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Construction Law/Proffessional indemnity

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Question
Project: loading jetty in Port of Fujairah
Design responsibility with Contractor
How long is Contractor responsible
Project value 40mlj. $US
What is a general accepted value for 10 year Proffessional Indemntity for this project with medium risk.

Answer
Dear Hubert,

Thanks for your question.

Let me say that, the value of PII - Professional Indemnity Insurance to be procured for design liabilities protection  varies from contract to contract and also from client to client. Some clients fixed the value based on certain percentage of the value of the project under design; some fixed it based on certain percentage of the professional fees for the design components; some as well fixed the value based on just a pre-determined lump sums classified in various categories of contract sums - it could be stated as ..i.e.
(1) For services with a contract sum of say from AED 1.00 up to AED 50Mn - the PII could be a lump sum of the full amount or say lump sum of AED 5Mn;
(2) For services with a contract sum of say from AED 50Mn up to say AED 250Mn - the PII could be a lump sum of the full amount or say lump sum of say AED 10Mn
* these figures may have been stated using some basic data of previous defaults and liabilities that the client has experienced without recovery and then, could have decided to take precautions in future projects by stipulating higher requirements for the PII value.
* Again, it should be noted that; Insurance companies or Banks that may provide these cover would also require some protection before they can issue these documents to the designers and where they feel the requirements constitutes a substantial risk and some may even reject saying they cannot entertain such risk of such value or demand greater premium from the designers.
From the experience i have; for design services up to AED 15Mn; i see clients asking for PII of AED 3.5Mn.
Again, on RICS website; there are figures indicated which RICS advised the limit of PII expected its members to undertake for their services. I think; this may become advisory should the client has a different requirement.

Hope this helps.

Femi

Construction Law

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Femi Alofe

Expertise

I can answer all questions relating to the followings: 1. Contract Administration - variations, contract clauses interpretation, all post contract procedures, valuations and certificates questions, extension of time issues and prolongation cost matters. 2. Contract Practice - Any questions regarding forms of contract like JCT, FIDIC & other Bespoke forms. 3. Quantification, measurements and Estimating questions 4. Contracts and construction law questions and dispute resolutions problems. 5. All FIDIC Conditions of contracts

Experience

Out of my 24 years experience in construction industry, i have the following specific experience: 1. Contract Administration - 15 years in contract administration with over 10yrs in Managerial positions covering africa and the middleeast. 2. Contract Practice - 15 years experience with over 10yrs in Managerial and expert positions covering africa, north america and the middleeast. 3. All pre-contract procedures, Tendering, Quantification, measurements and Estimating questions - 20 years experience. 4. Contracts and construction law questions and dispute resolutions problems - 15 years experience with over 10yrs in Managerial and expert positions and 5 years expert witness and active practice in arbitration proceedings covering africa and the middleeast.

Organizations
1. FAIQS - Fellow, Australian Institute of Quantity Surveyors, Australia 2. FRICS - Fellow, Royal Institution of Chartered Surveyors, UK 3. CCP - Certified Cost Professional AACEI, USA 4. PQS - CIQS, CANADA 5. ACIArb. - CIArb, UK 6. MNIQS - NIQS, NIGERIA 7. RQS - QSRBN, NIGERIA

Publications
1. AACEI RP on Estimating, 2010

Education/Credentials
1. B.Tech (QS) 2. RICS professional course, CEM - UK 3. MSc , UK NARIC 4. Professional Doctorate ( to commence 2016)

Past/Present Clients
1. Larsen & Toubro Ltd, Dubai UAE 2. Larsen & Toubro (oman) LLC 3. Archi + Web consortium, Abuja Nigeria 4. George Dike & Associates, Minna Nigeria 5. Public works Authority (Ashghal), Doha Qatar

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