Latest News Fri, Apr 27, 2018 8:48 AM
SU insurance is a safety net for developers and construction companies that protects parties from significant loss in circumstances where projects have suffered extensive delays.
The knock-on impact of delays can be devastating, especially where revenue streams are contingent upon the completion of the project. In these circumstances, everybody involved is affected - from contractors to suppliers, developers and back through to investors.
All of these parties lose out if progress is postponed, leading to the procurement of extended contracts to complete the
project and additional funds to cover any equipment requirements, etc. In public projects, such bridges, airports, and tunnels, stalled projects can affect multiple businesses in a wide geographic area.
In recent years, financial markets have become more cautious in funding large projects due to the uncertainties associated with every step of the construction process.
More so than in the past, delays resulting in financial loss pose more of a threat to the survival of developers. Issues can arise from an array of issues.
Changes in scope, designs, poor contractual management and planning can all cause teething problems that, if left unchecked, snowball and cripple any developments altogether.
Construction requires reliable delivery of equipment and essential materials - now, if there’s an unexpected event that affects a critical piece of machinery, then there can be disastrous implications for the project owner.
The damage can then extend to further expenditures, excessive loss of profits and revenue, financial penalties and damage to the reputation of the company heading the development.
To combat this issue, DSU coverage helps to build close links between developers and insurers to minimise and manage risk factors to hopefully pave the way for successful projects that reach completion on time.
If an event does trigger your cover, however, then the insurer will need detailed and organised scheduling of progress, deliveries, any alterations, as well as any other vital documentation. The more thorough the evidence, the easier the claim is to analyse and attribute the root causes of delay.
Project monitoring can help to combat any potential pitfalls - regularly reviewing how the project changes and tracking each setback to quantify which part of the process caused damage to the development is essential. For this to be achievable, the insured parties need to provide access every three to six months to progress reports and updates.
In taking out DSU cover, project owners benefit by gaining clarity so that they can move forward with their project, as well as receiving reimbursement for the damage event(s). Going forward, plans can be put in place to mitigate further potential losses.
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