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ACEC chapter summary: “Roles, risks and insurance requirements in public private partnership projects”

Valerie P. Onderka, Manager, Designers & Contractors Professional Liability, Ironshore and Donna M. Hunt, Assistant Vice President, Designers & Contractors Professional Liability, Ironshore
ACEC chapter summary: “Roles, risks and insurance requirements in public private partnership projects”

American Council of Engineering Companies (ACEC) has published the Third Edition of its prolific book, Public – Private Partnerships:  Opportunities and Risks for Consulting Engineers. The 2020 edition expands on prior versions, offering proposed guidelines for best practices and other initiatives to improve the performance of the respective project roles and alleviate the risk concerns of consulting engineers in Public Private Partnership (P3) and Design-Build (DB) projects.

Updated views on how to insure P3 or DB projects

The 3rd edition was compiled and edited by David J. Hatem, P.C., incorporating the expertise of industry professionals serving as guest authors. We have participated in submitting content for previous versions; each of which built upon recommended roles and responsibilities for the various parties engaged in public private partnerships. ACEC’s book examines the various issues, potential obstacles, and considerations relevant to a consulting engineer’s evaluation of whether, and under what terms and circumstances, to participate in P3 and DB projects. For this third edition, we found that our views on how a P3 or DB project should be properly insured required an update, based on industry knowledge and project management trends. In our chapter for the 2020 edition, we address potential risk exposures that should be adequately insured by each entity to help protect against adverse project impact.  

P3 and DB delivery methods that facilitate professional cooperation in the construction of bridges, roads, transit, water supply/treatment, tunnels and other public infrastructure projects continue to gain broader acceptance.  Consulting engineers, therefore, can benefit from access to vital knowledge and reliable expertise to make conscientious and prudent decisions about project opportunities, challenges, and risk exposures. The ACEC focuses on industry concerns regarding risk allocation and professional liability and sets forth recommendations of best practices for managing such concerns to avoid negative project outcomes. In-depth assessment of project issues addresses aggressive, imprudent procurement and risk allocation contractual practices of project participants, such as owners, design-builders, concessionaires, and selected subcontractors.

Addressing multi-layered insurance requirements

In Chapter 10, we tackle the thorny issue of multi-layered insurance requirements necessary to protect against potential exposure of the entity engaged in P3, Design Build and Design-Bid-Build projects. Identified risks inherent within the project work environment can range from property, environmental and liability exposures to design and construction defects or negligence, as well as payment and performance guarantees. A comprehensive chart segregates the project delivery method and underlying risk with an extensive look at insurance solutions for each of the project entities.

In its 3rd edition of Public Private Partnerships and Design Build, the ACEC provides an objective, realistic and practical resource for consulting engineers to make informed and balanced judgments when pursuing complex, yet rewarding, P3 and DB construction projects.

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