Consulting Contracts

I am currently in Abu Dhabi, and the US/Iran situation in the Middle East is creating some legal and commercial risks for construction projects. Here are some issues to consider: 1. Hostilities - Classic triggers for force‑majeure clauses in construction and EPC contracts. 2. Force majeure - Many GCC/FIDIC‑based contracts provide relief for unforeseen events, enabling contractors to claim extensions of time or suspend performance. 3. Notices - Parties must follow strict notification requirements to preserve claims. 4. Insurance - War‑risk insurance is being withdrawn, repriced, or severely limited, creating immediate exposure for ongoing projects. 5. Supply Chain Issues - Construction projects rely heavily on global logistics, now directly impacted by the conflict. Potentially leading to claims for delay, variation orders, or contract renegotiation. 6. Cost Escalation & Price Adjustment Claims – As shipping routes are disrupted and insurance costs rising, contractors face significant cost increases. Construction contracts are restricted in this respect, but contractors might seek relief under hardship or change‑in‑law provisions. 7. Compliance, Sanctions & Geopolitical Restrictions - U.S. and other sanctions on Iran create compliance risks for companies operating in the region and their international supply chains. 8. Site Safety, Security & Duty of Care - Attacks on civilian infrastructure and military bases increase party obligations. Consider implementing enhanced security protocols, evacuation plans, and risk assessments. 9. Governments Restrictions - They could and are imposing airspace closures, work stoppages, and movement restrictions, triggering delays and/or compensation events, depending on the contract conditions. What are your experiences so far? #constructionlaw #constructioncontract #GCC #epc #FIDIC #forcemajeure #unforseenevents #notices #insurance #supplychain #costescalation #sanctions #compliance #geopolitical #sitesafety #dutyofcare #airspace #workstoppage #riskassessments #evacuationplan #war #delay #disruption #lexology #recognisedexpert #constructionexpert #whosewho

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.

#Attention: Consortium Leads or Programme Leads and Aspiring SACPCMP PrCPMs #SACPCMP #PrCPM - Procurement Management Challenges Report #Objective: I aimed to ensure all professional service providers on the construction project had adequate professional indemnity insurance to mitigate risks and protect project interests. #Challenge: Smaller firms and individual consultants often lacked sufficient professional indemnity insurance coverage. This posed significant financial and legal risks to the project, as any errors or omissions in professional services could lead to substantial liabilities. Ensuring compliance and finding affordable solutions for these smaller providers was a complex task. #Intervention: To address this challenge, I implemented a comprehensive strategy: 1. Verification Process: I established a stringent process requiring all professional service providers to submit proof of insurance before contract finalization. This ensured only adequately insured providers participated in the project. 2. Negotiation with Brokers: I worked with insurance brokers to negotiate group insurance schemes. This made it more affordable for smaller firms to obtain comprehensive coverage, ensuring they could meet project requirements without financial strain. 3. Regular Audits: I instituted regular audits to review the insurance policies of all service providers, ensuring continuous compliance throughout the project’s lifecycle. This proactive approach prevented any lapses in coverage. 4. Education and Support: I conducted informational sessions to educate smaller firms about the importance of professional indemnity insurance. These sessions provided resources and guidance on obtaining and maintaining adequate coverage, promoting a culture of risk management. #Outcome: These interventions led to several positive outcomes: 1. Risk Mitigation: Ensured that all service providers had adequate insurance, significantly reducing potential legal and financial risks associated with professional errors or omissions. 2. Increased Participation: The group insurance schemes enabled smaller firms to afford coverage, allowing them to compete for project contracts. 3. Continuous Compliance: Regular audits ensured ongoing compliance, maintaining a high standard of protection throughout the project. 4. Enhanced Awareness: Educational initiatives raised awareness among smaller firms, encouraging better risk management practices. South African Council for Project & Construction Management Professions (SACPCMP) Myirha Consulting Engineers & Project Managers (Pty) Ltd

𝐍𝐨𝐭 𝐞𝐯𝐞𝐫𝐲 𝐫𝐢𝐬𝐤 𝐜𝐚𝐧 𝐛𝐞 𝐢𝐧𝐬𝐮𝐫𝐞𝐝 𝐚𝐧𝐝 𝐩𝐫𝐞𝐭𝐞𝐧𝐝𝐢𝐧𝐠 𝐨𝐭𝐡𝐞𝐫𝐰𝐢𝐬𝐞 𝐜𝐚𝐧 𝐬𝐢𝐧𝐤 𝐚 𝐩𝐫𝐨𝐣𝐞𝐜𝐭. In the course of my work, I see that some project agreements, especially concessions and PPPs, require the project developer to insure everything- like all risks. 🥹 On the surface, it looks harmless, after all, insurance is standard boilerplate and gives lenders comfort. 𝐁𝐮𝐭 𝐥𝐞𝐭 𝐦𝐞 𝐩𝐨𝐢𝐧𝐭 𝐲𝐨𝐮 𝐭𝐨 𝐬𝐨𝐦𝐞 𝐡𝐢𝐝𝐝𝐞𝐧 𝐭𝐫𝐚𝐩: 👉 Not every risk is insurable. 👉 Even when insurable, some risks are only available at prohibitive costs, far from what is commercially reasonable. 👉 If the clause is drafted too broadly, the project developer may end up in breach simply because they couldn’t source an insurance cover from the market. This risk often slips through review because insurance clauses are treated as “routine.” Yet, they can become some of the most onerous obligations in a concession agreement. 💡 𝐁𝐞𝐬𝐭 𝐩𝐫𝐚𝐜𝐭𝐢𝐜𝐞 𝐟𝐨𝐫 𝐩𝐫𝐨𝐣𝐞𝐜𝐭 𝐝𝐞𝐯𝐞𝐥𝐨𝐩𝐞𝐫𝐬 𝐞𝐬𝐩𝐞𝐜𝐢𝐚𝐥𝐥𝐲 𝐢𝐧 𝐭𝐡𝐞 𝐀𝐟𝐫𝐢𝐜𝐚𝐧 𝐜𝐨𝐧𝐭𝐞𝐱𝐭 : ✔️Carve out uninsurable risks e.g. war, terrorism, currency inconvertibility, political events. ✔️Link the obligation to insure to the availability of an insurance cover at a commercially reasonable rate, not at any cost. ✔️ Insert a duty to periodically review the availability of insurance so that if new products emerge in the market, they can be adopted without burdening the project. ✔️ it’s important to clarify the relief mechanisms if an uninsurable risk materialises. For instance , the developer should be entitled to extension of time, or compensation. By balancing comfort for grantors, lenders and fairness to developers, insurance provisions become realistic and bankable, not traps. ⚖️ The takeaway: Never gloss over insurance clauses as “boilerplate.” Careful legal support is essential to ensure these clauses reflect market practice and don’t impose obligations no party can realistically fulfill.