The insurance risks linked to building World Cup stadiums

The insurance risks linked to building World Cup stadiums | Corporate Risk & Insurance

The insurance risks linked to building World Cup stadiums

In little over a week, football (or soccer) fans will have a lot less time on their hands. The 2018 FIFA World Cup kicks off June 14 when Russia plays Saudi Arabia in Moscow’s Luzhniki Stadium, which has capacity for over 80,000 spectators. As one of the older venues out of the dozen stadiums where games will unfold – Luzhniki opened in 1956 – there was no fear of meeting a construction deadline, which was not the case with say, the Rostov Arena, which had its official opening April of this year.

Whether it’s for the Olympics, Super Bowl or the World Cup, construction projects that need to be done by a set date and will have the world’s eyes on them - facing risks that a newly constructed condo building, where tenants can delay moving in if the building isn’t ready, doesn’t.

“It has a completion date that has to be reached and if it means cutting some corners for some construction personnel or rushing some of the design phases, that’s going to be done most likely in order to meet that date,” said Dan Gmelin, Argo Group’s vice president of underwriting, and head of architects and engineers. “Any time you’re rushing, obviously you’re at greater risk for committing errors, so I can easily see some small design flaws from faulty workmanship that could exist in order to have that construction project completed on time.”

Huge projects, like a major stadium, could run into other hurdles, too. There’s always the possibility of both a cost overrun, after the general contractor in charge of the project gives their best estimate, and a lag in the project’s completion.

“With such a large project, even just the difference in the variations of cost of steel could provide a huge cost variation in the final project cost,” said Gmelin. “And because there’s so many different moving parts – getting materials and labour and equipment to the site, and removing construction debris – there’s a huge existence of construction delay possibilities.”

Stadiums are often built in metropolitan areas, and when there’s subsurface work being done, like excavation, and then construction work above ground, nearby buildings could be damaged. Bodily injury to third-parties or workers as well as pollution issues, if the project is close to a major waterway, are other risks to consider.

With tens of thousands of people making the trek to see a World Cup game, one obvious concern for construction teams is structural integrity. Walkways that allow for smooth flow of human traffic are important, especially since tempers sometimes flare during high-pressure penalty shoot-outs.

“These are soccer games we’re talking about,” explained Gmelin. “Sometimes the soccer crowds can get very intense and you wouldn’t want to have any situation where there could be trampling of people,” or any existence of a structure that prevents the flow of people so that they can get in and out safely.

Besides purchasing a significant amount of insurance, those constructing large stadiums outsource a number of risk managers in all areas to inspect every possible problem that could exist.

And once the rowdy spectators go home, the venues still need to be maintained for future use, though this critical step is sometimes forgotten about, according to Gmelin.

“All of a sudden, the event takes place and then it’s not under the international spotlight anymore. These buildings still have to be maintained because most likely they’re going to be used for other events and it might not be in the spotlight, but if it’s not maintained, you’re going to see some of these buildings degrading and causing problems to the subsequent users.”

 

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