Allianz Global Risks UK (AGR) is the lead retrocessionaire providing insurance for the construction phase of the Incheon Bridge The bridge will span nearly 12 kilometres between the new island-based

Construction began on July 1, 2005 for a 52-month period and a contract sum of US$1.4bn. The bridge is planned to open for traffic in 2009. At 11.5 kilometres, it will be one of the longest bridges in the world, with a cable-stayed span representing the fifth longest in the world.

The construction project concessionaire is the consortium KODA Development Co Ltd., a Special Purpose Company consisting of various member companies, including UK-based AMEC, which holds a 23% controlling interest. Incheon Bridge is a public-private finance initiative signed with the South Korean Ministry of Construction and Transportation. KODA will operate and maintain the bridge for a proposed 30 year period. It will then revert to the South Korean authorities.

The retrocession insurance policy for the Incheon Bridge project covers the Samsung Corp JV (joint venture) design and construction contractor and the project manager, AMEC. AGR is fronted by Korean Reinsurance & Insurance Company on behalf of the direct insurers Samsung Fire & Marine and others. The broker is Aon.

Risk control

AGR is providing risk consulting services on site to help mitigate loss potential during the construction phase, including any delays in start-up. The company's UK risk consultants will visit the site at least twice a year. The consultants' analysis looks at the project's risk management standards compared specifically with those set out in the UK Joint Code of Practice for Tunnelling.

As of February 2006, construction was four weeks behind programme. However, Samsung JV are in the process of reprogramming to shorten the critical path through the cable stayed bridge section to recover the current delay. The installation of marine piling and pile caps is in progress, and pier construction has commenced on the approach bridge. The construction of a large fabrication facility at nearby Songdo is now mostly complete, and fabrication and pre-casting is in progress in support of the marine works for the cable-stayed bridge, approach bridges and viaduct sections.

At the early stages of the project, a key focus was on establishment of risk management procedures. With these now in place, the AGR risk consultants are working closely with the project team to expand project risk control. Risk registers are a fairly new concept in South Korea, but common practice for many large civil engineering projects in the UK and elsewhere. Steve Leveritt, the AGR risk consultant assigned to the project, recently returned from a site visit to the Incheon Bridge project. The visit allowed him to gauge the implementation by the South Korean contractors of what is essentially European good risk management practice.

"The initial phase has been challenging - in particular, the improvement in risk management procedures and the adoption of the tunnelling code for risk management. The good risk management practices within the code are fairly rigorous, and essential in ensuring that the contractor is professionally managing the risks. To begin with, Samsung JV, was not familiar with the Tunnel Code of Practice and the approach to risk management embodied in it. For example, although the key risks relating to health and safety had been factored in, limited consideration had been given to the issue of material damage. The identification of actions to mitigate risks, together with procedures and documentation that supported high levels of risk control was not fully developed. However, following the risk control visits, the contractor has embraced these practices and has demonstrated greater risk awareness," says Steve Leveritt.

Risk assessments are carried out prior to construction and are summarised in risk registers, which are 'living' documents used to track significant risks throughout the project. For the next step, the risks are assigned to individuals, who take appropriate action to mitigate their potential for damage and disruption. "It is in the interests of all parties and partners on the project that good risk management is in place. However, it is generally the main JV contractor who is in a position to take action to ensure risks on the project are controlled. It is vital that he considers all the risks throughout the design and construction of the works and takes the appropriate measures to mitigate them," adds Leveritt.

The key project risks stem from natural hazards within the marine environment, as well as risks from shipping in what is a busy shipping channel, heavy lifting of large bridge components (plant and equipment failure, operator error), design, or quality problems in the fabrication and construction of bridge elements.

The business of public private partnerships is undoubtedly thriving both in the East and closer to home within the European market. UK government investments through PPP/PFI contracts currently represent around 10-15% of total annual investment in public services. "Because the stakes are so high in a typical international PPP project, the effective adoption of good risk management practice throughout all the stages has to be a top priority," says Leveritt.

"As far as the Incheon Bridge project is concerned, the site team are at a crucial stage. During the next two years, and beyond, there will be a focus on key critical path activities for the construction of the cable stayed bridge over the shipping channel serving Incheon. On this section and on other sections of the bridge are the challenging prospects of temporary lifting systems. Major failures have occurred on other large bridges during the installation of bridge deck elements. The management of such key risks are vital," adds Leveritt.

This report from AGR includes material from an article in the company's Global Risks Report. Among those involved in the project are Paul Smith, manager, contractors all risks and inherent defects insurance, E-mail:, and Steve Leveritt, senior risk consultant and engineer, E-mail: stephen.