RISK MANAGEMENT

FOR CAR/EAR
BY
N. VAIDYANATHAN,

BE(MECH).,D.O.M.,M.I.E.,F.I.V.,F.I.I.I.S.L.A.,M.I.R.M(UK)
CHARTERED ENGINEER, INSURANCE LOSS ASSESSOR,
ENGINEERING AND RISK MANAGEMENT CONSULTANT
E MAIL ID: vaida17@gmail.com

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
The Benefits of successfully
implemented Risk Management
on CAR / EAR Projects are
mainly:
1. prompt detection of potential
risks
2. their mitigation

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
Risk Management makes a major
contribution to the successful
completion of Construction and
Erection Projects according to
schedule, within budget and
minimised losses

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
This involves preparation of
Check- Lists for Construction All
Risks and Erection All Risks
besides the Third Party
Liabilities, with special attention
towards the connected ALOP or
DSU covers. Insurance is a key
means to transfer risk from
Construction Industry

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
Benefits of Risk Management:
Alert site management for major
potential hazards
Suggest practical loss prevention
measures
Intimate Insured about relevant
losses and risk, based on Insurers
loss experience.
Keep reinsurers abreast of latest
project developments

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
Methodology:
PROJECT
DOCUMENTATION

RISK SURVEYS

RISK SURVEY TEAM

LOSS PREVENTION
RECOMMENDATIONS

LOSS ADJUSTOR
REPORTS

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
GENERAL CHECK LIST FOR CAR/EAR COVERS
1.GENERAL INFORMATION:

POLICY NO:
CLASS OF BUSINESS:
NAME/ADDRESS OF INSURED
ADDRESS OF THE RISK
TYPE OF RISK

DATE OF VISIT
PERSON VISITED
DOCUMENTS RECEIVED
PURPOSE OF VISIT

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
GENERAL CHECK LIST FOR CAR/EAR COVERS
2. GEENERAL RISK INFORMATION

CONSTRUCTION START DATE

CONSTRUCTION END DATE
NO OF WORK FORCE
NORMAL WORKING HOURS
NUMBER OF SHIFTS

PLANT LAYOUT
PROCESS DESCRIPTION
PROCESS FLOW SHEET
DESCRIPTION OF
SURROUNDING PROPERTY
NEIGHBOURHOOD

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
GENERAL CHECK LIST FOR CAR/EAR COVERS
3. GENERAL COVER INFORMATION

COVER DETAILS SUCH AS

CAR
EAR
MCE
ALOP/DSU
TPL

SUM INSURED
DEDUCTIBLES
FINANCIERS

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
GENERAL CHECK LIST FOR CAR/EAR COVERS
4. OFFICE BASED MEETING PROJECT PROGRESS

PROJECT OVERALL PLAN

PROJECT AT ACTUAL/VARIANCE
TOTAL FLOAT
CRITICAL PATH
DEVIATIONS FROM PLAN

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
GENERAL CHECK LIST FOR CAR/EAR COVERS
5.OFFICE BASED MEETING PROJECT
MANAGEMENT
What are main contracts/ contractors?
What is the experience level of management and
Construction personnel?
What communications exist meetings, reports
On site and off site management and Subcontractors
How changes/variations in contracts are Managed
What is safety philosophy/ permit systems
What are current incidence/accident/damage
Reporting procedures
How near misses are reported/investigated
What is the claim history

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
GENERAL CHECK LIST FOR CAR/EAR COVERS
6. OFFICE BASED MEETING LOCATION RELATED
RISKS
WHAT MEASURES ARE TAKEN TO PREPARE AND TO
MITIGATE EFFECTS OF
WIND STORM
EARTH QUAKE
FLOOD
TSUNAMI
INUNDATION
IMPACT FROM ROAD, RAIL, MARINE AND AIR

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
GENERAL CHECK LIST FOR CAR/EAR COVERS
7. OFFICE BASED MEETING CONSTRUCTION
RELATED RISKS
What were the original ground conditions?
How was the site used previously?
If so for what purposes
What actions are taken to stabilise the foundations
and to which standards
What procedures to receive equipments at site
What procedures taken to store these at site
What are equipments stored off site

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
GENERAL CHECK LIST FOR CAR/EAR COVERS
8. OFFICE BASED MEETING PROCESS
RELATED RISKS
What changes from original on layout or equipments
What design standards been used
What equipment monitoring in place at site
Is supplied equipment of proven design or mfrs
When is electric power supply planned
When is fuel become available at site
What computer control systems in place at site

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
GENERAL CHECK LIST FOR CAR/EAR COVERS
9. OFFICE BASED MEETING FIRE
RELATED RISKS
How Fuel supplies managed
What fire detection systems used
What other inflammable material at site, where how
What permits or procedures to prevent fire
What procedures for good house keeping
What permanent fire protection/fire fighting
Systems planned, when it will be operational
What are mobile/portable fire fighting equipments --operational
What fire alert/alarms planned and operational
Data on municipal fire fighting setup

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
GENERAL CHECK LIST FOR CAR/EAR COVERS
10. OFFICE BASED MEETING TESTING ETC
RELATED RISKS
What testing/commissioning procedures/reports
What loss prevention procedures and control
When will operational personnel arrive at site and
what are their qualifications/experience
What training need to be given
How and when will the hand over would occur
How will major problems identified/discussed/ and
rectified

CLAIMS MANAGEMENT FOR

CAR/EAR PROJECTS
ENGINEERING CLAIMS MANAGEMENT
SLIDES TO BE INSERTED NOW

CASE STUDIES FOR

CAR/EAR PROJECTS
RUN 2 CAR PROJECTS DAMAGES FROM INDIA

CASE STUDIES FOR CAR/EAR PROJECTS

WIND DAMAGED
OIL STORAGE
TANKS

CASE STUDIES FOR

CAR/EAR PROJECTS
AMOUNT OF LOSS
: SWISS FRANCS 620,000
CAUSE
: WIND STORM
SHORT DESCRIPTION : 2 OUT OF 14 OIL TANKS COLLAPSED
DUE TO STRONG WINDS
COMMENTS AND LOSS
PREVENTION
: THE COLLAPSE OF TANKS UNDER
CONSTRUCTION IS AN EVENT LOSS
PREVENTION. THE LOSS COULD HAVE
BEEN REDUCED UPTO 50% IF
CONSTRUCTION HAD BEEN
PROGRAMMED SUCH A WAY THAT
ONLY ONE TANK AT A TIME REACHED
THE CRITICAL HEIGHTS

CASE STUDIES FOR

CAR/EAR PROJECTS
TYPE OF INSURANCE:
DESCRIPTION OF DAMAGED ITEM:
CAUSE OF LOSS:
CLAIM AMOUNT
DESCRIPTION OF INCIDENT:

EAR
ROTOR OF GAS TURBINE
FAULTY MATERIAL/
WORKMANSHIP
UNKNOWN

A major loss occurred to existing property during a

Contract for replacing some blades of gas turbine
In order to replace a number of damaged blades, a crane
Failed, while lifting the rotor out of gas turbine chamber
The rotor, massive weight, sank to the ground, with
Resultant damages to more parts. Crane Trolley hit the
Compressor blades at compressor stage 1, Several blades
of 4 Rows were affected, straightness of rotor was doubtful

CASE STUDIES FOR

CAR/EAR PROJECTS
Inspection and repair of the rotor involved a
complete dis-Assembly of the blades in order to
allow detailed checks on the Rotor as well as on
the blades. It was necessary to send the Rotor
and the blades back to the original manufacturers
In the meantime, a new rotor including new
blades was ordered. This allowed recommissioning of the gas turbine within 2 months
of the accident.
The repaired rotor was received within 4 months,
which served as spare

CASE STUDIES FOR CAR/EAR PROJECTS

Compressor section getting damaged

by crane beam

COMPRESSOR SECTION GETTING

DAMAGED BY CRANE BEAM

COMPRESSOR BLADES --DAMAGED

TURBINE END HITTING THE GROUND

THE SCAFFOLD BROKEN SHROUD EDGE

CASE STUDIES FOR CAR/EAR/CPM PROJECTS

CASE STUDIES FOR

CAR/EAR/CPM PROJECTS
AMOUNT OF LOSS:

Swiss francs 510,000

INCIDENT

Toppling of mobile crane

CAUSE
SHORT DESCRIPTION

COMMENTS AND
LOSS PREVENTION

Outriggers were positioned on

Weak supports on filled ground
When the crane was under load
The wooden planks on which the
Outriggers were positioned sunk
Into the filled ground and the
Whole crane toppled over. The
Boom landed on a third party
Car. Crane itself badly damaged
Plant operators over confident/
Negligence in checking actual
Ground conditions/ and positioning
Of planks on the same

CASE STUDIES FOR CAR/EAR/CPM

THE OTHER VIEW

OF MOBILE CRANE
TOPPLED

THIRD PARTYS
CAR DAMAGED
BY CRANE

CASE STUDIES FOR CAR/EAR/CPM

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
CONCLUSION:
Risk Environment for Construction
Projects are drastically changing and
also make impact on CAR/EAR/ALOP
insurance and related Risk
Management needs.

RISK MANAGEMENT FOR

CAR/EAR PROJECTS
CONCLUSION: contd
The following key elements are essential for the
success of relevant risk management approach:
1. Professional setup of risk management process
2. Experienced Risk Survey team
3. Open communication between Insured and
Insurers especially in the event of any
recommendations
If the above key elements are fulfilled by both
Insured and Insurers, the relationship between
parties would improve and risk losses would get
significantly reduced. The costs and efforts for
successfully risk management are minor, compared
with potential losses, which can be avoided