Management Consulting
Aon
Full Credential Description
In the higher education sector, a significant challenge arose due to the increasing complexity of insurance arrangements for major construction projects. As construction activity is projected to rise by 13% in university building project starts in 2024, it became crucial for clients to consider their insurance options early in the planning process. The primary issue was the choice between a Contractor Controlled Insurance Programme (CCIP) and an Owner Controlled Insurance Programme (OCIP). The former could lead to potential gaps in coverage and increased costs due to overlapping insurance, while the latter offered more control and certainty over the insurance arrangements. A tailored solution was proposed through the implementation of an OCIP, which allowed the client to arrange insurance coverage in the joint names of themselves, financiers, contractors, and all subcontractors involved in the project. This approach mitigated risks associated with contractors potentially taking out insufficient coverage or going out of business, which could leave the client exposed. By taking responsibility for the insurance, the client ensured that all claims would fall under their insurance program, simplifying the claims process and providing greater certainty in the event of a loss. The benefits of this tailored solution were quantifiable. For instance, in a hypothetical scenario involving a university constructing a new hall of residence for 200 students, if a fire delayed the project by six months, the OCIP would allow the university to claim for advance loss of profits and costs associated with the delay. This coverage would enable the university to recover rental income that would have been generated had the project been completed on time. By considering insurance requirements at the earliest stages of project planning, the client could outline clear responsibilities in the tender documents, ensuring that contractors were aware of their obligations and could factor these costs into their bids. This proactive approach ultimately enhanced the protection of the contracting authority against risks associated with large construction projects.