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.
