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Change is not good for construction

20 November 2020
A recent report highlights that construction changes still remain the main cause of claims and disputes. How do construction insureds manage this significant claims risk?

HKA has published its Crux Insight global report on lessons learned from claims and disputes in engineering and construction.

Change in Scope

The top cause of claims and disputes continues to be "change in scope".

Two main observations:

  • Change continues to be a significant issue for construction.
  • Are construction clients continuing to take advantage of their position as repeat employers?

Informed contractors and consultants should be aware of change being the main reason for contractual difficulties and so should focus on what they have contracted to provide and also notify in good time when a change has occurred.

Insurers should be very interested in the change management systems of their insureds employed to mitigate these potential sources of claims.

Let's not forget design

Looking at remaining causes, design remains a significant source of problems. In order of significance these include:

  • Incorrect design.
  • Incomplete design.
  • Late design.
  • Unforeseen physical conditions.
  • Workmanship.
  • Late access.
  • Late approvals.
  • Supply chain management.
  • Contract management / interpretation.

COVID-19 spurious claims

Lastly the report notes the initial effects of the COVID-19 pandemic are being evidenced in an upsurge of spurious claims. It remains to be seen if the acknowledged delay issues suffered by the construction industry will manifest themselves as claims for the insurance industry. 

Please contact our experts if you need any further information.

Further Reading

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