Risk Management, Insurance and Bonding
Identifying, allocating, funding and transferring construction risk: why projects overrun, risk identification and registers, probability-impact scoring, expected monetary value and Monte Carlo cost and schedule analysis, risk responses, decision trees and contingency sizing and drawdown, indemnities and anti-indemnity statutes, limitation of liability, consequential damages waivers and warranties, AIA A201 concealed conditions and FAR differing site conditions, geotechnical baselines, delay, no-damages-for-delay, force majeure, escalation and tariff clauses, builder's risk and AIA insurance requirements, liability towers, professional, pollution and cyber cover and OCIP and CCIP wrap-ups, Miller Act and Little Miller Act bonds, subcontractor default insurance and bond claims, claims valuation, mediation, arbitration and dispute boards, and a capstone risk management plan for a community center.
CON-350 Year 3 3 credits 12 lessons · 5 h 15 min
Offered by HSM University · Construction Management
This is the American version of this course. See the Canadian version.
What you'll learn
- Explain why construction is risky, distinguish risks, facts, opportunities and issues, and describe the risk management cycle, risk appetite and allocation principles
- Identify risks systematically using several sources and techniques, describe them as cause, event and effect, and build and maintain a risk register with owners
- Analyze risks qualitatively with defined scales and a probability-impact matrix, and quantitatively with expected monetary value, three-point estimates and Monte Carlo cost and schedule models
- Choose and plan risk responses using expected value and decision trees, and size, hold, draw down and release contingency and management reserve
- Evaluate how contract clauses allocate risk, including indemnities and anti-indemnity statutes, limitation of liability, consequential damages waivers and warranties, and review owner contracts for risky amendments
- Analyze the allocation of site condition, delay, force majeure, escalation and change-in-law risk, including AIA A201 section 3.7.4, FAR differing site conditions, geotechnical baselines and index-based price adjustment
- Explain the principles of insurance and the coverage, exclusions, defects wording, pricing and deductibles of builder's risk insurance, and the steps after a property loss
- Explain commercial general liability, umbrella and excess layers, workers' compensation, professional, pollution and cyber coverage, wrap-up programs and the verification of coverage
- Explain surety bonds and how they differ from insurance, including bid, performance and payment bonds, the Miller Act and Little Miller Acts, and calculate bond premiums
- Estimate the cost of subcontractor default, compare subcontractor bonds with subcontractor default insurance, and follow the steps for performance and payment bond claims
- Treat claims and disputes as risks, value claims and settlement options, support delay claims with records, and choose dispute processes including mediation, arbitration and dispute review boards
- Monitor and report project and enterprise risk with dashboards, triggers and cover ratios, and prepare a complete risk management plan for a construction project
Course content
12 lessons · 5 h 15 min total · final exam
- 1 Why construction is risky 27 min · quiz
- 2 Risk identification and the risk register 26 min · quiz
- 3 Qualitative and quantitative risk analysis 25 min · quiz
- 4 Risk response and contingency management 27 min · quiz
- 5 Risk allocation in contracts I: principles and key clauses 26 min · quiz
- 6 Risk allocation in contracts II: site conditions, delay, force majeure and escalation 27 min · quiz
- 7 Construction insurance I: builder's risk and property 26 min · quiz
- 8 Construction insurance II: liability, professional, pollution and wrap-ups 26 min · quiz
- 9 Surety bonds 25 min · quiz
- 10 Subcontractor default, bonds versus SDI and claims on bonds 29 min · quiz
- 11 Claims, disputes and alternative dispute resolution 26 min · quiz
- 12 Monitoring and reporting risk, and capstone: a risk management plan 25 min · quiz
- E Final exam 20 questions
Requirements
Recommended background. You can start any course at any time.
Description
Identifying, allocating, funding and transferring construction risk: why projects overrun, risk identification and registers, probability-impact scoring, expected monetary value and Monte Carlo cost and schedule analysis, risk responses, decision trees and contingency sizing and drawdown, indemnities and anti-indemnity statutes, limitation of liability, consequential damages waivers and warranties, AIA A201 concealed conditions and FAR differing site conditions, geotechnical baselines, delay, no-damages-for-delay, force majeure, escalation and tariff clauses, builder's risk and AIA insurance requirements, liability towers, professional, pollution and cyber cover and OCIP and CCIP wrap-ups, Miller Act and Little Miller Act bonds, subcontractor default insurance and bond claims, claims valuation, mediation, arbitration and dispute boards, and a capstone risk management plan for a community center.
Part of the Construction Management stream, typically taken in year 3.