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RISK IN CONTEXT

Rising Risk: Three Considerations for Tall Tower Projects

Posted by Rahul Sharma 27 July 2016

London’s skyline has risen over the past few years due to an increase in the number of tall towers being built across the city.  The trend is set to continue, with 436 towers proposed, in planning, approved, or under construction in London.

Tall towers (defined as those buildings with more than 20 floors) provide much needed additional space for residents and businesses flocking to urban areas.  But such monumental projects need careful and extensive risk management.

In order to mitigate against costly delays, damage, or even litigation, developers and contractors should pay particular attention to the following during a tall tower construction project:

1.       Plan for the risk of higher losses

Tall towers are complex structures to build, and therefore the associated risks can have an even greater impact.  While fire and/or the escape of water can cause serious damage and delay to any project, these have a multiplied impact on a tall tower.  The same can be said for third-party liability risk or inherent defects.

2.       Be aware of urban risks

These buildings tend to be located in high-density urban areas, meaning that construction typically takes place in tight environments.  The proximity to people, properties, businesses, parks, and areas of historical significance is therefore much greater, heightening third-party liability risks.  In addition, tall buildings can often be located near transport lines or key infrastructure and carry a risk of disrupting nearby operations.

3.       Consider risks unique to tall buildings

These projects are complicated and carry additional risks to other construction projects.  Tall towers can block out light, leading to right of light disputes. The increase in tall towers has put greater scrutiny on obstruction of light disputes, particularly after a planned London tower at 22 Bishopsgate recently became the target of right of light litigation.  Consideration must also be taken to make sure that a building’s location and height does not interfere with flight paths.

Bearing in mind this risk profile, careful consideration should be given to the types of insurance purchased for a tall building project.  Construction all risks will generally only cover damage to the works and may not cover risks such as delay or litigation, therefore, more tailored policies will be necessary.

Rahul Sharma