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May/June 2009
Foreseeing the Unforeseen
Contractors must plan for the potential dangers behind new approaches to projects
By Mark J. Shaw, Editor-In-Chief
his issue of Constructor examines recent developments in what has become one of the industry’s murkiest four-letter words: risk. A special section focuses on insurance and how providers are dealing with new dangers, including such alliances as public-private partnerships and unseen problems in the push for sustainability.
As the green-building movement grows, insurers are forced to ask: What new and unforeseen risks are emerging in the wave of green building? What environmental issues are most likely to trip up contractors because the underlying dangers have not been properly investigated?
Environmental insurance specialist Jeff Slivka of New Day Underwriting comments on the environmental exposures of green construction. Slivka says too many contractors lack the experience to work successfully in contaminated conditions, which greatly elevates their risk profiles and may make it more difficult to find good insurance coverage overall.
Writer Bruce Buckley says many insurers are not knowledgeable about public-private partnerships, making them more difficult to achieve in a time when PPPs can be most beneficial to cash-strapped governments.
For contractors who work for government agencies, PPPs “represent a significant shift in their approach to risk,” Buckley writes. Risks typically held by a public entity are transferred to the PPP consortium and then often passed on to the contractors, who should avoid becoming ensnared in risk-shifting contracts and tying up important resources in potentially shaky deals.
Writer Angelle Bergeron’s article advises firms to look for warning signs of project interruptions, always a problem in a slumping economy. She wonders how contractors can mitigate their risks when financing goes awry. “Contractors should watch for things that may signal a problem behind the scenes,” she says, noting, “Is an owner missing a [project] meeting because he is meeting with the lender? Is the lender suddenly showing up on a project?”
The story urges contractors to pay attention to these and other warning signs and exercise their contractual rights to follow the money, thus avoiding the bad-news legal notices that arrive in the mail during a project interruption.
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