Project Management is a fast-growing occupation that can be applied to hundreds of different industries. 

Effectively, Project Management is the managing or undertaking of projects in a particular field.  It is the application of processes, methods, skills, knowledge and experience in order to achieve specific project objectives.  

There are many different industries that require and employ the services of a Project Manager.

Some common disciplines of Project Managing may include:

• Construction
• Engineering
• Business Change
• Electrical
• Manufacturing
• Oil & Gas
• Information Technology
• Financial Services
• Energy
• Utilities

The primary exposure faced by ALL Project Managers is the failure to deliver the desired project outcome.

This may be determined by the time in which the project was delivered, not delivering a project as per specifications, the outcome not being suitable for its intended function or simply not achieving what was set out to be done originally. 

Suzie is engaged as a Project Manager for the build of a new office complex.  She has been engaged by the Client (property owner) to ensure the project runs to the specification.  She has been diligent in her risk management and ensured all contractors have been engaged directly by the property owner or builder so she’s removed from the contracting chain.

Throughout the build, it is discovered that a key design element has been missed from the project which is crucial to the functionality of the building.  It was noted on the architectural drawings but missed during construction. Suzie became aware of this issue, however, she forgot to report this to the property owner and the construction continued.  

After another month, she remembered and reported it to the property owner.  At this stage, it’s too late for an easy fix and part of the project needs to be demolished to rectify the issue.  The property owner seeks legal advice and sends a Statement of Claim to Suzie along with the builder.

In the Statement, it alleges that the builder is responsible for the costs of rectifying the original issue and Suzie is responsible for the demolition expenses.  The property owner argues that, had the error been reported on time, it could have been rectified easily at the builder’s expense.

The claim consists of:

• $130,000 demolition expenses
• $48,000 additional crane hire
• $35,000 additional scaffolding
• $400,000 lost rental opportunities due to the project delay
• $500,000 liquidated damages trigged by the contract

Suzie panics and notifies her Professional Indemnity insurer immediately who appoint solicitors to represent her.  The solicitor argues that the liability should fall on the builder, however, feels that Suzie does have some liability, so a settlement is attempted.

During mediation between the property owner’s solicitor, builder’s solicitor and Suzie’s solicitor, settlement terms are reached. Suzie’s insurer agrees to indemnity for the loss and contributes $106,500 on a commercial basis which is 50% of the actual costs incurred. Suzie pays her excess of $2,500 which is her entire cost for this process. 

The insurer has paid:

• $106,500 settlement
• $88,000 legal costs 
• $194,500 TOTAL (paid by the insurer)

She is extremely relieved to avoid the liquidated damages as these are EXCLUDED costs under her Professional Indemnity insurance.

Professional Indemnity Insurance 

Regardless of the type of Project Management work that you are involved in, Professional Indemnity Insurance is crucial to ensuring that you are protecting yourself and your business for the services and advice that you provide. 

Professional Indemnity Insurance will provide you with protection should you breach your professional duty.  This type of cover will pay for actual claim costs as well as defence costs against legal action you may receive.  

Professional Indemnity cover can be arranged for limits of $1 Million, $2 Million, $5 Million and $10 Million.  We can also assist with higher limits of cover if they are required.  

We understand that Project Management can be a broad industry, and your business may offer different services than the next.  As an experienced Insurance Brokerage, we will work hard to secure the best package that is tailored to your specific requirements. 

Public Liability Insurance 

If you are attending sites or meeting and engaging with clients, Public Liability Insurance is another key insurance that you will need to consider as a Project Manager. 

Public Liability Insurance covers your business for Bodily Injury or Property Damage caused to third parties, which is as a result of an occurrence arising from the business activities. 

Project Managers operating within the Construction or Trades industries tend to have a much higher exposure to causing damage or injury.  Depending on your level of involvement with the project, it may also be mandatory for you to hold Public Liability Insurance before you even step on site. 

If you are undertaking any manual work yourself or via subcontractors, your Public Liability risk increases significantly and Public Liability Insurance is absolutely recommended. 

As an Insurance Broker, we not only provide you with quality insurance for your business, but also assist with providing advice on your Risk Management procedures and strategies. 

We have put together a few handy Risk Management Tips & Tricks, specific for those operating within the Project Management Industry. 

• Subcontractors – ensure subcontractors are engaged directly by the Principal so you remove yourself from the contracting chain.  You are responsible for the actions of subcontractors and may be directly or vicariously liable for their actions.  
• Contracts – have your contract reviewed by a solicitor to understand your contractual liabilities.  Insurance policies typically exclude liability assumed under contract, so it is important to understand where you stand.  Certain insurance providers give cover for contractual liability but you need to raise this first so it can be factored into the quote process.  
• Business Continuity Planning – we recommend always having a contingency plan and redundancy controls in place to fall back on.  Within the IT industry, this could be something as simple as ensuring a previous system is backed up and easily accessible before changing to a new system.  If the transfer does not go as planned, it will be easy to revert the changes and re plan the project. 
• Checkpoint Sign Off – It is important to have checks and balances to pick things up along the way so you can judge whether a project is performing the way it should be.  Having Key Milestones for a project is a great way to reflect on the project and whether it is being delivered as expected. Obtaining written advice from the client, developer and any other relevant parties at each Milestone checkpoint is a great Risk Management initiative. 
• Scope of Works – ensure your scope is clearly defined in writing so there can be no questions as to your responsibilities.  Project management is broad in nature, however, you should not be responsible for anything and everything with the project.  If something goes wrong on site, you should be positioned as the person to fix it, rather than the one responsible for the loss.
• Choose Your Clients – this may sound simple, however, being selective about who you work with will avoid a lot of issues.  Unreasonable, unrealistic and demanding clients are often the people that will cause you problems.  Trust your gut, if it doesn’t seem right it often isn’t.

The following insurances may also be relevant to your business – please speak with us to determine what is suitable for you:

Management Liability

Management Liability insurance covers the costs of defending directors, managers and employees

against any claims that are the result of their actions or decisions.   If you are faced with unexpected liability costs, Management Liability Insurance can protect your business and personal assets, such as your home from being sold to cover the cost of paying claims.  

Cyber Liability 

Cyber Protection Insurance is a relatively new form of cover.  It’s designed to help protect your business from the financial impact of computer hacking or a data breach.  If your business has a website or electronic records, you’re vulnerable to cyber hackers.  In fact, it’s likely that your business will suffer a cyber attack at some stage.  A cyber attack could cost your business more than money.  It could also threaten your intellectual property and put customers’ personal information at risk – which could damage your reputation.

Corporate Travel

When business travel doesn’t go to plan, Corporate Travel Insurance can help to cover out-of-pocket costs to your business and employees.  If you or your employees need to travel for work, Corporate Travel Insurance can protect your business from financial loss associated with situations such as overseas health emergencies, flight cancellations or lost and stolen baggage.

Corporate Travel insurance is similar to personal travel insurance.  It can cover your business for unanticipated travel costs if specific events happen.  Corporate Travel insurance also covers your directors’ personal travel, which includes spouses and dependents.

General Property

General Property Insurance covers you for the cost of repairing or replacing property insured, such as your tools or equipment, that is accidentally damaged in any location worldwide (unless otherwise noted).

We understand that not having your tools or equipment could result in you not being able to work, which could affect your cash flow while also leaving you out of pocket to repair or replace your necessary tools or equipment.  This is why having General Property Insurance can help by ensuring accidentally lost or damaged tools or equipment are repaired or replaced ASAP enabling you to continue operating.

Income Protection

Income protection is as simple as it sounds – it’s insurance for your income.  If you can’t go to work because of sickness or injury, income protection will pay you a monthly benefit to replace your salary while you’re out of action.  Income protection is particularly useful if your job is your main or sole means of supporting yourself or if you have a family or own a business.

To arrange an obligation-free quote please click the button below – if you would like more information or have any questions, please call us on 1300 932 237.