Consulting Contracts

PI insurers are leaving the construction market. While premiums SOAR and coverage SHRINKS: Every man and his dog specifies PI insurance. But no one's talking about the brutal reality. Here's what's happening: - Insurers fleeing the market - Premiums skyrocketing - Coverage shrinking - Exclusions expanding Employers still demand: → Cover in the tens of millions, many multiples of the scope value → Extensive protection for all scope → Full PI insurance otherwise your tender is rejected  → Zero gaps  But mandating PI insurance? Doesn't mean you're protected *Those exclusions will bite What insurers now want: - To exclude scope they consider too risky - Mountains of documentation - Strict risk management procedures - Higher deductibles - Your firstborn child (Okay, not yet...) The reality: - Only big players can afford it - Smaller but perfectly capable players get excluded - Coverage gaps and exclusions are everywhere - Claims get messy Smart companies are: → Enhancing risk management → Defining clear contract terms → Finding alternative solutions → Not just ticking PI boxes Mandating PI insurance for your project isn't enough.

Design risk management is critical for architects and engineers in construction projects, where liabilities arise from design deficiencies, contractual ambiguities. Under FIDIC contracts, risk allocation varies: Red Book: Employers hold design responsibility, but contractors must flag errors in employer-provided designs. Yellow Book: Contractors assume full design risk under “fitness for purpose” obligations, requiring designs to meet project intent, even if compliant with flawed standards. Silver Book (EPC): Contractors bear total risk, including employer-provided data errors, with strict “fitness for purpose” clauses leaving little recourse. In civil law jurisdictions like the UAE, Article 880 imposes 10-year liability for structural defects, while Article 383 emphasizes “reasonable skill and care” unless contracts specify stricter obligations. Key strategies to mitigate risks include: Contract Clarity: Define design roles, limit ambiguities in Employer’s Requirements, and specify performance criteria. Insurance: Secure professional indemnity coverage for fitness-for-purpose liabilities and decennial risks. Proactive Compliance: Document design reviews, client approvals, and legal consultations to align with jurisdictional mandates. For professionals, understanding these frameworks is vital to avoid disputes, costly rework, and legal penalties. Prioritize contractual precision, risk transfer through insurance, and collaboration with legal experts to navigate complex liabilities. #DesignRisk #FIDICContracts #ConstructionLaw #CivilEngineering #RiskManagement #UAEConstructionLaw #EPCContracts #FitnessForPurpose #DecennialLiability #ConstructionClaims #ProfessionalIndemnity #ContractManagement #ArchitecturalDesign #EngineeringExcellence

𝗖𝗼𝗻𝘀𝘁𝗿𝘂𝗰𝘁𝗶𝗼𝗻 𝗜𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲: 𝗔 𝗞𝗲𝘆 𝗖𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝘂𝗮𝗹 𝗢𝗯𝗹𝗶𝗴𝗮𝘁𝗶𝗼𝗻 Insurance in construction protects against design errors, accidents, and liabilities. It is a safeguard, not just a compliance requirement. Overlooking policy wording, coverage limits, or claims procedures can lead to costly disputes and financial exposure. Ensuring proper coverage, reviewing exclusions, and understanding claims conditions help prevent unexpected liabilities. 𝗪𝗵𝗲𝗿𝗲 𝗔𝗿𝗲 𝗜𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗥𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁𝘀 𝗶𝗻 𝗖𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝘀 𝙅𝘾𝙏 2016 – Clause 6 covers Public Liability, Employer’s Liability, and PI Insurance. 𝙉𝙀𝘾4 – Clause 83 outlines required insurances, Clause 84 sets minimum cover levels. 𝙁𝙄𝘿𝙄𝘾 2017 – Clause 18 mandates employer and contractor insurances, Clause 19 covers force majeure. 𝘽𝙚𝙨𝙥𝙤𝙠𝙚 𝙘𝙤𝙣𝙩𝙧𝙖𝙘𝙩𝙨 – Typically in General Conditions or Risk Allocation Sections. Failure to maintain required insurance may breach the contract. 𝗞𝗲𝘆 𝗜𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲𝘀 𝗶𝗻 𝗖𝗼𝗻𝘀𝘁𝗿𝘂𝗰𝘁𝗶𝗼𝗻 𝙋𝙧𝙤𝙛𝙚𝙨𝙨𝙞𝙤𝙣𝙖𝙡 𝙄𝙣𝙙𝙚𝙢𝙣𝙞𝙩𝙮 (𝙋𝙄) Insurance covers design errors. Example: An architect’s miscalculation causes defects. 𝙋𝙪𝙗𝙡𝙞𝙘 𝙇𝙞𝙖𝙗𝙞𝙡𝙞𝙩𝙮 𝙄𝙣𝙨𝙪𝙧𝙖𝙣𝙘𝙚 covers third-party injury or property damage. Example: A pedestrian is injured by falling scaffolding. 𝙀𝙢𝙥𝙡𝙤𝙮𝙚𝙧’𝙨 𝙇𝙞𝙖𝙗𝙞𝙡𝙞𝙩𝙮 𝙄𝙣𝙨𝙪𝙧𝙖𝙣𝙘𝙚 covers workplace injuries. Example: A worker falls from scaffolding. 𝘾𝙤𝙣𝙩𝙧𝙖𝙘𝙩𝙤𝙧’𝙨 𝘼𝙡𝙡 𝙍𝙞𝙨𝙠𝙨 (𝘾𝘼𝙍) Insurance covers damage to works and equipment. Example: A fire destroys a partially completed structure. Additional coverage may be needed for environmental risks, business interruption, or terrorism upon request for a additional cost. 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱𝗶𝗻𝗴 𝗣𝗼𝗹𝗶𝗰𝘆 𝗧𝗲𝗿𝗺𝗶𝗻𝗼𝗹𝗼𝗴𝗶𝗲𝘀 𝙀𝙖𝙘𝙝 𝙖𝙣𝙙 𝙀𝙫𝙚𝙧𝙮 𝙊𝙘𝙘𝙪𝙧𝙧𝙚𝙣𝙘𝙚 covers each claim separately up to the policy limit. Example: A £5M per claim policy covers multiple £5M claims. 𝙀𝙫𝙚𝙧𝙮 𝙎𝙞𝙣𝙜𝙡𝙚 𝙊𝙘𝙘𝙪𝙧𝙧𝙚𝙣𝙘𝙚 covers all losses from one event under one limit. Example: A storm damages multiple buildings, treated as one occurrence. 𝙄𝙣 𝘼𝙜𝙜𝙧𝙚𝙜𝙖𝙩𝙚 is the total amount an insurer will pay for all claims in the policy term. Example: A £10M aggregate policy stops paying once claims reach £10M. Misinterpreting these limits can leave businesses exposed. 𝗪𝗵𝘆 𝗜𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗠𝗮𝘁𝘁𝗲𝗿𝘀 MT Højgaard A/S v E.ON Climate & Renewables (2017) – The contractor was liable for design defects despite following standards. OMS Environmental Solutions Ltd v. Cannon Viking Ltd (2019) – Insurance was denied due to failure to disclose risks. 𝗖𝗮𝘂𝘁𝗶𝗼𝗻 𝗳𝗼𝗿 𝗖𝗼𝗻𝘀𝘁𝗿𝘂𝗰𝘁𝗶𝗼𝗻 𝗣𝗿𝗼𝗳𝗲𝘀𝘀𝗶𝗼𝗻𝗮𝗹𝘀 Insurance is often overlooked until a claim arises. Always review contract clauses, confirm policy coverage, and ensure subcontractors have valid insurance.

𝐒𝐮𝐛𝐫𝐨𝐠𝐚𝐭𝐢𝐨𝐧 𝐯𝐬. 𝐖𝐚𝐢𝐯𝐞𝐫 𝐨𝐟 𝐒𝐮𝐛𝐫𝐨𝐠𝐚𝐭𝐢𝐨𝐧 – 𝐀 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐢𝐧 𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐚𝐧𝐝 𝐂𝐨𝐧𝐭𝐫𝐚𝐜𝐭𝐬 𝐂𝐥𝐚𝐢𝐦 𝐒𝐜𝐞𝐧𝐚𝐫𝐢𝐨𝐬 𝐖𝐡𝐚𝐭 𝐢𝐬 𝐒𝐮𝐛𝐫𝐨𝐠𝐚𝐭𝐢𝐨𝐧? Subrogation is the legal right of an insurer (e.g. a bank or an insurance company) to recover a paid claim from the party who actually caused the loss. After compensating the insured (e.g., Employer or Contractor – who incurred loss), the insurer “steps into their shoes” to seek reimbursement from the liable party. 𝐖𝐡𝐚𝐭 𝐢𝐬 𝐚 𝐖𝐚𝐢𝐯𝐞𝐫 𝐨𝐟 𝐒𝐮𝐛𝐫𝐨𝐠𝐚𝐭𝐢𝐨𝐧? A waiver of subrogation means the insured party agrees in advance that the insurer will not pursue claims against certain project participants, even if they are responsible for the damage. 𝐄𝐱𝐚𝐦𝐩𝐥𝐞: 𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐂𝐥𝐚𝐢𝐦 𝐰𝐢𝐭𝐡 𝐚 ‘𝐖𝐚𝐢𝐯𝐞𝐫 𝐨𝐟 𝐒𝐮𝐛𝐫𝐨𝐠𝐚𝐭𝐢𝐨𝐧’ a) Insured (Employer): Purchaser of the insurance policy b) Insurer (Bank/Insurance company): Pays the claim (e.g., under a CAR policy) c) Contractor/Subcontractors: Responsible for the loss A fire breaks out on site due to the subcontractor’s negligence during hot works. The Employer's Contractors’ All Risk (CAR) insurance pays USD 4 million to repair the damage. However, the contract includes a mutual ‘waiver of subrogation’ among all parties. Therefore, 𝐭𝐡𝐞 𝐢𝐧𝐬𝐮𝐫𝐞𝐫 (𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐜𝐨𝐦𝐩𝐚𝐧𝐲) 𝐡𝐚𝐬 𝐭𝐨 𝐩𝐚𝐲 𝐭𝐨 𝐭𝐡𝐞 𝐢𝐧𝐬𝐮𝐫𝐞𝐝 (Employer) but 𝐜𝐚𝐧 𝐧𝐨𝐭 𝐫𝐞𝐜𝐨𝐯𝐞𝐫 𝐟𝐫𝐨𝐦 𝐭𝐡𝐞 𝐬𝐮𝐛𝐜𝐨𝐧𝐭𝐫𝐚𝐜𝐭𝐨𝐫 —even though they are at fault. 𝐑𝐞𝐬𝐮𝐥𝐭: - The insurer absorbs the full loss - Insurance premiums go up in the next cycle - The contractor/subcontractor avoids liability – although they were directly responsible for the loss - The Employer indirectly bears the cost over time (indirect cost) 𝐁𝐞𝐬𝐭 𝐏𝐫𝐚𝐜𝐭𝐢𝐜𝐞: * 𝐈𝐧𝐬𝐮𝐫𝐞𝐝 𝐩𝐚𝐫𝐭𝐲 should be cautious with blanket waivers; consider risk exposure * 𝐈𝐧𝐬𝐮𝐫𝐞𝐫𝐬 should review contract terms before underwriting * Parties to a contract 𝐦𝐮𝐬𝐭 𝐜𝐨𝐨𝐫𝐝𝐢𝐧𝐚𝐭𝐞 𝐜𝐥𝐨𝐬𝐞𝐥𝐲 𝐰𝐢𝐭𝐡 𝐭𝐡𝐞 𝐩𝐫𝐨𝐣𝐞𝐜𝐭’𝐬 𝐢𝐧𝐬𝐮𝐫𝐞𝐫𝐬 (including their own) before agreeing to any waiver of subrogation; as it may compromise the coverage or validity of the insurances. [*FIDIC does not directly define or prohibit subrogation or waiver of subrogation. However, it preserves the insurer’s rights by default, unless the parties agree otherwise and agree on a waiver of subrogation]. 🔖 #ContractManagement #ConstructionLaw #InsuranceClaims #Subrogation #WaiverOfSubrogation #AICredit #FIDICContracts #RiskManagement #ContractorsAllRisk #CommercialContracts #AIResearch #ClaimsManagement #ProjectDelivery

Will Your Cyber Insurance Coverage Respond to Contractual Obligations? Sample contract language: Party A agrees to indemnify, defend, and hold harmless Party B, its officers, directors, employees, and agents from and against any and all claims, damages, losses, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or related to (i) any cybersecurity incident or data breach caused by the negligent acts, omissions, or willful misconduct of Party A, its employees, agents, or subcontractors. When entering into contracts with cyber insurance and indemnification provisions, it is crucial that you understand your contractual obligations and how your cyber insurance will respond to avoid misunderstandings or disputes in the future. Points to consider: 👉Definition of Terms: Clearly define what is meant by "cyber insurance," "indemnification," "cybersecurity incident," "data breach," etc. 👉Interaction with Your Insurance: Consider how the insurance and indemnification provisions interact. Make sure that there is a clear delineation of responsibilities and coverages. 👉Scope of Coverage: Review the scope of the cyber insurance policy to ensure that it covers relevant risks. 👉Liability: Understand the extent of your liability for cybersecurity incidents and the indemnification obligations. This includes limitations on liability and the process for making and resolving claims. ⚠ Pay attention to broad terms such as "any" and "all". 🚫 Insurance policies have exclusions and NO policy is designed to cover any or all losses. Coverage will always be subject to policy provisions. 📝 Indemnity agreements provide “assurance” not “insurance. ⭐ Ensure that provisions align with the risk tolerance and business objectives of your organization. Consult with legal and insurance professionals to ensure you are not acquiring unwanted risks and leaving your business exposed. #indemnification #insurance #contracts #cyber #protectwhatmattersmost

📢 𝗦𝗔𝗣 𝗘𝘅𝘁𝗲𝗻𝗱𝘀 𝗘𝗥𝗣 𝗦𝘂𝗽𝗽𝗼𝗿𝘁 𝘁𝗼 𝟮𝟬𝟯𝟯- 𝗔 𝗦𝗺𝗮𝗿𝘁 𝗠𝗼𝘃𝗲 𝗼𝗿 𝗮 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗟𝗼𝗰𝗸-𝗶𝗻?🤔 ➡️As you know, SAP customers worldwide have been grappling with the looming 2027 deadline for SAP ECC and Business Suite. While SAP has offered extended maintenance until 2030, many businesses still need more time to transition to SAP S/4HANA. Well, SAP has just announced a new "SAP ERP, Private Edition, Transition Option", which extends support until 2033 but only if you commit to 𝗥𝗜𝗦𝗘 𝘄𝗶𝘁𝗵 𝗦𝗔𝗣. 📢 𝗦𝗼, 𝘄𝗵𝗮𝘁 𝗱𝗼𝗲𝘀 𝘁𝗵𝗶𝘀 𝗿𝗲𝗮𝗹𝗹𝘆 𝗺𝗲𝗮𝗻 𝗳𝗼𝗿 𝗦𝗔𝗣 𝗰𝘂𝘀𝘁𝗼𝗺𝗲𝗿𝘀? 𝗟𝗲𝘁’𝘀 𝗯𝗿𝗲𝗮𝗸 𝗶𝘁 𝗱𝗼𝘄𝗻!👇 🎯 𝗪𝗵𝗮𝘁’𝘀 𝘁𝗵𝗲 𝗗𝗲𝗮𝗹? SAP understands that large enterprises with complex IT landscapes can’t always meet tight migration deadlines. With this new offering, customers can continue running their SAP ERP systems beyond 2030 with extended support until 2033, but under specific conditions: ✅ Extended Support: Your on-prem SAP ERP stays operational with continued maintenance. ✅ RISE with SAP Commitment: You must enroll in SAP’s cloud transformation initiative. ✅ SAP HANA Requirement: No more third-party databasesyo u must migrate to SAP HANA. ✅ Available from 2028: Extended support applies from 2031 to 2033, giving customers time to prepare. Sounds great, right? But let’s weigh the benefits and challenges. ⚖️ 💡 𝗛𝗼𝘄 𝗗𝗼𝗲𝘀 𝗧𝗵𝗶𝘀 𝗕𝗲𝗻𝗲𝗳𝗶𝘁 𝗬𝗼𝘂? 🔹 More Time for Migration- No rush to move off SAP ECC by 2027 or even 2030. 🔹 Continued Support & Security Updates- Avoid the risks of running an unsupported system. 🔹 Smooth Transition- Organizations can take a phased approach to cloud adoption. 🔹 Business Continuity- Reduce disruption while preparing for SAP S/4HANA. ⚠️ 𝗪𝗵𝗮𝘁’𝘀 𝘁𝗵𝗲 𝗖𝗮𝘁𝗰𝗵? ❌ Mandatory RISE with SAP Subscription- No RISE, no extended support. ❌ Database Lock-in- You must migrate to SAP HANA (goodbye, Oracle, SQL Server, etc.). ❌ Higher Costs- SAP will charge an expanded fee beyond 2030. ❌ Strategic Dependency on SAP- Limits flexibility for customers who want more control. 📊 𝗔 𝗤𝘂𝗶𝗰𝗸 𝗖𝗼𝗺𝗽𝗮𝗿𝗶𝘀𝗼𝗻 𝗼𝗳 𝗦𝗔𝗣 𝗘𝗥𝗣 𝗦𝘂𝗽𝗽𝗼𝗿𝘁 𝗢𝗽𝘁𝗶𝗼𝗻𝘀👇👇 🏁 𝗪𝗵𝗮𝘁 𝗦𝗵𝗼𝘂𝗹𝗱 𝗬𝗼𝘂 𝗗𝗼? If your organization needs more time to move to SAP S/4HANA, this is a lifeline- but it comes with conditions. 💭 Are you considering this option? Will your company take the RISE with SAP path or explore alternatives? Let’s discuss in the comments! 👇 #SAP #ERP #S4HANA #DigitalTransformation #RISEwithSAP #EnterpriseIT

SAP ECC / S/4HANA Deadline Update 🚀 Big news for SAP ECC users! SAP has introduced new options to help businesses manage their transitions to S/4HANA more effectively. 🧐👇 💡 SAP introduces "SAP ERP Private Edition, Transition Option": According to report in the German Newspaper Handelsblatt, SAP now offers ECC customers the ability to extend their system support until the end of 2033: if they commit to the RISE with SAP program. This option ties the extension to SAP's cloud-first strategy. Note: SAP is yet to officially announce a "SAP ERP Private Edition, Transition Option" themselves, though they “confirmed the plans in response to a request from Handelsblatt.” 💡 Mainstream maintenance still ends in 2027, with extended maintenance to 2030: SAP clarified that maintenance timelines remain unchanged for on-premise customers. The new option only benefits those who adopt RISE with SAP. 💡 Extra time comes with conditions: This is a trade-off: customers gain an extended timeline but must commit to a long-term RISE contract, ensuring they eventually transition to SAP S/4HANA Cloud. 💡 Rise with SAP offers a step-by-step migration path: The program provides a gradual approach to moving from ECC to S/4HANA Cloud Private Edition, simplifying transitions and offering flexibility to customers. 💡 SAP confirms development of custom code translation tool: An AI-powered translator for custom code is also in the works. It promises to modernize legacy code automatically, easing one of the most challenging aspects of migration. 💡 Focus on clear goals for migration success: SAP emphasizes that companies should define clear objectives for their transition. A solid foundation ensures smoother planning and execution while minimizing risks. 💡 Selective Data Transition introduced: For customers with complex landscapes, SAP offers a method to consolidate and migrate only essential configurations and data to S/4HANA Cloud. This approach balances flexibility with practicality. 💡 Guidance for IT executives released: SAP launched a migration guide for IT leaders, detailing critical strategies for an easier move to S/4HANA Cloud. It focuses on technology, transformation paths, and project planning. 💡 The ultimate goal: Cloud-first ERP adoptions: This announcement aligns with SAP’s broader strategy of encouraging cloud adoption while addressing the challenges of delayed migrations. SAP is taking bold steps to ensure customers have the tools and flexibility needed to make their ERP transitions as smooth as possible. Share your thoughts on these developments in the comments below! ⬇️ #IgniteSAP #SAPMigration #S4HANA

Do you know why your Contractor clients provide Waiver of Subrogation? Contractors are often required to offer a waiver of subrogation to prevent their insurance company from pursuing reimbursement from the hiring party (e.g., property owner or general contractor) for claims paid out. This requirement exists for the following reasons: Risk Allocation: It ensures the contractor’s insurer cannot seek to recover losses from the hiring party, aligning with the agreed-upon risk distribution in the contract. Contractual Requirement: Many contracts include a waiver of subrogation clause to protect the hiring party from unexpected liability, especially in construction projects where risks are high. Avoiding Disputes: It reduces the likelihood of legal conflicts between the contractor’s insurer and the hiring party, streamlining claims processes. Project Insurance Compliance: It may be required to align with the project’s insurance structure, such as when a wrap-up insurance policy (e.g., OCIP or CCIP) is in place. The waiver is typically added via an endorsement to the contractor’s insurance policy, ensuring the insurer relinquishes its right to subrogate against the hiring party. This protects the hiring party from being held financially responsible for losses covered by the contractor’s insurance.

SAP has recently extended the deadline for migrating from SAP ECC6 to S/4HANA from 2027 to 2030, with the support commitment extending until 2033. This is a notable shift, as many organizations had initially planned to complete their migration by 2027 based on the earlier timeline. Key "Gives" and "Takes" of this Extension: Gives 1. More Time for Migration: With the deadline extended, companies have more flexibility and time to plan and execute their migration strategy without the pressure of a hard cut-off by 2027. This could ease the burden of managing large, complex migrations. 2. Reduced Pressure on Resources: Organizations can allocate more time to train employees, invest in system upgrades, or integrate with other technologies as part of the transition to S/4HANA, instead of rushing to meet the original deadline. 3. Improved S/4HANA Features: Over the next few years, SAP will likely enhance S/4HANA with new capabilities, better tools, and more integration options, making the migration process smoother and more beneficial. This means companies could take advantage of more mature features during migration. 4. Cost-Efficiency: Spreading out the migration over a longer period can help businesses plan and allocate budgets more effectively, avoiding the need for sudden, large-scale investments. Takes 1. Continued Support for ECC6: Although support for ECC6 will continue until 2033, SAP has signaled that businesses should not delay too much and should be prepared for eventual obsolescence of ECC6 in favor of cloud and next-gen technologies. Procrastination could risk falling behind competitors that have already transitioned to S/4HANA. 2. Migration to S/4HANA remains complex and costly, requiring significant preparation. The extension provides more time, but doesn't make the migration easier or cheaper, and companies may face challenges with hybrid environments during the transition. 3. End of ECC6 Investment: While the extension buys more time, there’s a risk that organizations may delay too long and end up investing in a legacy system that may be harder to maintain and integrate with new technologies as time progresses. 4. S/4HANA Adoption Pressure: As SAP continues pushing for the adoption of S/4HANA, companies that choose not to migrate will face increasing pressure to do so, as SAP shifts focus toward cloud solutions and modern applications. Businesses sticking to ECC6 might face increasing difficulty in obtaining support or integrating with future SAP innovations. In Summary: The deadline extension is a practical concession that allows businesses more breathing room. However, this move shouldn't lead to complacency—those migrating to S/4HANA will need to carefully consider their long-term strategy and plan ahead to make the most of the migration process while staying competitive. Are you considering a migration, or are you just looking to stay informed about SAP's updates? Read up my related article on this topic https://lnkd.in/gywQs3ZQ