Project Managers Professional Indemnity Insurance
A project manager is responsible for the things between other people's work. Programme, procurement, information flow and coordination of a design team all belong to the project manager, and when a project runs late or overspends the question is whether those things were managed.
That is what separates the role from quantity surveying. A cost consultant answers for the figures; a project manager answers for the programme and the process, which means delay claims rather than valuation claims, and coordination failures rather than measurement errors.
Delay is the characteristic loss and it is expensive to quantify honestly. A client claims the cost of a late completion, which for a commercial building means finance, holding costs and sometimes lost trading, while the contractor claims prolongation from the other side. The project manager can be pursued by both.
We can advise project management practices on professional indemnity covering programme and coordination duties, and on the employer's agent and CDM roles that commonly sit alongside them.
Common claims and risk exposures
The exposures that produce claims in this trade, rather than a generic list.
Delay and programme failure
A project completing late, with the client claiming finance costs, holding costs and lost revenue. Establishing whose delay it was consumes most of the cost of these disputes regardless of the eventual answer.
Procurement and contract selection
Advising on the wrong contract form, a procurement route that transferred risk badly, or a tender process that left the client exposed. The consequence is felt through the whole project rather than at one moment.
Coordination of the design team
Information not issued in time, clashes not resolved, consultants not properly appointed. The project manager carries the failure of coordination even where each designer's own work was competent.
Certification and employer's agent duties
Where the project manager certifies payments or acts as employer's agent, the exposure extends to overcertification and to decisions on time and money under the contract.
Change control
Variations instructed without proper authority or record. The client disputes the cost and the contractor disputes the instruction, and the project manager's records are the only evidence of what happened.
The cover we arrange
We arrange professional indemnity and related insurance around the services you provide, the clients you work with and the contractual requirements you face. The appropriate cover and limits will depend on your individual activities and the terms available from insurers.
Professional indemnity
Claims arising from negligent project management, programme advice, procurement advice and coordination, including delay claims.
- Programme and delay claims
- Procurement and contract advice
- Coordination failures
- Defence costs included
Employer's agent and certification
Where those roles are taken, the duties go beyond management into administration of the contract and need to be declared.
- Employer's agent duties
- Interim certification
- Extensions of time assessed
- Declared as separate activities
CDM appointments
Where the practice holds principal designer or client adviser duties under CDM, those are statutory roles with their own exposure and regulatory dimension.
- Principal designer duties
- Client duties advised on
- Regulatory representation
- Declared specifically
Public and employers' liability
Injury and damage during site attendance, which for a project manager means regular presence on live construction sites.
- Site attendance and meetings
- Damage to works and property
- Employers' liability, legally required
- Limits commonly £5m or £10m
Run off
Continuing cover after the practice ceases. Delay and defect disputes are resolved long after practical completion, and the project manager's records are central to them.
- Continues after the practice ceases
- Disputes resolve years later
- Six years or longer
- Arranged before closure
What an underwriter will ask
Having these to hand shortens the process considerably, and usually improves the terms.
- Fee income split between project management, employer's agent, CDM and consultancy
- Largest project by construction value, and the typical range
- Sectors worked in, and whether residential above eighteen metres is involved
- Whether payments are certified, and under which contract forms
- Whether CDM appointments are held
- Appointment terms, liability caps and net contribution clauses
- Change control and record keeping procedures
- Claims and notified circumstances over the last six years
What affects the cost of your insurance?
The main factors insurers consider when assessing the premium.
Construction values managed
The main factor, because delay and prolongation costs scale with project value rather than with the management fee.
Whether certification is undertaken
Certifying payments adds the overcertification exposure that belongs to cost consultancy, and is rated on top of the management role.
Sector and project type
Residential, and particularly high rise residential, is rated above commercial and industrial work of the same value, for the same reasons that apply across construction professions.
Record keeping
Change control, minutes and a documented information release schedule are what decide delay disputes. A practice that can evidence them is a materially better risk.
Conditions and exclusions to consider
Terms vary between insurers, so treat these as the questions to ask rather than a description of any one policy.
Guaranteed completion dates or costs
Warranting a completion date or an outturn cost is an obligation beyond reasonable skill and care, and it is the commitment most likely to appear in a client's own appointment.
The contractor's performance
A contractor's own delay or defective work is not the project manager's liability unless the failure was in managing or reporting it. The distinction is where most of these disputes are actually fought.
Design responsibility not held
A project manager who did not design is not liable for the design, though claims are often pleaded against everyone on the project at once and defended on that basis.
Fee disputes
Recovering unpaid fees is a commercial matter, and it is a frequent trigger for a counterclaim alleging mismanagement of the project.
Common questions
How is this different from a quantity surveyor?
A quantity surveyor answers for cost: measurement, valuation and certification. A project manager answers for programme and process: procurement, coordination and information flow. The claims are different in kind, which is why the two are presented separately even where one practice does both.
The project is late and everyone is blaming everyone else.
That is the normal shape of a delay dispute, and it is resolved on records rather than recollection. Minutes, instructions, the information release schedule and change control documents are what establish whose delay it was, so preserve them and notify your insurer early.
We also act as employer's agent. Does that need declaring?
Yes. Employer's agent duties under design and build include certification and decisions on time and money, which is a different exposure from managing the project. Undeclared, those activities may sit outside the cover you hold.
What limit should a project management practice carry?
Set it against the construction value you manage, not your fee. Delay costs on a commercial building are measured in finance, holding costs and lost trading, and a modest management fee can sit behind a claim many multiples of it.
How do I get a quote from True Risk Solutions?
Call 01304 262880 and speak to a broker, or email info@truerisksolutions.co.uk with what you do, what you need cover for and a phone number with the best time to call, and a broker will call you back. We need a phone number to quote, because the cover and the price depend on questions that are quicker to answer on a call than by email.
Speak to a specialist who understands your industry
Tell us about your business and the work you undertake, and we will come back to you with cover options built around it. Call 01304 262880, or email us with a phone number and the best time to call and a broker will ring you back.