Construction Challenges

Owning the Risk

Owner control of insurance and project safety was vital to the success of Denver’s commuter rail project.
By: | February 22, 2016 • 7 min read

Denver’s Eagle P3 project is ambitious not only in its scope and structure, but in its approach to risk and insurance.


The $2.2 billion project links Denver’s airport, downtown and metropolitan areas with three new commuter rail lines, which are due to open in 2016, as part of the Regional Transportation District’s (RTD) ‘FasTracks’ infrastructure expansion. The project is unusual from an insurance perspective in that the RTD opted to assume control of the insurance program and participate in the safety program.

Owner-controlled insurance programs (OCIPs) were more rare back in 2011, said Don Holmes, Denver head and managing director of the construction practice for RTD’s broker Marsh.

Public entities would typically defer such responsibilities to the project concessionaire. However, the approach is growing in popularity, thanks in part to the success of Eagle P3.

Don Holmes, managing director, Marsh

Don Holmes, managing director, Marsh

“Investors and lenders asked lots of questions in order to get comfortable with how the coverage would work, and if we’d given the wrong answers there could have been a great deal of resistance,” Holmes said.

“But the client was doing it for the right reasons.”

Without the public entity controlling the insurance program, some of the contractors on the project could not have secured high enough general liability or workers’ compensation insurance limits to participate. But by creating a program greater than the sum of its parts, RTD was able to serve the community by offering contracts to a broad range of regional companies.

The selected concessionaire, Denver Transit Partners (DTP), is a partnership owned by lead constructor and designer Fluor Enterprises, Denver Rail (Eagle) Holdings — a unit of John Laing PLC and an investment arm of Aberdeen Global Infrastructure Partners.

The concession group is complemented by a host of supporting contractors.

It was essential prospective underwriters on the project fully understood its structure, funding and safety program. Marsh conducted an extensive risk assessment of all six FasTracks corridors prior to structuring the Eagle P3 insurance program.


This information was shared with bidders on the project, while RTD engineers took the underwriters on extensive tours of the rail corridor — a transparent approach that undoubtedly contributed to every prospective insurer submitting a quote to participate.

“I give RTD a lot of credit — not every client invests in that kind of analysis pursuant to placing an insurance program,” said Holmes, who admits the biggest challenge was to meet the needs of a great number of stakeholders.

“The challenge is convincing markets the risk is well managed. We succeeded in this and achieved very good pricing, and the program has responded well.” — Don Holmes, managing director, Marsh

“There are so many competing interests in a PPP. We had to establish provisions regarding escalation of payments and commercial invalidation of insurance, because we would be living with what we committed to for a very long time and we needed to get it right,” he said.

“That took a great deal of time, effort and conversation.”

Zurich won the role of lead underwriter for the casualty, general and excess liability and workers’ compensation wrap-up, while the first party builder’s risks are led by Liberty International Underwriters (LIU).

Additional underwriters participate in excess layers across the program.

Paul Hampshire, vice president, engineering and civil construction, Liberty International Underwriters

Paul Hampshire, vice president, engineering and civil construction, Liberty International Underwriters

“We felt the quality of the client, the way they had procured their P3 concession, their overall approach and the caliber of the design and construction concession team were very favorable,” said Paul Hampshire, vice president of engineering and civil construction at LIU, which also assumed responsibility for construction risk engineering.

“We like to be considered an extended part of the project delivery team, albeit at arm’s length,” said Hampshire.

“We are not there to audit; we are there to add value, because insurer and insured have aligned interests — we both want the project to be a success.”

But, he added, “there is a small but significant difference between risk management and the management of risk, which sits 100 percent with the concession team of designers and constructors, through to maintenance and operations, who are fully responsible for the management of risk as they see fit — we don’t own their risk, they do.”

Delegating Risk Management

Loss control on a project of this nature is a true team effort. RTD chose to oversee this element, employing its own loss control engineer to work closely with Marsh across the OCIP program and with LIU on construction risks.

According to DTP’s executive project director Aaron Epstein, the contractors and sponsors of the project partnered to allocate risks among the parties best equipped to mitigate potential exposures.

“On a quarterly basis, management formally reviews the outstanding risks and revises the risk framework to ensure all potential risks to the project are identified and mitigated,”  he said.


Epstein noted it is important participants understand all risks up-front during the development phase of the project in order to structure the team in the best manner possible; and that risk analysis is updated on a consistent and frequent basis to keep abreast of any new risks that may arise.

Hampshire added that on projects of this scale, underwriters prefer to work with concessions that have worked together previously “so they are not on a learning curve, discovering how each other work while trying to deliver to intense timelines.”

It should also be noted, he said, that contractors have been hired for requisite experience and skill rather than on price, and that there is adequate time and budget in the project schedule to ensure the project is completed to the right standard.

Holmes admitted that driving loss control by committee can sometimes raise concerns over who is controlling what, “but our loss control engineers performed exceptionally well,” he said.

Bumps on the Track

Construction on the project revolves primarily around station upgrades, drainage work and the interaction of railroads with utilities, communities and existing structures across 36 miles of rail corridor.

Aaron Epstein, executive project director, Denver Transit Partners

Aaron Epstein, executive project director, Denver Transit Partners

“Coordination with the local communities, cities and counties, as well as the two freight railroads we are in close proximity to, is one of our major focuses,” said Epstein.

Working with third parties who have had to adapt their own facilities to accommodate the railroad has been a “headache,” said Hampshire, and caused several delays — in some cases requiring the project’s critical timeline to be sliced into sub-activities, and gaps left in infrastructure, to avoid project-wide delays.

There are also environmental considerations, such as dredging up polluted spoils from under old rail tracks.

“The key for the client is for policies to have broad wordings and not be too specific,” said Holmes.

“The challenge is convincing markets the risk is well managed. We succeeded in this and achieved very good pricing, and the program has responded well.”

However, Hampshire said there was “a wide range of issues, from technical to natural catastrophe to day-to-day security and control,” to contend with on the project — to which Liberty’s claims team reacted “proactively.”

Heavier than expected rainfall, for example, caused flood damage to the train maintenance facility as well as isolated incidents along the rail corridor. Then there was the decision by the concession team to demolish and rebuild a number of bridges they constructed, having decided they were not fit for purpose and would cost more to repair than rebuild, as well as some theft of plant and equipment.

“Certainly we have faced some issues, just as all projects do,” said Epstein.


“The important thing is that our internal processes have allowed us to identify these issues early and correct them before they turned into major setbacks.”

And the project has indeed so far achieved that rare feat of being on time and on budget.

“Performance has been splendid and I’m very proud of our work and that of RTD’s risk manager Bob Medina,” said Holmes.

“Safety and engineering has been excellent and I’m not aware of any major claims.”

Hampshire said that P3 projects, having briefly fallen out of political favor, will become more prevalent due to increased demand for infrastructure in the U.S., coupled with a challenging funding environment. His concern, however, is a potential lack of experienced teams to deliver them.

“PPP projects are big, ugly and risky. Everyone involved needs to understand what the risks are — and that’s not always the case.”

But having glided smoothly towards completion, Eagle P3’s risk approach may prove to be a prototype for others to follow.R2-16p92-93_08Construction.indd

Antony Ireland is a London-based financial journalist. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Absence Management

Establishing Balance With Volunteers

It’s good business to allow job-leave for volunteer emergency responders, whether or not state laws apply.
By: | January 10, 2018 • 7 min read

If 2017 had a moniker, it might be “the year of the natural disasters,” thanks to a phenomenal array of catastrophic or severe events— hurricanes, tornadoes, wildfires, ice storms and floods.


Combined with smaller-scale fires and other emergencies, these incidents tax the resources of local and state emergency services, often prompting the need to call volunteer emergency responders into action.

But as lean as most organizations are already running, volunteer activities can sometimes cause friction between employees and employers. Handling conflicts the wrong way can potentially lead to legal headaches, harm employee morale and batter a company’s reputation.

State by State Variations

Most employers are aware of the various federal and state leave laws protecting their employees, including family and medical leave, pregnancy leave and military leave. But leave laws that protect the livelihoods of volunteer emergency responders are more likely to fly under the radar of some HR managers and risk managers.

Such laws don’t exist in every state, but more than 20 states do have some type of law in place to protect volunteers including emergency responders, firefighters, disaster workers, medical responders, ambulance drivers or peace officers.

Marti Cardi, vice president of Product Compliance for Matrix Absence Management

The laws vary broadly. Nearly all specify that such leave be unpaid, and that employees disclose their volunteer status to employers and provide documentation for each leave. But there is a spectrum of variations in terms of what may trigger an eligible leave. Some, for instance, apply for any emergency that prompts a call from the volunteer’s affiliated responder group. Others may require a government declaration of emergency for the law to be triggered.

While many of the laws do not explicitly require employers to let employees leave work when called to an emergency during a shift, most specify that an employee may be late or even miss work entirely without facing termination or any other adverse employment action.

Some states mandate a maximum number of unpaid leave days that a volunteer can claim. But others may place more significant burdens on employers. In California, for instance, employers with 50 or more employees are required to grant up to 14 days of unpaid leave for training activities in addition to any leave taken to respond to emergency events. For multistate employers, keeping on top of what obligations may apply in each circumstance can be a challenge.

Significant Risks

Large or mid-sized employers may rely on absence management providers to keep them in compliance. For smaller employers though, it may be as simple as looking up a state’s law via Google to find out what’s required. However, checking in with the state department of labor or the company’s attorney may be the best way to get the correct facts.

“I would caution that just because you don’t find something [on the internet], it doesn’t mean it’s not there,” said absence management and employment law attorney Marti Cardi, vice president of Product Compliance for Matrix Absence Management.

For example, Cardi said, an obscure Texas law provides job-protected leave for volunteer ham radio operators called into service during an emergency.

Cardi said employers should task HR to investigate the laws in each state the company operates in, and to ensure that supervisors are educated about the existence of these laws.

“If a supervisor is told by one of his or her employees, ‘Sorry I’m not coming in today … I’ve been called to volunteer firefighter duty for the [nearby region] fire,’” she said, you want to be sure that the supervisor knows not to take action against the employee, and to contact HR for guidance.

“Training supervisors to be aware of this kind of absence is really important.”


An employer that does terminate a protected volunteer for responding to an emergency may be ordered to pay back wages and reinstate the employee. In some cases, the employee may also be able to sue for wrongful termination.

And of course, “you don’t want to be the company in the headlines that is getting sued because you fired the volunteer firefighter,” she added.

If an employer bars a volunteer from responding, the worst-case scenario may be a third-party claim. Failure to comply with the law could give rise to a claim along the lines of “‘If you had complied with your statutory obligation to give Jane Doe time to respond, my loved one would not have died,’” explained Philadelphia-based Jonathan Segal, partner at law firm Duane Morris and managing principal of the Duane Morris Institute.

“That’s the claim I think is the largest in terms of legal risk.”

Even if no one dies or is seriously injured, he added, “there could still be significant reputational risk if an individual were to go to the media and say, ‘Look, I got called by the fire department and I wasn’t allowed to go.’”

The Right Thing to Do

What employers should be thinking about, Segal said, is that whether or not you have a legal obligation to provide job-protected leave for volunteer responders, “there’s still the question of what are the consequences if you don’t?”

Employee morale should be factored in, he said. The last thing any company wants is for employees to perceive it as insensitive to their interests or the interests of the community at large.

“Sometimes employers need to go beyond the law, and this is one of those times,” — Jonathan Segal, partner, Duane Morris; managing principal, Duane Morris Institute

“How is this going to resonate with my employees, with my workforce, how are people going to see this? These are all relevant factors to consider,” he said.

There’s an argument to be made for employers to look at the bigger picture when it comes to any volunteer responders on their payroll, said Segal.

“Sometimes employers need to go beyond the law, and this is one of those times,” he said. “Think about the case where’s there’s not a specific state law [for emergency responders] and you say to a volunteer, ‘No, you can’t leave to deal with this fire’ and then people die. You as an employer have potentially played a role, indirectly, because you didn’t allow the first responder or responders to go,” he said.

The bottom line is that “it’s the right thing to do, even if it’s not required by law,” agreed Cardi.

“I feel that companies should have a policy that they’re not going to discipline or discharge someone for absences due to this kind of civic service, subject to verification of course.”

Clear Policy

While most employers do strive to be good corporate citizens, it goes without question that employers need to guard their own interests. It’s not especially likely that volunteer responders will try to take advantage of the unpaid leave allowed them, but of course, it could happen.

That’s why it’s important to have policies that are aligned with state laws. Those policies could include:

  • Notifying the company of any volunteer affiliations either upon hire or as soon they are activated as volunteers.
  • Requiring that employees notify a supervisor as soon as possible if called to an emergency (state requirements vary).
  • Requiring documentation after the event from the head of the entity supervising the volunteer’s activities.

If at some point it becomes excessive – someone has responded to emergencies five times in nine weeks, then it’s time to examine the specifics of the law and have a discussion with the employee about what’s reasonable, said Segal. It may also be time to ask specifics about whether the person is volunteering each time, or are they being called.


In some cases, the discussion may need to be about finding a middle ground, especially if an employee has taken on an excessively demanding volunteer role.

“We encourage volunteers to pick the style that best fits their schedule,” said Greta Gustafson, a representative of the American Red Cross. “Disaster volunteers can elect to respond to disasters locally, nationally, or even virtually, and each assignment varies in length — from responding overnight to a home fire in your community to deploying across the country for several weeks following a hurricane.

“The Red Cross encourages all volunteers to talk with their employers to determine their availability and to communicate this with their local Red Cross chapter.”

Segal suggests approaching it as an interactive dialogue — borrowing from the ADA. “Employers may need to open a discussion along the lines of ‘I need you here this week because this week we have a deliverable on Friday and you’re critical to that client deliverable,’” he said, but also identify when the employee’s absence would be less critical.

No doubt there will be tough calls. An employer may have its hands full just trying to meet basic customer needs and need all hands on deck.

“That may be a situation where you say, ‘First let me check the law,’” said Segal. If there’s a leave law that applies, “then I’m going to need to comply with it. If there’s not, then you may need to balance competing interests and say, ‘We need you here.’” &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]