DelayinStart Up(DSU)

AIMU May2008
J ayKubinak
Swiss Re
EngineeredRiskView
Who Who
Owner
Contractor
What
DSU/ALOP
Soft Costs
Slide2
Soft Costs
When
ConstructionTimeline
WaitingPeriods
Who- Concerns
Owner Owner
ProjectedProfits
OngoingCosts
Debt
Penalties
Contractor
Slide3
Contractor
Penalties
What
DSU/ALOP DSU/ALOP
Soft Costs
Penalties
Slide4
DSU/ALOP
Annual GrossProfit
= Net Profit plus StandingCharges = Net Profit plus StandingCharges
= Annual Turnover less VariableCosts
VariableCosts are not insurable
Loss of Market is not insured
ExtraExpense
Additional expenditureto avoid or diminishthe
amount theinsurers would havebeenliableto
pay
Slide5
pay
Lessanyamount
Legallyor contractuallyrecoverablebythe
insured
Anyother sumsavedduringtheperiod of
indemnity
SumInsured: Gross
Profit
GROSSSALES
VARIABLE COSTS
STANDINGCHARGES
SUM INSURED
NET PROFIT
DEBT SERVICE
FIXEDCOSTS
Soft Costs
Time RelatedAdditional Expenses Time RelatedAdditional Expenses
Interest
InsurancePremiums
Permit Fees
AdvertisingFees
Taxes
Slide7
Taxes
Legal Fees
Penalties
Owner Owner
Preconstructioncontractedsales
Performanceissues
Contractor
LiquidatedDamages
Slide8
When
Important Dates &Time periods
ConstructionSchedule ConstructionSchedule
Start Date
AnticipatedDateof Completion
WaitingPeriod(Deductible)
IndemnityPeriod
Critical Path
Slide9
Critical Path
AggregateTimeExcess
% PROGRESS
TIME EXCESS
100% Actual date of compltion
2
3
INDEMNIFIED
DELAY NOT
INDEMNIFIED
4
TIME
1
2
INDEMNIFIED
DELAY
INDEMNIFIED
Anticipated date of
completion
1
2
3
4
Per OccurrenceTimeExcess
% PROGRESS
TIME EXCESS
100%
Actual date of compltion
2
3
INDEMNIFIED
DELAY NOT
INDEMNIFIED
4
TIME
1
2
INDEMNIFIED
DELAY
INDEMNIFIED
Anticipated date of
completion
1
2
3
4
Critical Path
KeyPhases
KeyEquipment
Prototypes
Lagtimes
MultipleManufacturers
Demand
Slide12
Demand
Partial Operation Possibilities?
Singlelinebuild
Makeup capacity
MultilinePower Plant
Slide13
Watchful Eye
Monitoring Monitoring
Inspections
Insurancecompany
Outsideengineer
Lenders inspection
News
Slide14
News
IndustryContacts
Other Considerations
Co Insurance Co Insurance
Seasonality
Extensions
Slide15
HumanRisk
ImaginativeSolutions
Slide16
Risk comes from not knowing what you're doing.
Warren Buffet