Marsh Botswana, a subsidiary of Marsh & McLennan Companies, recently revealed that a number of insurers in the local market are known to totally exclude liability under their policies for construction works.
Marsh & McLennan Companies is a world leader in delivering risk and insurance services and solutions. Marsh Botswana warned local contractors to be wary of insurer contracts’ ‘all risks policy’ wordings. These are usually worded as, “the insurers shall only indemnify the insured for loss of or damage to existing underground cables and / or pipes, if prior to the commencement of works, the insured has inquired with the relevant authorities about the exact position of such cables, pipes or other underground facilities and takes all necessary steps to avoid such damage.”
Fritzgerald Dube, Managing Director of Marsh Botswana has called for greater interrogation of Insurer policy wordings to ensure that the insurer has indeed provided the contractor with lateral support and vibration liability cover. Dube explained that the consequences of this clause is that, where the contractor does not possess underground maps from appropriate authorities, and causes damage to third party property, the insurer will settle the resultant liability claim for property damage, loss of water / power and business interruption to the utility company.
Dube highlighted a common problem that exists for contractors with projects involving blasting using explosives and or projects involving compaction of the contract works. These are typically road projects or sewerage projects that are executed in close proximity to residential dwellings, typically in the village communities of Botswana. He further explained that blasting and compaction activity has been known to cause cracking of walls of residential dwellings in communities.
“In worst case scenarios, contractors will be confronted with financial claims for property damage, from almost the entire community, where, the contract works, project is executed,” he said.
This subject has been very topical in Botswana, with the government of Botswana expressing strong concern at the poor quality of construction work performed on some major public infrastructural projects. The sentiments of Marsh Botswana come several months after Government said it is considering changing the way it manages projects in an effort to avoid wastage and allow resources to be utilised in other public works.
This follows delays in execution of major projects including Morupule B Power Project, Sir Seretse Khama International Airport, National Stadium, Botswana International University of Science and Technology (BIUST) to mention only a few. The Budget Strategy Paper for 2015/ 16 prepared by the Ministry of Finance and Development Planning states that “as part of the solution to the problem of poor project implementation, priority will be given to ‘prioritised’ project monitoring and evaluation as a critical success factor. To this end, beginning financial year 2015/16 will see a rigorous monitoring and evaluation of projects reported in each financial year instead of being reported during NDP mid-term reviews.”