BIM and Integrated Project Insurance – the future for true collaboration in construction?

It has long been accepted by UK Government that the future of the construction industry lies in better integration and collaboration: the interests of clients, contractors, consultants and specialists need to be better aligned.

Under a radical new development of ‘alliance contracting’ the client and an integrated project team collaborate under the cover of Integrated Project Insurance, a product of unique value providing coverage under one policy, which replaces all the traditional construction insurances.

In all our discussions with the Construction Industry supply chain, whether with industry bodies, Architects, Engineers, PMs or Contractors, one of the main topics that we are asked about is Building Information Modelling (BIM). Questions include: How does our Insurance respond? Are we covered to work in the collaborative way that BIM requires? Does the insurance industry understand what we are doing? Will I incur additional risks by using BIM?

Griffiths & Armour have been heavily involved in BIM since the publication of the Government Construction Strategy in 2011, where it was announced that the Government intended to require the use of collaborative 3D BIM technology on all projects by 2016. Working as part of the Construction Industry Council’s CIC BIM Task Group, Griffiths & Armour produced a Best Practice Guide for BIM. The guide sets out the simple steps that insured parties should take when obtaining PI insurance cover for projects, where some or all of the design is being delivered using BIM. This document can be accessed here.

Building on that basis, we are recognised as one of the few insurance brokers in the UK with a true understanding of what BIM is, the insurance implications of its use, and thereby with a genuine ability to appropriately advise our clients on the best way to manage the risks they may incur.

Our guidance to date has concentrated on Level 2 BIM, but the recent publication of the Government paper on Digital Built Britain Level 3 BIM Strategic plan will inevitably mean that the Level 3 debate now starts to expand.

In relation to Level 3 BIM, it is already clear that a considerable change will be required in terms of how projects are procured, run and how risks are managed and funded. In order to embrace the fully collaborative nature of Level 3 BIM, we strongly believe that an entirely different approach will also be required in terms of insurance and risk. This is where Integrated Project Insurance (IPI) could be a true game-changer for the construction industry, as it truly supports the collaborative working principles outlined by the use of BIM.

IPI will change the way projects are insured and is an innovative form of insurance. It insures project risks rather than liabilities, it allows for a blame-free basis and insures outcomes rather than causes; all members of the project are covered – including the client – and all rights of subrogation are waived. IPI unlocks the key obstacles to working collaboratively and allows for a truly integrated project team, helping to deliver innovation, and provide better, more cost effective solutions to meet the needs of clients by driving out waste.... (read more)

IPI will change the way projects are insured and is an innovative form of insurance. It insures project risks rather than liabilities, it allows for a blame-free basis and insures outcomes rather than causes; all members of the project are covered – including the client – and all rights of subrogation are waived. IPI unlocks the key obstacles to working collaboratively and allows for a truly integrated project team, helping to deliver innovation, and provide better, more cost effective solutions to meet the needs of clients by driving out waste.

Griffiths & Armour’s CEO, Stephen Bamforth

Griffiths & Armour’s CEO Stephen Bamforth has been at the heart of the creation of IPI; Stephen has spent over ten years working with the construction and insurance industries to develop cover that is unique to the insurance market and which caters to the needs of clients and the changing environment that is created by BIM. During this time, he has liaised with Government in order to educate and encourage the use of IPI and building relations which led to the formation of Integrated Project Initiatives Ltd. IPI is promoted by the Specialist Engineering Alliance and has the support of 30+ practices and companies across the construction industry. In Steve's view, IPI is the only current insurance product capable of supporting BIM Level 3.

The Government is convinced of its value and has committed to trialling IPI as part of the Construction Procurement Strategy by supporting demonstration projects under the Cabinet Office’s Trial Projects Programme. The aim of the trials will hopefully show the savings in capital costs and how procurement efficiencies can be achieved in practice, whilst also demonstrating to insurers this is a commercially viable product that can be made available to both the public and private sectors. The recent Digital Built Britain Strategic Plan published by the Government, highlights the need to ‘support wider adoption of integrated project team insurance models’ as being a key action in transition to BIM Level 3.


How it works

“An Alliance Contract empowers the ‘flat’ inclusive team to create and deliver solutions fit for the purpose set out in a strategic brief in a ‘no blame/no claim’ environment, supporting innovation and incentivising successful outcomes.

One Team - Seamless Cover

The proposition is that IPI will cost no more than traditional project insurances, but the real benefits are from collaborating as a “virtual company” to eliminate process and procedural waste and deliver improved project performance and efficiency savings which achieve the expectations of Government Strategies.” Integrated Project Initiatives, The Integrated Project Insurance (IPI) Model, Project Procurement and Delivery Guidance, 2 July 2014.

IPI insures the integrated project team’s performance against specification, time and cost. A project board is created which includes the client, who are in place to manage the process and the project as a whole. A representative from the Insurers would also be involved throughout project delivery. An independent party provides a light touch audit of designs, and they are also not exposed to claims – in order to support the blame-free culture.

In order to avoid duplication of insurance costs, fees on IPI projects should not need to be declared under consultants' annual PI covers. The blame-free culture means that there is no litigation and therefore no legal costs - which is one of the most substantial elements of any construction insurance claim in the current conventional models. (hide)

The first trial project at Dudley College is now on site. As PI specialists, Griffiths & Armour have first hand knowledge and experience that turning risks into liabilities is an inefficient process, hence why we are so supportive of IPI and its potential to change construction procurement practice entirely.... (read more)

The first trial project by the Cabinet Office is at Dudley College is now on siteand design work is progressing. The works , is being procured using the withIPI methodology and the IPI policy is being prepared ready to be placed later in 2015. As PI specialists, Griffiths & Armour have first- hand knowledge and experience that turning risks into liabilities is an inefficient process, hence why we are so supportive of IPI and its potential to change construction procurement practice entirely.

Work on Dudley College’s Centre for Advanced Building Technologies is worth £11.685m and is on target to complete in Spring 2017. Construction is expected to start around Christmas 2015 and is expected to create 390 jobs.

More information in the form of a case study will be available in due course.

Dudley College logo Dudley College vector Dudley College plans

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In summary:

Integrated Project Insurance is an innovative insurance product which is a benefit to those who adopt it and is exclusive from Griffiths & Armour. It collectively insures the client and all the other Alliance partners: consultants, specialists, manufacturers, construction managers and their supply chains. In particular it replaces liability-driven Professional Indemnity insurance (which requires proof of fault before responding) with financial loss cover where the outturn cost above the target cost plus pain-share is insured.

A detailed paper on how IPI would work in practice is available here. Whilst at trial project stage we would be very interested to hear about any potential projects that could be included in the trial. This will require a project team and client who are genuinely willing to work truly collaboratively, on a project with overall value of between £10m and £20m. Once the trial projects have demonstrated the twin aims of a commercially viable insurance product and proved the savings that can be made through the use of IPI, it should be a model that can be used on almost any project. If you would like to discuss IPI further or have a potential trial project that you would like to bring our attention to, please contact us.

In addition, Griffiths & Armour offer a specialist construction broking team, whose focus is on Employer Controlled Project insurance solutions. Even if your project is not currently suitable for IPI it will almost certainly benefit from the wider protection this approach delivers against a traditional contractor arranged insurance programme. For further details on how Employer Controlled Project insurance may benefit your project please contact Jack Wolstencroft.

Telephone: +44 (0)151 600 2132
Email: jwolstencroft@griffithsandarmour.com

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