The global outbreak of the Ebola virus not only has long term social ramifications but economic ones as well. Recently, this issue has become more and more prevalent on construction projects in developing nations. When a local government considers a substantial construction project it is expecting certain economic outcomes to follow. In light of the Ebola crisis, risk managers of construction companies and material supply companies must now factor into their budgets the real likelihood of a project being delayed or shut down even after a substantial amount of funds have been expended. A recent WSJ article, "Mining Projects Take Hit From Ebola Crisis", spoke about how major mining efforts have come to a virtual halt in the regions where Ebola is most prevalent. Work is now being disrupted by contractors pulling out of the area. This could lead to a variety of claims being filed – which may or may not be covered.
In addition to economic loss, project owners and contractors must consider workers health and safety issues. Not only do they need to address the sick workforce but they also could be held liable for claims from the family members of infected workers. It’s time for the construction industry to take a fresh look at their risk mitigation strategies. Transferring the risk to an insurance company may not be a viable alternative as insurance companies could start looking at ways to limit their exposures to the epidemic through contract language. Companies are building medical clinics near their work sites to test and treat workers and their families.
As construction is vital to economic stability, owners and developers alike must get out in front of this issue by implementing proactive risk management strategies and a uniformed crisis response program long before the first claim is filed or project is delayed or cancelled. The ALS Group has extensive experience managing construction risks and can review your existing insurance program and ensure any coverage gaps are closed either through amendments to the current program or alternative risk mitigation techniques. We can also help clients develop a crisis response program, which can be implemented quickly should the need arise.
About the Author
John Mooney is a Senior Consultant with The ALS Group. You can read more about John or contact him here. Click here to request more information about The ALS Group or for assistance with managing your construction risks.