RISK & INSURANCE | INSIGHT


Insurance types that are difficult to obtain, such


as Professional Indemnity or DSU insurance, which is particularly important for privately financed projects, could thus be made available with less restrictions. Even forms of cover that have not been offered so


far, such as a policy that covers possible additional costs not related to material damage (Cost Overrun insurance), could be considered under the aforementioned circumstances. Parametric natural hazard covers, such as earthquake


or windstorm risk in highly exposed projects, could also become available if project insurers are involved in the risk management process and help clarify uncertainties and mitigate any major concerns.


THE WAY FORWARD In order to confirm the potential added value of involving the project insurer at an early stage, it is necessary to implement it in practice within the framework of a pilot project. Ideally, this would be a privately financed project with


a pro-active project owner in which the concept of IPD is implemented. In order to ensure a complete identification and


quantification of the project risks and to adopt the IPD professionally, the involvement of a technical consultancy experienced in project risk management is indispensable. Furthermore, a suitable project insurer must be


identified and appointed. This insurer must be prepared to contribute its experience and expertise to the project in full and to exercise the role of lead insurer in all project phases in a responsible manner. They must also be prepared to reward positive findings from the joint risk assessment with advantageous insurance conditions. In order to place the complete insurance package on


the market at a later stage, it is advisable to involve a competent insurance broker. This broker should also have well-founded


competences in project risk management and bring these into the IPD process. The feasibility of an early involvement of the project


insurer within the framework of a pilot project should be able to be provided in a timely manner. If this new


and more intensive role of the insurer in the project turns out to be beneficial for all parties involved, it could well become the standard for suitable future projects.


SUMMARY Project insurances are usually only arranged shortly before the construction contracts are awarded. A potential project insurer therefore has significantly limited opportunities to familiarize itself with the risk profile of the project in detail and across all phases of the project. This has a potentially unfavorable impact on the


scope of the insurance cover and the premium charged, because insurers have to make provisions for the high levels of uncertainty. In particular, projects where IPD is applied lend


themselves to early involvement of the project insurer. Here, the insurer has the opportunity to contribute its technical expertise and experience with previous projects to the risk assessment. If the IPD concept significantly improves the risk


profile of the project, this can also have a positive impact on the insurance conditions. The early involvement of the insurer in project risk


management should be applied promptly within the framework of a pilot project, with the aim of standardizing this for suitable project types.


AUTHORS Heiko Wannick, Principal & Senior Expert, HEIRISKO construction risk management, Munich, Germany; Richard Krammer, General Manager, GrECo Specialty


GmbH, Vienna, Austria; Philip Sander, Head of the Institute of Construction


Management, University of the Bundeswehr, Munich, Germany


ACKNOWLEDGMENTS Important elements of the article ‘The Insurers’ Role in Project Risk Management’ are part of the research project DigiPeC – Digital Performance Contracting Competence Center – which is funded by dtec.bw – the Digitalization and Technology Research Center of the Bundeswehr. dtec.bw is funded by the European Union - NextGenerationEU.


REFERENCES 1 Recommendations for Project Risk Management in Underground Construction, German


Committee for Tunnelling (DAUB), 2022


2 Joint Code of Practice for Risk Management of Tunnel Works, International Tunnelling Insurance Group (ITIG), 2006; 2nd ed 2012


3 Sander, P., Moergeli, A., and Reilly, J. (2016). Risk Management – Correlation and Dependencies for Planning, Design and Construction. ITA World Tunnel Congress, San Francisco, 2016


4 Sander, P., Becker, S.C., Friedinger, C.P., Riemann, S., Ditandy, M., and Spiegl, M. (2022). Creating Incentive Mechanisms for Integrated Project Delivery. tunnel magazine, 2022


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