Defective products most common damage in construction projects


Between 2013 and 2018, Allianz evaluated nearly 14,000 claims on major construction sites worldwide for engineering and construction projects insured by the Dax Corporation. Examples are airports, power plants or car factories. More than 2,500 of the cases examined happened in projects of German companies – but not necessarily on construction sites in Germany.

Thus, in addition to the increasing importance of defects and control failure, the increasingly large construction sites are a trend that the authors have observed. The projects tend to become more extensive and the construction takes longer – which in turn increases the sum insured and the potential damage.

For example, a giant airport like Dubai, whose current expansion is insured by Allianz, costs 32 billion euros. "As a result, the sums insured are now much larger – projects worth between four and nine billion euros are not uncommon, so hundreds of millions of dollars in damage can not be ruled out," said Robert Maurer, who works for Allianz to insure major construction projects in Central and Eastern Europe cares.

Political risks such as sanctions or trade disputes have also increased – and the damage has increased. A large part of the damage caused by construction projects is also causing fire all over the world. A prominent example is the fire on the construction site of a large high-rise in Warsaw in June, which is also insured by Allianz. According to the investigation, not the most defective products worldwide cause fires and explosions the highest amounts of damage (27 percent). But the most common source of damage is also globally defective products (27 percent).

Another trend is the increasingly complex supply chains: in the past, for example, airports or power plants were largely built by national customers and local suppliers. Meanwhile, companies from all over the world supply machines and plants. If a turbine breaks down, it sometimes takes months to replace or repair it – and that costs.

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