Press Release Management and mitigation of risk 060904 by 6IrEI1


									                                                                                                                      4 September 2006

                                                              PRESS RELEASE

Insurance Limitations & Liability Excesses - Alarm Signals for the Consulting Engineering Industry

The ability of consultants to offer high quality and innovation is being threatened by unrealistic

liabilities and limited insurance.

With an increasingly complex array of project implementation options, (Design-build, Design-build-

operate, Build-own-operate-transfer, or other types of Public Private Partnerships), risks are often

unclear and inappropriately dealt with. The increasing use of such tools as professional and

commercial guarantees and warranties places unrealistic expectations on the parties involved.

Project implementation options, conditions of contract, or procurement models all carry risk, and

need to be better understood by all parties.

It is therefore not surprising that risks are being transferred in ways that do little to manage or deal

with them effectively. Consulting engineering service providers, although typically representing less

than 5% of the cost of a project, are increasingly facing risk levels well in excess of this proportion.

Even the insurance industry is aggressively transferring risk, by limiting coverage and increasing

premiums to such an extent as to make policies uneconomical for many consulting firms. The cost of

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insurance in some countries now exceeds 12% of consulting firms’ revenue. This will inevitably be

reflected in increased costs for the project itself, if consultants are to continue offering their services.

Ironically, risks to all parties will also increase where appropriate coverage is not available and risks

not effectively managed.

At the International Consulting Engineering Conference, participants will explore new ways of

showing clearly to clients and investors the perils of risk avoidance or risk transfer, and the lack of

good risk management practices. Consulting engineers, who are often required to define risks, are

not always familiar with the best ways to mitigate those risks. New tools to highlight their expertise

will be developed. Education for consulting engineers as well as their clients, is an important part of

the work undertaken by FIDIC.

The conference, a joint venture organised by the International Federation of Consulting Engineers

(FIDIC) and the European Federation of Engineering Consultancy Associations (EFCA), and in

collaboration with the Hungarian Association of Consulting Engineers and Architects (AHCEA), will

bring together over 550 professionals from the world’s engineering and consulting industry to discuss

challenges, trends and opportunities. This is the first time that the two international heavyweights

have held a joint conference, which arose from initiatives to increase co-operation and member


- ENDS -

Notes to Editors
EFCA, founded in 1992, has member associations in 27 countries, and is the sole European federation
lobbying on behalf of engineering consultancy and related services, a sector that employs some
700,000 staff in Europe –

Conference programme and registration are available at

Conference logo :
For further information, please contact

Julia Ridsdale-Saw

EFCA Policy Advisor

Av. des Arts 3-5

B-1210 Brussels


Tel (direct): ++32 2 209 07 77

Fax: ++32 2 209 07 71

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