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9. Construction Project Risk Management and Insurance
Intermediate economist in construction and real estate - 9. Construction project risk management and insurance, probability estimation methods of risk events - 1. Historical data determination method; 2. Theoretical probability distribution method; 3. Subjective probability method; 4. Comprehensive inference Method (forward deduction method, backward deduction method, side deduction method)
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9. Construction Project Risk Management and Insurance
- bacteria
This is a mind map about bacteria, and its main contents include: overview, morphology, types, structure, reproduction, distribution, application, and expansion. The summary is comprehensive and meticulous, suitable as review materials.
- Plant asexual reproduction
This is a mind map about plant asexual reproduction, and its main contents include: concept, spore reproduction, vegetative reproduction, tissue culture, and buds. The summary is comprehensive and meticulous, suitable as review materials.
- Reproductive development of animals
This is a mind map about the reproductive development of animals, and its main contents include: insects, frogs, birds, sexual reproduction, and asexual reproduction. The summary is comprehensive and meticulous, suitable as review materials.
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9. Construction Project Risk Management and Insurance
Construction Project Risk Management
I. Engineering risk classification
1. Owner or Developer Risk
I. Risks in the project decision-making phase
1. political risk
2. market risk
3. sociocultural risks
4. Legal Risk
5. Internal decision-making mechanism risks
II. Risks during project implementation phase
2. contractor risk
I. Bidding Stage Risks
II. Risks during the contract performance stage
III. Risks during the acceptance and delivery phase
3. Consulting design service unit risks
I. Risks from the owner or developer
II. Risks from contractors
III. Risks from own professional responsibilities
II. Engineering risk management content and methods
1. Engineering risk identification
Identification steps
1. Collect and organize relevant information
2. Establish an initial list of engineering risks
3. Carry out risk aggregation and classification
4. Prepare project risk list
Identify common methods
1. Checklist method
2. Brainstorming
3. common sense, experience and judgment
2. Project risk estimation
Estimated content
1. Estimate of likelihood of occurrence
2. Estimate of consequences
3. Impact Scope Estimate
4. Estimated time of occurrence
Common methods for estimating
1. Methods for estimating the probability of risk events - 1. Historical data determination method; 2. Theoretical probability distribution method; 3. Subjective probability method; 4. Comprehensive inference method (forward push method, backward push method, side push method)
2. Risk loss estimation method
Estimation of progress loss - 1. Impact on local progress; 2. Impact on total construction period
Cost loss estimate - including: one-time maximum loss estimate / overall project loss estimate; cost estimate increased due to economic factors / rush to work / handling quality accidents / handling safety accidents
3. Risk impact degree and risk indicator estimation method
Risk impact degree: ordinal measurement method / cardinal measurement method
Risk indicators: 1. The smaller the standard deviation, the denser the probability distribution, the smaller the risk; 2. The larger the coefficient of variation, the greater the risk impact.
3. Engineering Risk Assessment
comment content
1. The interaction and interaction between risks
2. Overall impact of risk events on engineering projects
Common methods of evaluation
1. subjective scoring method
2. Monte Carlo method
3. Equal risk diagram method - the properties of engineering risk size R: 1. Potential losses have a greater impact on R; 2. Potential losses are similar, and risks with high probability of occurrence have larger R; 3. Different curves have different risk levels , the farther the curve is from the origin, the greater the expected loss and the greater the risk; 4. Expected value of loss = probability of occurrence * potential loss
4. Engineering Risk Response
Response content
1. Describe the basic information of the identified engineering risks; 2. Identification of key risks; 3. Identification of risk responses; 4. Allocation of risk responsibilities; 5. Allocation of resources required to implement response strategies; 6. Tracking, decision-making and feedback time; 7. emergency plan
preventive solution
1. risk avoidance
2. risk transfer
insurance transfer
Non-Insurance Transfer – Sale/Contract Terms/Guarantee/Subcontracting
3. Risk Mitigation
4. risk prevention
Tangible means - engineering and technical means
Intangible means - education law / procedural law
5. risk retention
Risk backup measures - cost backup measures/schedule backup measures/technical backup measures
6. risk exploitation
5. Engineering risk monitoring
Monitor content
Main tasks: 1. Pay attention to the size of risks; 2. Analyze the development and changes of factors affecting risk events
Monitoring methods
1. earned value analysis
2. Engineering risk response audit method
control measures
1. contingency measures
2. Corrective Action
3. Project change application
Construction project insurance
I. Characteristics and types of engineering insurance
1. Engineering insurance features
1. Risks are specific
1. Property loss risk and liability risk; 2. Low ability to withstand risks; 3. High degree of risk
2. Guarantee is comprehensive
3. The insured has extensive
4. The insurance period is uncertain
5. The insurance amount is subject to change
2. Engineering insurance types
Classified by implementation
1. Compulsory insurance; 2. Voluntary insurance
Classified by coverage
1. All risks for construction projects; 2. All risks for installation projects; 3. Professional liability insurance; 4. Accident insurance; 5. Guarantee insurance; 6. Ten-year insurance; 7. Motor vehicle insurance
II. construction project all risks
1. Limitation of Liability
1||| Scope of liability for material losses
1. Natural disasters; 2. Accidents; 3. Plane crashes; 4. Theft; 5. Losses caused by workers’ negligence; 6. Accidents caused by defects in raw materials or poor workmanship; 7. Natural disasters or accidents other than excluded; 8. , on-site cleaning costs
2||| Scope of liability of third party liability part
2. Exclusions
1||| Total exclusions
2||| Insurance exclusions applicable to material damage component
3||| Exclusions applicable to third party liability insurance
3. insurance rate
1||| Factors to consider in determining rates
1. Scope of insurance liability; 2. Risk level of the project itself; 3. Credit status; 4. Previous loss records of similar projects; 5. Project deductible level
2||| Rate composition
4. Insurance period and guarantee period
1||| Start time - the date when the project breaks ground/when the insured project raw materials, etc. are unloaded to the construction site (whichever occurs first)
2||| Termination time - the termination time specified in the policy/when the project is completed and handed over to the project owner/when the project owner starts using it (whichever occurs first)
3||| Warranty Period - Limited Liability Warranty Period/Extended Liability Warranty Period
4||| Extension of insurance period
III. Installation project all risks
1. Limitation of Liability
1||| Scope of liability for material losses
1. Natural disasters; 2. Fires and explosions; 3. Falling objects from the air; 4. Property losses caused by electrical appliances; 5. Accidents caused by poor installation technology
2||| Scope of liability of third party liability part
2. Exclusions
1. Compensation for other property losses caused by design errors, except for direct losses; 2. Compensation for other property losses caused by excluding losses of electrical equipment and appliances themselves.
3. insurance rate
One-time rate
4. Insurance period and guarantee period
1||| 1. Start time - the date when the project breaks ground/when the insured project raw materials are unloaded to the construction site (whichever occurs first); 2. Termination time - the termination time specified in the policy/when the project is completed and handed over to the project owner / When the owner of the project starts using it (whichever happens first)
2||| Commissioning assessment period - cold test; hot test; trial production (not more than 3 months)
3||| Warranty date
4||| Extension of insurance period
Construction Project All Risks VS Installation Project All Risks
All risks of construction projects - 1. The subject matter gradually increases after the start of construction, and the insurance amount gradually increases; 2. Mainly natural disasters;
All risks for installation projects - 1. The target exists on the construction site from the beginning, and the risk is greatest during the commissioning, assessment, and warranty stages; 2. Mainly losses due to man-made accidents; 3. The risk is relatively high, and the premium rate is high
IV. professional liability insurance
1. Engineering design liability insurance
Insurance duty
Engineering design unit - 1. Liability for loss compensation; 2. Appraisal costs; 3. Litigation costs; 4. Reasonable compensation costs
insurance type
1. Annual liability insurance; 2. Project liability insurance; 3. Multiple project insurance
2. Project supervision liability insurance
Insurance liability - 1. Direct economic losses; 2. Litigation attorney fees; 3. Necessary expenses to reduce losses
Categories of exemption: 1. Absolute exemption from liability; 2. Appropriate exemption from liability
V. accident insurance
1. Insurance duty
Necessary conditions: 1. Accidental injury during the insurance period; 2. Death or disability within the liability period; 3. The accident is the direct cause or proximate cause
2. Insurance coverage and duration
1. Starting from 0:00 the day after the project officially starts and premiums have been paid; 2. Ending at 24:00 on the day of completion; 3. If completed ahead of schedule, it will be terminated on its own; 4. No insurance liability will be borne during the suspension period.
3. insurance rate
Differential rates; floating rates
VI. Engineering quality assurance insurance
1. Insurance duty
1. Collapse of the main structure; 2. Inclination exceeding the allowable value; 3. Collapse and fracture of balcony awnings; 4. Cracks and deformation
Agreed compensation: 1. Demolition and cleanup costs; 2. Litigation costs
2. Project quality responsibility period
Project quality warranty period - the construction unit is responsible for repairs
Damage liability period
3. The difference between engineering quality assurance insurance and construction and installation project all risks
1||| Insurance liability is different
2||| The insured is different
3||| Insurance policies are issued in different ways
4||| Insurance amounts vary
5||| Different risk control measures
Engineering risk management flow chart
Engineering project begins
Risk Identification
Formation: Project Risk Checklist
risk estimate
The possibility of a risk event occurring; possible consequences; scope of impact; possible time of occurrence
Risk Assessment
The interaction and interaction between risks; the overall impact of risk events on the engineering project
risk response
Risk avoidance; risk transfer; risk mitigation; risk prevention; risk retention; risk utilization
Risk monitoring
Engineering project completed
Engineering risks
Classification by risk consequences
1. pure risk
2. speculative risk
Classification according to the cause of risk occurrence
1. natural risks
2. political risk
3. social risk
4. economic risk
5. Financial risk
Classify risks according to whether they are manageable
1. Manageable risk
2. unmanageable risk
Classification by project participants
1. Owner or investor risk
2. contractor risk
3. Consulting unit risks
Classification by intensity of risk effects
1. High risk
2. medium risk
3. low risk