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...
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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

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 : ƒ ƒ ƒ ƒ ƒ ƒ

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

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IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment

Reasons for revamping / modernisation : ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ

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

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IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment

Evaluation of technical risks involved : ƒ ƒ

Risk assessment => analyse scope of cover of works Specificity y of works ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ

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

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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: ƒ

New / replacing components

ƒ

Components being worked upon

ƒ

Components being protected, moved or disassembled in order to allow the works to be carried out

ƒ

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 : ƒ

New replacement value for newly supplied equipment

ƒ

Contract value for cost of works + newly supplied equipment

ƒ

Existing plant and machinery • Œ Œ Œ

Residual value of existing equipment before refurbishment Original purchase costs of equipment Actual market value after refurbishment Value of similar type of equipment

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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

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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 ƒ ƒ

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 ƒ Existing plant taken out of operation in order to carry out th works the k ƒ

Existing g plant p continuing g operation p during g the works

ƒ

Existing plant covered by existing policies where the contractor is responsible for material damage

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IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment

DSU premium rating aspects a delicate matter in general ! ƒ ƒ ƒ ƒ ƒ ƒ

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 : ƒ ƒ

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

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IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment

Covers and wording ƒ

Material Damage + extensions to existing Property / Machinery covers

Contract works cover + inclusion of cover for existing / surrounding property

ƒ

L Loss off Profits P fit

ƒ

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

ƒ

Loss experience / Loss examples

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IMIA - WPG 51 (07) Revamping and modernisation of machinery and equipment

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