Originally published in Risk Management Magazine,
October 2010.
Among the economic risks associated with any construction
project, payment risk looms large. Money is the lifeblood of
construction, and the withholding of payment can doom a project to
failure. Industry participants employ a battery of tools to manage
payment risk, first among them the construction contract itself.
The oft-heard slogan, "allocate now or litigate later,"
recognizes that disputes can sink a project.
Construction contracts tend to be large, complicated documents,
with a multitude of moving parts that are the work of many hands.
Herein lies one of the greatest, but incompletely recognized, risks
of construction: coordination. And among the challenges of
coordination, insurance arrangements are a foremost concern. Below
are ten factors to consider to ensure that insurance contracts and
construction contracts are properly aligned.
