Article Loss Prevention Safety

Loss Prevention CDM 2015

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Image Credit: Ace Work Gear, http://www.aceworkgear.com/brands/portwest-workwear

There appears a general consensus that working for a commercial competent supply chain and client, CDM2015 is reasonably straightforward to comply with. Although the changes are significant, good contractors perform similar duties that have kept them safe in the past.

A competent client will appoint a Principal Designer (PD) and Principal Contractor (PC) in sufficient time for the ground investigation to be undertaken by a contractor using sufficient resources in accordance with the regulations. Everyone knows where they stand.

In other situations, a commercial client may not fulfil their duties for making the appointments; or for providing all the information needed to safely operate the site.

In such circumstances, the contractor may elect to undertake the duties that are missing to get the work done; adopting the PD/PC roles. In effect, treating a commercial client like a domestic client. (Hyperlink to HSE http://www.hse.gov.uk/pubns/indg411.pdf)

Where a domestic client appoints only a contractor, the duties are automatically transferred if they do not exist elsewhere. Contractors may think life-of-project organisations like builders/architects/structural engineers are better suited to PD/PC duties, and this is probably true but may be out of the member’s control. Members could check whether any written agreements are in place before deciding whether to proceed. “

Contractors that do decide to take on a project in this way should recognise their additional duties (and competencies or otherwise), which can be discovered by looking at the regulations and the guidance. Some highlighted issues are presented below.

The contractor must ensure they have made the client aware of their own duties (either as commercial or domestic client), but also that they are taking on the additional roles (PD/PC) which may require extra resources. This should be done as part of the tendering process/offer of service, AND include details of when these roles will cease plus other limitations.

The contractor still needs to make wider arrangements to manage the site for the duration of the works by performing inductions, ensuring the site is secure, ensure suitable welfare arrangements are in place and generally comply fully with their part 4 duties under the regulations. They should also prepare a Construction Phase Plan (CPP) which will deal with how they intend to arrange the work and how they will manage foreseeable hazards both at and adjacent to the site.

The CPP should also identify any additional information that the contractor needs before starting work.  If the client is not able to provide that information (e.g. services location, intrusive asbestos survey, ordnance assessment, etc.) then the contractor should arrange with the client for the work to be carried out.

Where the contractor carries out design work (e.g. temporary works including perimeter fencing, arranging traffic management, ground conditions assessment and alterations, excavation support, etc.) they should ensure they follow the principle of avoid the hazard or use a suitable control measure to minimise risk.

Without clear arrangements to the contrary, there is danger an early stage contractor could be assumed to be responsible for following phases of works. It is therefore important that where a contractor only is appointed, they clearly limit their role.

The following examples show where a contractor (PD/PC) might find unexpected resources required to comply with the regulations.

  1. Obtaining service drawings & checking for unexploded ordnance
  2. Managing extra contractors
  3. Dealing with unexpected visitors
  4. Maintenance of security or welfare where damage occurs
  5. Changing investigation method due new information, unforeseen site conditions, or consequential events

It is probably the role of PD that introduces most uncertainty to the contractor because the role is generally unfamiliar to site staff. For instance, would using a borehole instead of a trial pit represent a clear-cut reduction in risk against striking a service, and is this a designer’s decision under CDM 2015?

 

If you found this article helpful, you may find the AGS Client Guide on CDM2015 useful, to download for free please click here.

 

Report Loss Prevention

Loss Prevention Working Group Report

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Hugh Mallett, Chairman LPWG writes:

The group is drafting articles and guidance on a number of issues that are important to AGS members, see below for the list of our ongoing work programme and soon to be available guidance.

General

The LPWG met once since the November Committee meeting – 22nd Jan 2015. No calls have been made to the Legal or Chemical Helplines since the last LPWG meeting.

A Griffiths & Armour publication on claims “Professional Indemnity Insurance: Lessons to be learnt” is to be made available to AGS members via the new website

LPWG generally agrees with putting some documents behind a paywall on the new AGS website. There is also support for a knowledge hub (e-learning) that could be considered as a future initiative for students.

Loss Prevention Alerts (LPAs) are still in high demand for downloading [20 LPAs downloaded >100 times between Oct and Jan].

New member has joined the  group, Nora Fung – Arup legal.

Recently Published

Newsletter

  1. Elvanite Vs Amec- Limitations of Liability
  2. BGS – Deposition of Data

LPAs

LPA 58 – Risks associated with as built drawings.
LPA 59 – The Consequences of Damage to Underground Services LPA 60 – What is meant by Supervision?

Work in Progress

  • LPAs
  • Summaries for the web site being reviewed and edited for accuracy.
  • Permission is being sought for publication of LPA 09 [Mott MacDonald case] online.
  • Contractors seeking contractual indemnities from their Sub Contractors. Ready for publication

Net Contribution Clauses: Newsletter article prepared. Authorisation to publish being sought from Griffiths & Armour.

Document on Ground Investigation Reporting (GIR/ GDR): Initial redraft prepared by J Strange – subject to further review/ comment. Now held to be consistent with revised BS5930.

Asbestos & deleterious materials: Newsletter article to be prepared [may also pick up discussion at Members Day]. Article on insurance cover re asbestos last published in 2011 to be re-published.

Collateral Warranties: Griffiths & Armour being approached to allow their Collateral Warranties – Basic Guide to be made available to AGS members. If permission is granted a short article highlighting its availability to be prepared for the Newsletter.

Expert Advisor and Expert Witness: Newsletter article being prepared. 1 of 2

Copyright Paper on copyright issues: drafted [advice to Members on copyright and on issues arising from use of reports and drawings in planning process].

PI Insurance for Contaminated Land: NEC3 contract requires insurance terms to be on an each and every claim basis. Aggregate cover only available for contaminated land (and asbestos and radioactivity). A newsletter article is being drafted.

Guide to report writing: Newsletter article drafted to advertise the guidance to AGS Members. The Guide itself was up-dated, but never published. Up-dated version to be retrieved, put on the web site and publicised in Newsletter.

Limitation period and defects liability: Article being drafted

Confidentiality and Intellectual Property Rights: issues for Staff on Secondment Loss Prevention Guidance drafted to address some of the issues arising from secondment of staff.

Signing contracts under duress: Newsletter article being prepared.

Client Guide: What Institutions, Trade Associations or other organisations might a Client expect a Geotechnical/Geoenvironmental Company and their employees to belong to? Paper in preparation.

Piling Damage to Live Railway Tunnel. Paper in preparation.

 

Article Contaminated Land Loss Prevention

ENVIRONMENTAL INSURANCE

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The AGS Contaminated Land Working Group organised a seminar in July 2001 to provide an update on the latest position of environmental insurance. Seminar presentations were provided by speakers from both insurance brokers and underwriters (Mike Patterson of Willis, Tony Lennon of ECS, Ian Evans of CERTA and Richard Davies of AIG).

Introduction

The regeneration of brownfield land has been hindered by the absence of a coherent redevelopment framework, the entrenched attitudes of some regulators and the previous availability of greenfield alternatives.

Concerns over the inherent complexity of the Contaminated Land regime and its ambiguous liability principles are causing ongoing uncertainty in the property industry. Research carried out on behalf of the RICS has demonstrated that concern about contamination is still the major barrier to brownfield land regeneration.

The main concerns tend to centre around financial uncertainties such as escalating clean up costs, the long term liability exposures and the potential impact of stigma. The risks are compounded by a perceived lack of clarity in relation to the consistent enforcement of the new regime by the local authorities (and regional Environment Agency offices) and the practical application of the risk assessment process

Notwithstanding these concerns, Government policy, new fiscal incentives and other commercial pressures are encouraging the mainstream property sector to reconsider its historic aversion to land with a previous industrial usage.

The evolution of new environmental insurance solutions over the past five years has had a significant impact on brownfield land development. New risk transfer products are being used to remove residual risk exposures and maximise financial certainty.

It is recognised that insurance should be considered in the context of a risk management strategy as indicated below:

RISK IDENTIFICATION AND EVALUATION

RISK RESPONSE

AVOID – abstain from activity or purchase
CONTROL – loss prevention / monitoring
RETENTION – retain the risk
TRANSFER – insurance, contract, warranty

This article will review the main environmental insurance products and markets as outlined in the seminar.

Environmental Risk Exposures

Most operations and business ventures are exposed to environmental risk. Practical sources of risk arise from three sources a) Operational risk – may lead to pollution at some time in the future and typically arise form sources such as industrial plant, vehicles and transportation, fuel and chemical storage or waste products b) Historical risks – relate to past activities that may have left a legacy or dormant or active pollution. c) Contractual risk – liabilities and warranties agreed in contract such as sale and purchase agreements, leases, indemnities and warranties etc.

Many organisation perceive that environmental risks are covered by their existing public liability or property damage insurance however these usually have pollution exclusion clauses and do not cover own site clean-up.

Potential consequences of these risks include own site / off-site damage and clean-up costs, business interruption, regulatory authority notices, legal costs, bodily injury and property damage.

The Players

The design and placement of an appropriate environmental insurance solution usually requires input form many parties. Policies cover potentially enormous loss scenarios and may represent significant capital outlay. It is therefore important to recognise the pitfalls and obtain objective advise.

The players potentially involved comprise:

“PLAYER” ROLE BROKERS Professional intermediaries who have access to the whole market and range of products, acts in Clients interest to obtain best solution. Not to be confused with underwriting agents or insurers eg. Willis, Aon, Marsh,

AGENTS Acts on behalf of a specific insurer offering their products and conditions eg. CERTA are agents for Allianz Cornhill insurers

INSURERS Underwrite the risk eg AIG, Allianz, ECS / XL Capital, Zurich

REINSURERS Insure the insurers eg Swiss Re LLOYDS Private and corporately funded syndicates

INSUREDS Varied but includes industry, commerce, banks / pension funds, governments etc etc

The Products

The main environmental insurance products include :

  • Historical Contamination Cover Insurance can be arranged for liabilities associated with pre-existing contamination ie not liabilities associated with current activities or future “new” pollution. Cover is typically provided for both third party damage claims (resulting from off-site migration) and statutory clean up costs. It can however be extended to cover issues such as business interruption or economic loss associated with contamination (eg rental income, loss in property values etc). Policy periods typically vary between 5 and 15 years.

Policies can be worded so that they are fully transferable and often jointly insure various parties (eg vendor, developer, acquirer and financial backers etc).

  • Remediation Cost Cap Insurance Cost cap insurance is designed to minimise the uncertainty associated with clean up projects by providing the extra funds to complete the works in the event of a cost overrun resulting from the discovery of additional contamination, failure of the remedial technology etc. It is often combined with a ‘wrap up’ cover to protect against pollution liabilities associated with the actual clean up operations and the long term effectiveness of the scheme.

  • Contractors Pollution Liability Remediation and construction operations present an on-going risk of pollution or contamination. Public liability policies typically exclude gradual pollution risks and will not cover any on-site remediation costs. Specialist cover is however available to indemnify the contractors against on-going pollution risks resulting from unanticipated discharges, leakages or spillages etc

Future Pollution Cover (Operational Pollution Risks) Public liability policies generally provide cover only for the costs of third party damages and injury arising from pollution incidents that are sudden, accidental and unexpected. Most PL policies do not therefore provide cover for claims arising from gradual pollution such as leaking underground storage tanks. In addition PL policies do not cover clean up of the insured’s own land and may not respond to clean-up orders from the regulatory authorities. Future Pollution cover is designed to “plug” these gaps providing for own site clean-up, claims from neighbours for damages or injury, legal defence costs and clean-up notices from regulatory authorities. Such insurance is available for policy periods between one and five years.

In many situations the correct business risk solution involves the combination of historical contamination cover and future pollution cover for example. This provides cover for claims for third party damage and injury arising from historical contamination migrating off site and future spills, run-offs and leaks. It also provides for clean-up orders for the insured’s own site or third party land from enforcement authorities – for example remediation notices from the local authority.

Where sites are heavily contaminated and remediation is required, cost cap cover can be placed to limit escalation of costs, backed up by historic contamination cover to provide assurance for financial consequences of potential residual contamination not dealt with by the remediation.

The Finale

Most industrial operations and business ventures are exposed to environmental risk. Constantly tightening legislation coupled with an active merger and acquisition climate means that these risk area becoming more significant. Environmental insurance is providing a rapidly expanding armoury of solutions to these risk exposures. The environmental insurance market in the UK has seen substantial increases in insurance premium volume and innovative deals to demonstrate the value of environmental insurance. Willis estimate up to £25 million in premium was written in the London insurance markets during 2000 and this figure was almost doubled during 2001. This represents very rapid growth – five years ago premium was negligible. Insurance should form only part of an integrated risk management approach to environmental liability exposures but can be a valid and real part of the solution.

For further information please contact Fiona Rooney (Director – Environment Practice, Willis Ltd)
Tel 0118 949 8035, rooneyf@willis.com