Skip to main content
Marsh logo

Article

Delays in construction projects: How to mitigate loss

Find out why delays in construction projects are likely to persist and what Asia’s project owners and contractors can do to mitigate disputes and losses.

05/30/2024 · 2 minute read

The chain reaction from the supply chain crisis has resulted in persistent delays in construction projects across Asia.

Global trade disruptions amid heightened geopolitical tension have impacted the built environment supply chain and costs, and Asia’s construction sector. Notably, only about 8.5% of large projects finish on time and on budget,1 with delays in construction projects in the region exacerbated by material supply shortages, payment delays and defaults, as well as labour shortages and mobility issues.

At the same time, attacks on ships in the Red Sea have extended shipping times for construction materials and heavy equipment — such as machine and engine parts — that are vital to project continuity.2 Factors such as the inflation, economic downturn, armed conflict, social unrest, government policies, and domestic electoral outcomes can also abruptly change the construction landscape, leading to higher costs, project delays and financial impacts.

Insurance solutions to minimise disputes and losses from construction delays

As each construction project has its own unique set of challenges and considerations, owners and contractors require a bespoke blend of risk management and insurance solutions that include the following:

To indemnify against insurable risks:

  • Construction/Erection All Risks (CEAR) insurance: Provides comprehensive coverage for risks associated with a construction project, including damage to the works’, materials, and third-party liability. Key considerations include assessing project-specific risks, ensuring adequate coverage limits, and understanding policy exclusions and deductibles to effectively manage potential losses and protect the project's financial interests.
  • Delay in Start Up (DSU) insurance: Provides coverage to project owners and lenders for financial losses incurred due to delays in project completion beyond the scheduled commencement of commercial operation date. Key considerations when obtaining DSU insurance include accurately assessing the potential financial impact of delays, understanding the coverage period and waiting period, and ensuring that the policy includes appropriate extensions and endorsements to address specific project risks and circumstances.

To protect against non-insurable risks:

  • Pre-loss Construction Delay Review: Provides insights to control costs, develop contingency plans (e.g. supplier diversification), and optimise project schedules. A robust review can lead to better streamlined processes, increased efficiencies, and improved productivity. 
  • For delay-driven disputes, our claims advocacy team can help negotiate final settlement with insurers. 

Learn more about our construction delay solutions here.

 

Have questions about your construction project?

Get in touch with a Marsh Construction specialist today for a non-obligatory discussion.

Contact us

[1] The Washington Post. (2023). https://www.washingtonpost.com/transportation/2023/04/28/infrastructure-projects-time-budget

[2] Construction Briefing. (2024). https://www.constructionbriefing.com/news/does-disruption-in-the-red-sea-mean-more-pain-for-construction-supply-chains-/8034392.article

 

Related insights

Financial diagrams representing data and analytics in a business context Generative AI

Podcast

RIMScast Podcast: Harnessing the power of data and analytics for effective risk management

09/18/2024
Blurred crowd of unrecognizable at the street

Podcast

Risk in Context Podcast: Building Resilience in Times of Crisis

07/23/2024
Looking up Green forest. Trees with green Leaves, blue sky and sun light. Bottom view background

Article

Marsh India News and Views - June 2022

07/17/2024
Global Risks Report 2023 Cover

Report

The Global Risks Report 2023

04/16/2024
View more