IMIA Working Group Paper 51 (07) Revamping and modernisation of machinery and equipment
IMIA – Working Group Paper 51 (07)
Revamping p g and modernisation of machinery y and equipment q p
WPG 51 (07) – IMIA Tokyo Conference October 2007...
Revamping p g and modernisation of machinery y and equipment q p
WPG 51 (07) – IMIA Tokyo Conference October 2007
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
SUMMARY 9 9 9 9 9 9 9
Typical revamping - modernisation works Reasons for revamping - modernisation Technical risk evaluation Insurance aspects p Material Damage g cover Insurance aspects Business Interruption cover Covers and wordings Loss experience / loss examples
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 2
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
Definition : revamping g / modernising g works Specificity of revamping / modernising works :
On existing equipment or machine Dismantling reassembling works Dismantling, Close coordination with plant operation Pressure through operation time constrains I Involve l critical iti l works k and d technology t h l Several parties involved
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 3
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
Age Extension of lifetime Improvement of efficiency Testing of latest technology Energy savings Improvement for maintenance, safety of operation Relocation of machinery Environemental strains or legislation changes
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 4
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
Evaluation of technical risks involved :
Risk assessment => analyse scope of cover of works Specificity y of works
Experience of designers Main parties involved Technology involved Compatibility between new design specification and original design Technical safety y margins g on upgraded pg machines Transport to a manufacturer or service shop Conservation measures during standstill Logistics security on working site Logistics, WPG 51 (07) – IMIA Tokyo Conference October 2007 - 5
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
Providing cover E Extension t i on Fi Fire, All Risks Ri k policies li i Extension on Machinery insurance policies Contract works policies
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 6
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
Providing cover : Owner / Principal
Existing E i ti Plant Pl t worked upon
Existing
Plant not worked upon
New items of equipment
C t Contractor t
Manufacturer
Workshop
Property p y exposed p
Colored areas
and
Transportation Various responsabilities : WPG 51 (07) – IMIA Tokyo Conference October 2007 - 7
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
GRASS ROOT PROJECT
REVAMPING PROJECT
Contract Value
CV + EP to be evaluated
For new works only
For new works & existing plant
Not involved
Usually y involved
TRANSPORTATION
To the site only
May include to and from workshops for existing plant
TESTING
On new equipment only
Also existing plant involved
RATES
Available
To be derived from EAR-rates
WORDING/COVERS
Standard
Implications to be assessed
INDEMNIFICATION
“New for new”
To be defined in wording for EP
VALUES AT RISK TECHNICAL INFORMATION DISMANDING WORKS
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 8
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
V l Values att risk i k:
New / replacing components
Components being worked upon
Components being protected, moved or disassembled in order to allow the works to be carried out
Existing Property : Actual “surrounding property” not being worked upon
Sum Insured =
Contract Value for Refurbishment Works + Value V l off items it being b i worked k d upon WPG 51 (07) – IMIA Tokyo Conference October 2007 - 9
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
Estimation of values :
New replacement value for newly supplied equipment
Contract value for cost of works + newly supplied equipment
Existing plant and machinery •
Residual value of existing equipment before refurbishment Original purchase costs of equipment Actual market value after refurbishment Value of similar type of equipment
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 10
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
RATING APPROACH : Starting rate = grass-root contract works rate With modificating factors : ¾ Project j Set-up p
¾ ¾ ¾ ¾
Working environment specificities Complicated access Delocalisation of existing plant items Transportation logistics
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 11
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
Indemnification rules A “good good “ wording For new components or works => full indemnity for repairs und replacement “new for new” For existing equipments
Partial loss depreciation rules Total Loss depreciation rules
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 12
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
MAIN INTERDEPENDANCES Evaluation of values at risk
Pricing
Revamping of Machinery & Equipment including Testing
Technology
Insurance Covers
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 13
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
Business Interruption cover : Plant status Existing plant taken out of operation in order to carry out th works the k
Existing g plant p continuing g operation p during g the works
Existing plant covered by existing policies where the contractor is responsible for material damage
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 14
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
DSU premium rating aspects a delicate matter in general !
Technical T h i l risk, i k Natural hazards BI sum insured Influence of Time Excess Indemnity Period Existing plant items to be included as for the MD cover, cover in respect of the BI effects
Rating guideline :
Rate a comparable standard construction risk Take proper care in evaluating all special risk elements
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 15
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
Existing Plant not worked upon :
EP 3rd
Existing Plant incidentally
Existing E i ti Plant Pl t intensly
worked upon but otherwise in operation ti :
worked upon (not operating during CW):
EP 2nd category
EP 1st
category
BI exposure to the continuing ti i operation ti
New iitems off N machinery / equipment
category
DSU Exposure relevant for items undergoing contract works
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 16
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
Covers and wording
Material Damage + extensions to existing Property / Machinery covers
Contract works cover + inclusion of cover for existing / surrounding property
L Loss off Profits P fit
BI within Existing Property / Machinery Covers WPG 51 (07) – IMIA Tokyo Conference October 2007 - 17
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
Loss experience / Loss examples
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 18
IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment
WPG 51 (07) – IMIA Tokyo Conference October 2007 - 19