in a production bay and used for lifting the production machinery during installation.

 (B) LIABILITY TO THIRD PARTIES ARISING OUT OF THE WORK:

Third party liability risks to which the Principal is exposed to are:

Liability for accidental bodily injury or illness and for accidental loss of or damage to property caused by

(a) The Principal or his representatives and employees to Third Parties and the Property of Third Parties not connected with the Project
(b) The Principal or his representatives and employees to other Parties engaged in the Contract Work and to their Property

Liability for accidental bodily injury or illness and for accidental loss of damage to property caused by

(a) The Contractors and other parties employed by the Principal in connection with the Construction/ Erection Work to third parties not connected with the project
(b) Any of the Contractor or the other parties employed by the Contractor in connection with the Contract Work caused to another party or another Contractor employed for the same project

Liability for loss of or damage to property in care, custody or control of the Principal

CHECKLIST FOR RISK MANAGERS OF CONSTRUCTION/ ERECTION PROJECTS:

DESIGN & CONSULT:

Insurance cover for Architects, Design Engineers and Consulting Engineers:

(a) Professional Indemnity cover to be producured by the Architects, Design Engineers and Consulting Engineers: limit of indemnity to be specified by the Principal depending on the exposure

Name of the specialist Period of cover Limit of indemnity

 (b) Personal insurances for these officials and their assistants:

Cover Period of Limit of Schedule of
required insurance indemnity items

Motor vehicle insurance
Workmen Compensation insurance
General liability insurance

Insurance covers for the employer/ principal:

(a) Contactors all risks and third party liability covers including the following extensions:

Risks to be covered: 

 Insurance covers for the contractors and the sub contractors:

(a) Marine/ inland transit cover for materials supplied
(a) Contractors all risks and third party liability covers including the following extensions
(b) Plant all risks cover
(c) Motor vehicle insurance
Cover to include:
(d) Workmen compensation insurance
(e) Medicare and personal accident covers
(f) Bonds
(g) Fire and perils covers for off site accommodation, offices, warehouse buildings etc (permanent buildings taken on lease and the contents not absorbed in the contract price)
(h) General liability cover

Booming Construction Industry in Saudi Arabia

New building under construction

The construction Industry is booming in Saudi Arabia.

The increase in the oil prices had an immense effect on all the sectors of th economy.

Apart from the Government investments there are international investors who are too willing to put their money into Saudi economy.

The construction is not restricted to domestic sector. Many new factories are coming up. The government is investing in repairing and re-building the highways. The development of industrial belts of Yanbu and Jubail along with other industrial estate development gives a positive look to the economy.

There is immense demand for Engineers and workers in the Kingdom. Lot of importing companies are getting order to provide supplies related to the construction industry.

Old buildings are being demonlished and new multi-storey buildings are being constructed

in different areas. This has given an opportunity to local as well as multinational labour force.

The over-all demand is expected to continue for another 5 years.

Benefits of Fruits

Benefits of Fruits - Good for Health

Fruits are one of the best foods on the earth.  Fruits come in different colors, tastes and textures.  They have different benefits for the human beings.  It gives instant energy for the person who is consuming the fruit.  It also satisfies the hunger.  Even some fruits are watery and they will quench the thirst. They are known as protective foods.

Fruits boost our immune system.  They can be taken any time of the day.  Some people who are allergic to foods and people with diabetes should take care before consuming large amount of foods. Fruits are usually eaten raw.  There are more benefits of eating raw fruits.  It is also consumed as Salads, Juices, Jams and some times in the form of pickles.  Some fruits are also roasted and deep fried.

Most of the fruits contain nutrients and usually rich in vitamin C.  They act as anti-oxidants.  Some of the fruits are considered as super-foods.

Fruits being considered as protective food protect our health from different diseases, it helps in maintaining a healthy body.  They are also considered as food for anti-ageing.  In terms of taste also they are excellent.   It also used in detoxification and reduction of weight.  Some people have reduced their weights by consuming fruits as a major portion of their diet.  Many fruits contain fiber and water in good quantity which helps in digestion and preventing many forms of cancer.  It is also alleviating the problems of constipation.   Due to fiber content, it helps in reduction of cholesterol, which is a major cause of heart problems.

It is always recommended to go in for seasonal fruits rather than unseasonal fruits.  The seasonal fruits are cheaper and are high in nutrients.

Benefits of Garlic

Benefits of Garlic

The Garlic, Indian name “Laissan”, is Allium Sativum, its useful ingredients and have many benefits related to health issues. If eaten raw the Garlic causes bad breath due to its smell but has numerous health benefits. It is also available in capsule form to avoid the problems of taste and smell.

For times immemorial it has been used as a cure all remedy combined with other herbs.  We have also seen the utility of Garlic in Dracula movies. Apart from this various studies have been conducted and it has been found that the Garlic consumption on regular basis is useful in preventing different types of cancers, it helps in circulation of blood (it helps in thinning of the blood), removing cholesterol and triglycerides.  Some proponents have also given it stimulant and aphrodisiac properties. 

Garlic is also having antibacterial, antiviral, and anti-fungal activity. Garlic is also beneficial in reducing Blood pressure, which is also known as Hypertension.  It benefits in the process of digestion. Many of the culinary preparations are done with the combination of Garlic and Ginger.

It has also helped some people in dealing with the issues of Acne.  It also helps in preventing the clotting of blood. Eating too much raw garlic may cause different types of problems. Using some drugs may also have problems. Few people may be allergic to Garlic.  Always better to consult the Doctor before embarking on any new regimen. Making garlic a part of diet is useful and definitely it will benefit the general health of the person. 

Benefits of Honey

Beautiful flowers aiding in honey production

Since times immemorial man is aware of the benefits of honey to the mankind. The honey provides enormous, amazing and astonishing benefits, which may be short of miraculous.

Honey is produced by the bees and they travel hundreds of kilometers to gather the nectar from the flowers.  Over a million of flowers need to be visited by the bees for honey which may be less than 1 Kg.  The cost of the honey also ranges on many variables like color, texture, area and benefits etc.  Overall the cost of honey is very reasonable. In-spite of consuming honey for over 2 decades I consider myself as an amateur as far as the selection of honey goes. Some of the major religious scriptures highlight the benefits of honey.  It is also used by the alternative medicine practitioners.

The honey is sweet and good to taste. It gives instant energy and it considered as energy booster. It is also used in many culinary delights. If we compare sugar with honey, the calories in the honey are lesser.  For weight reduction honey is better due to reduced calories.

New researches have confirmed most of the benefits of honey. It is a very good anti-oxidant, it has anti-ageing properties and some even have deduced that it has anti-cancer properties.  It is also considered as an immunity builder.  In olden times it has been used by the military personnel for application to the wounds as it helped in healing the wounds.  It has anti bacterial and anti fungal properties.  It is also used for detoxification. Much is discussed about Manuka honey and its utility and its medicinal properties.

It is soothing to the stomach and provides instant energy. I have a personal experience of having a good night’s sleep after consuming a teaspoonful of honey.  But one should be cautious while consuming honey.  The diabetics should take adequate medical advice and precautions before consuming honey.  Some people may also have allergy to honey. Certain types of people need to be generally cautious while consuming honey. It is better if adequate precautions are taken before utilizing it for health benefits. 

There are many discussions about honey and its benefits as a hibernation diet, the efficacy of which is not yet proven. Honey and its products are also considered to be useful in controlling bad breath, hair loss, sleep disorder, arthritis, acne, and yeast infection.

Some personal experiences with Honey has been as follows,

Benefits Lemon and Honey – The combination of lemon and honey was used but it did not reduce my weight but was helpful in maintaining my weight and health. 

Benefits Vinegar and Honey – In-order to reduce weight I tried vinegar and honey formula but was not successful and had to discontinue.

Benefits Honey and Cinnamon – This formula of honey and cinnamon was good and helped me in maintaining my weight but did not help in reducing the weight. However this is a good remedy for certain coughs and cold symptoms.

Benefits Honey and Milk - This is a good combination and benefits in the bowel movements and reducing acidity.

Benefits of Honey and Apple- This is supposed to reduce weight but in my experience it did not help me in reducing my weight.

Benefits of Honey as a hibernation diet – This did not help me in my fight with the bulge.

There are various studies which suggest that a combination of other herbs with honey cures arthritis, Flu etc. but one should be cautious while using any of the combination. Sometimes a person may have problem with using honey alone or with other combinations and there are certain disadvantages to certain people.

Nowadays it is difficult to get pure honey and it is better to get full information before getting into any regimen. For some honey may be beneficial and there are also certain disadvantages in honey. However it is useful when combined with milk/cinnamon/black pepper. It helps in controlling some allergies and cough due to cold or even dry cough. Honey is a good food and can also be considered as a super food. But it has its own limitation. It is not a magic cure or a magic formula. It should be used with proper precautions.