The following is an illustrative example of the type of Professional Indemnity claim a Project Manager could experience.

Example #

A Project Manager is engaged to coordinate a commercial development.

Their role includes:

• Managing the scope of works
• Coordinating contractors
• Monitoring project costs
• Reporting to the client

The scope issued to several contractors does not clearly identify which party is responsible for particular parts of the work.

As construction progresses, contractors submit variations for work they say was outside their original scope.

The variations increase the project cost and contribute to delays.

The client alleges that the Project Manager failed to properly define, coordinate and document the scope of works and seeks recovery of its additional costs.

What would the insurer consider? #

A Professional Indemnity insurer may consider matters such as:

• The Project Manager’s agreed services
• The contract
• The written scope
• Communications with the client
• Communications with contractors
• How the variations arose
• Whether the Project Manager may be legally liable
• The policy wording
• Exclusions
• Excess
• Available limit

Depending on the findings and policy terms, the policy may assist with defence costs and an insured settlement or compensation.

What does the example demonstrate? #

It highlights the importance of:

• Clearly defining responsibilities
• Recording instructions and approvals
• Documenting scope changes
• Using a formal variation process
• Identifying which party engages each contractor
• Accurately describing insured Project Management services

This is an illustrative example only. Actual claim outcomes depend on the facts and policy terms.

Contact our team if your Project Management responsibilities or contracting arrangements materially change.