Washing Away Construction Damage

The potential for water damage plays a major role in underwriting assessments for new construction and engineering projects. However, in addition to known perils — such as storms washing away roads and bridges — water damage from unforeseen sources has the potential to cause unanticipated damages and drive material claims related to damage to parts of the project that would otherwise be protected. Many of these potential damages can be avoided through risk management measures that can greatly reduce the unknown risk associated with these projects and reduce total losses.

Although difficult to quantify separately, various sources estimate total losses attributable or partially attributable to water damage to be equal to or more than 25% of all construction claims globally.

WATER DAMAGE

Unforeseen water damage can arise from design flaws, weak reinforcements and a lack of protection on worksites during construction. It can cause millions of dollars in damage that is not accounted for in normal underwriting assessments. Some high profile examples include:

A faulty fitting in a high-rise office block caused a pipe to leak, resulting in more than US$2 million of damage to ductwork, plaster-work, wiring and other systems in a building in downtown Toronto.

Trenchwork flooding during construction of an oil pipeline in Australia caused multiple inci- dences of collapse, filling the pipe with mud and causing further damage to the coated surface. Total claims were in excess of US$25 million.

Long-term rainfall on a United Kingdom road project — which involved long earthworks and large stretches of roadway built on clay — caused multiple landslips and a subsequent collapse of the road. This resulted in more than US$25 million in damage.

IMPLICATIONS FOR CANADIAN CONSTRUCTION PROJECTS

Meltwater

Sudden warming in the spring has a dramatic effect, since the frozen ground beneath doesn’t allow for natural drainage; this can multiply the damaging effects of excess water. After a severe winter, the ground is often frozen and impermeable, preventing normal water drainage that prevents flooding. Once the winter snow starts to melt, the water can only flow over the surface, eroding the surface to a greater degree than many heavy rainstorms.

Damage to slopes can be reduced with good project management. This includes protecting the works from the possibility of overflowing riverbeds and ensuring the site is kept clear of snow. Often the water causing floods originates a long distance from the site, so care is needed. Pipelines dug in trenches over a long distance are susceptible to flooding of all sorts. They need to be protected by minimizing the length of the trench kept open and ensuring that nearby water sources are kept under control.

A good ongoing risk management regime by the insurer can provide valuable information regarding the site management and the protective measures being taken. It can allow corrective measures to be taken by the contractor prior to an incident (preferably), or impose policy conditions.

Hydro-electric project and flash flooding in British Colombia

In mountainous regions, snowmelt can cause moraine outbursts and flash flooding. Many new hydroelectric projects are underway in British Columbia, including Ashlu Creek Hydro, Forest Kerr Hydro and Zeballos Lake Hydro. These projects are located in the mountains and take the water needed from streams flowing off the hill. The projects are constructed by diverting the stream with a small temporary dam away from the construction site, where the main dam and power station are built. Designs are made according to careful studies of rainfall information, so that a good factor of safety can be built in and the project properly protected.

One particularly unforeseen danger related to meltwater looms in glacial lake outburst floods (GLOFs). Often the streams are fed from lakes higher in the mountains; these lakes are in turn supplied with water from melting snow and ice. When the spring thaw starts, the parent glacier can crack and fall into the lake. The lake then bursts its banks and flows down the path of the stream at high speed. Subsequently, a wall of water, mud, rock and debris destroys everything in its path straight through the construction site. Even if the site is undamaged by the impact, it can be filled with mud. Additional costs resulting from these GLOFs can be in the multiple millions of dollars.

These dangers can be partially avoided by ensuring the slopes are protected and stabilized during the construction phase. This can be done using artificial protections such as geo-textiles and rock bolting, or through natural means such as grass and trees. Prevention measures are worthwhile expenditures: the cost of delays can run into millions of dollars as the ground is re-stabilized and the project redesigned. Prevention measures can involve the controlled draining of the glacial lake prior to any works being exposed to the flood. This can be relatively inexpensive and provide a valuable protection to the lifecycle of the dam.

Hidden dangers in large structures

Condo and office tower blocks are highly susceptible to damage from burst pipes. Burst pipes on construction sites, pipe failure due to faulty workmanship and frost at a building’s top levels can all cause water to flow through building ducts, potentially causing damage to other floors of the site.

One notable example of water damage occurred in an office tower with an air-conditioning, heating and water-handling plant on the roof. One of the pipes in the system was poorly connected and the joint burst, allowing a slow leak of water. The water from the ruptured pipe flowed along the service ducts through the building across each floor on all 40 stories of the building. Damage to the building was minor, but the damage to the electrical system was extensive. Every wire connection had to be remade and every piece of wire replaced. Thousands of miles of wiring had to be renewed. The resultant loss was several millions of dollars.

These losses could be avoided using a modified design that makes sure drainage paths avoid internal service ducts. Separation of electrical conduits from the air-handling and waterpipe work can be modest in cost and allows for easier building maintenance. Similarly, ensuring that ponding water is drained away from critical items is common sense. Unfortunately this is not always part of today’s cost-conscious construction planning.

Sprinkler failure, due to vandalism, is another potential cause of water damage. But do you turn the water supply off to prevent water damage and thereby accept a higher fire risk? Sprinklers are easy targets for vandals. They are easily triggered — hitting them with a hammer or applying heat will set them off — and they are difficult to turn off without accessing the main water supply. Damage can be very high, especially in buildings close to completion with plasterboard ceilings and wiring. The difficulty in solving this problem is that disconnecting the sprinklers from the water supply will potentially cause delays in putting out a fire, increase fire damage and/or risk worker safety.

Such incidents can often be avoided through project planning and careful time planning at construction sites to avoid exposure during peak flood periods. Possible prevention techniques include constructing the project outside of rainy periods, ensuring adequate protections and pumps are available and ensuring awareness of these dangers on the site to empower the work force to protect the project.

SOLUTIONS

Enhanced site management can alleviate most of the problems caused by water. The awareness of the problems at all levels of construction site management can prevent the damage occurring — or at least help reduce the effect of the water. Good security can prevent vandalism, culverts can be kept clear of debris and awareness of weather condit
ions can help prevent major flooding. Good initial surveying can help show where hidden water may lie. Proper design and planning can ensure that only minimal areas are exposed to the effects of the water. The risk surveyor can assist when visiting the site by highlighting these problem areas and ensuring that the project management has action plans ready to go in the event of a water emergency. Regular site visits by insurance surveyors can check on implementation. Plus, robust risk management practices — as proposed by societies such as the British Tunelling Society and industries such as the petrochemical industry — can help to reduce exposures.

There is no way to completely eliminate unforeseen water damage during construction. But enhanced site management, strict time planning and an awareness of the water’s lurking danger can help reduce and eliminate some of the potential damages.

The underwriter’s job is to ensure the consequences of water damage are properly addressed. This can be done by allowing for it in the price, or by choice of deductible level. More powerfully, an underwriter can work with the contractor to instill a good risk management regime.