Risk is an inherent part of any construction project
Many factors can result in costly delays or even outright project failure, from unforeseen design flaws to unexpected ground conditions. Among these, uninsured and uninsurable risks pose unique challenges. In a worst-case scenario, uninsured and uninsurable risks can jeopardize the successful completion of a project and contribute to profit-at-risk (PaR) exposure, threatening the financial sustainability of the organizations involved. This article explores these risks, their impact on construction projects, and emerging solutions for more effective risk management.
The impact on profit-at-risk
In general, uninsured risks are those that a contractor has chosen not to cover with an insurance policy, while uninsurable risks are those that insurance companies will not cover due to their unpredictability or high likelihood of occurrence. Key risks in both categories include:
- Design and engineering risks: could arise from errors, omissions, or negligent acts in a construction project’s design or engineering phase.
- Contractual risks: related to non-compliance with contractual obligations, project delays, or non-performance.
- Environmental…
