STUDIES ON EXPLORING THE POTENTIAL INNOVATIONS IN CONTRACTOR INSURANCE OPTIONS IN THE CONSTRUCTION INDUSTRY IN GHANA

ABSTRACT
The construction industry (CI) worldwide involves many forms of activities that exposes it products, professional, services providers and consumers in the industry to many forms of risk and uncertainties in various dimensions. Contractors are not of sound mind when carrying out construction project because of the uncertainty and risk associated with it. This study presents critical examination of contractor insurance options available to the contractor and determines potential innovations in insurance delivery and means of adopting the options in the CI of Ghana. The study was based on a mixed method research methodology and covers construction and contractor insurance options, means of adopting an innovation method of contractor insurance option in order to ascertain the nature and typology contractor insurance options in the CI of Ghana. Data was collected in a questionnaire survey of 60 stakeholders in the CI and insurance companies across the Ashanti region of Ghana representing 76.92 percent (%) as the response rate. Descriptive statistical analyses were used toanalyse the research questions. Proposed findings cover better ways of creating awareness of risk and uncertainties involved in successful completion of construction projects and the need to involve them as contractor to contactor insurance when contracts are awarded. The study shows that, creating awareness of risk and uncertainties associated with contractor insurance is to fully protect construction worker as a core responsibility for every contractor. The study also shows that, the most influencing factors affecting the selection of contractor insurance are the insurance companies‟ parameter and the determinants of contractor insurance options respectively. There is also evidence of “Contractor Insurance options and innovation is key to the development of the insurance industry” as the most potential innovations insurance option that influence the selection of contractor insurance option in the CI.


CHAPTER ONE 
GENERAL INTRODUCTION TO THE RESEARCH 
1.1 BACKGROUND OF THE STUDY
The CI worldwide involves many forms of activities that exposes it products, professional, services providers and consumers in the industry to many forms of risk and uncertainties in various dimensions. Risk is the likelihood, chances or possibility of occurrence of a danger to a construction activity or injury to a construction professional, worker, service provider, equipment among others (Ringen, et al., 1995). Uncertainty in the context of construction is the likelihood of unfortunate and unforeseen incidents to occur. This may occur as a result from any form of accidents including vehicle accidents, injuries from workplaces and diseases which may lead to permanent or partial incapacitation (Green, 1997; Loosemore, et al., 2006). Risks in the industry have received tremendous attention whereas the subject of uncertainty in construction activities has not been given the necessary attention in term of research. The two concepts are all likelihood events since their occurrence are not known until they happen. Although risk can be measured and predicted, uncertainty is difficult and sometime not even thought of many in the industry.

The nature of construction works exposes almost all the factors of construction products and production to various kinds of risks including the use of scaffolds, chemicals and toxics that are harmful to human health and the effects of natural disasters such as flood, fire outbreak, earthquake among others as well as poor workmanship(Wisner, 2012). In order to reduce the devastating consequences of any of such risks and uncertainties, construction companies (CC), clients, consultants have devised conventional ways that cushioned them and other third parties to the contract against the results of such unfortunate occurrences. One of such conventional means is the institutionalization of an insurance cover, which depending on the aspect of the construction process is determined as very critical in insuring.

Contractor insurance is a means by which there is an exchange of a party prerogative over an amount which is fixed in order to protect another party/parties‟ interest in relation to a particular construction project (O‟Sullivan, 2016). According to Rapp, (2011) and Edwards (1995), contractor insurance in itself is a major innovative way of managing risks for contractors, clients and other related parties associated with the project. It provides party funding in time of the occurrences of any risk and uncertainty to the insurers. Contractor insurance acts in a more and more important in ensuring project success and as with underwriters transferring gains and losses that result through sudden happenings as well as natural disasters (Akbıyıklı, et al., 2011).

Despite the above, risk and uncertainty mitigation mechanism in the CI has little been known in both practice and in literature about the utilization and the potential innovations in the options available to contractors in the Ghanaian Construction Industry (GCI). The subject of contractor insurances does times does not receive the necessary attention it deserves due to some various factors. Notably among these factors could be as a result of the lack of understanding of the industry on the importance of insurance; lack of legal framework within which stakeholders can operate; stakeholders, particularly in the context of Ghana lacks the understanding as to how to allocate risk and the methods used in managing risk through insurance.

In the CI, insurance is limited to a section of its staff, thus living the rest and the works to their providence. The CI is one of the largest employment provider‟s in Ghana. According to Cotton et al. (2005), the construction industry is among the most hazardous industries with records of high occurrence of accidents that cause deaths, injuries, financial losses etc. This indicates that instead of managing the risk for maximum protection and increase in profit margins, CI is doing otherwise.

According to Lloyd (2014), globally, contractors normally have risk indemnity policies covering almost every aspect of their projects as it is the most profitable for them to maintain this indemnity. Once insurance is made to cover all aspects of the construction project, the risks involved in the process is consequently passed to the owner. Even though defects in the project are normally not included in the insurance policy; wording could be purchased instead to cover damages caused by the defects to the works of the project. For such insurance to be significant, different aspects of the works ought to be precisely defined. Construction insurance is only available when construction works is going on in accordance with sound established techniques of construction.

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Item Type: Ghanaian Project Material  |  Attribute: 70 pages  |  Chapters: 1-5
Format: MS Word  |  Price: GH50  |  Delivery: Within 30Mins.
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