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Supertall Buildings: Construction Risk Assessment

Tall buildings are becoming taller and being built faster than ever before, driven by rapid growth in Asia and the Middle East. The number of supertall buildings (101) in the world has almost tripled in the last seven years. Just 15 were built between 1930 and 1995.

How high in the sky can they go? A realistic achievable height with current technology is one mile (1.6 km), although this is not expected for another 20 to 30 years. Outside of planning restrictions, limiting factors are efficiency and speed of elevators, new building materials to potentially replace steel and concrete, safety measures and damping systems. Cost is the major obstacle preventing developers going much beyond the one-mile mark.

Allianz World Map 2012b

Increasingly complex high-rise building projects present significant risk challenges meaning insurance claims and risk consulting services are particularly important on a construction site. Risks include:

  • the impact of any seismic or natural catastrophe activity, such as flooding during the construction stage;
  • the threat posed by wind loads and fire;
  • choice of building materials; and
  • the unique complexity of managing projects that can involve as many as 10,000 workers and more than 100 subcontractors.

Significant technical issues include:

  • pumping and placing concrete at extreme heights;
  • cranage and lifting items to such heights;
  • significant variation in wind speeds between ground level and higher levels, which affects design and construction works.
  • maintaining verticality as the building height increases;
  • elastic shortening of constructed building elements as the imposed weight from the completed building increases;
  • maintenance and repairs of inside and external elements; and
  • building services provisions (electrical, water and sewer disposal).

The insured values involved with supertall buildings are increasing, with insurance playing a vital role in ensuring such projects advance past the design stage. Today’s newest and largest buildings easily exceed $1 billion or more in value. Allianz Global Corporate & Specialty SE (AGCS) is the leading reinsurer for the construction of the next building that will hold the title of “world’s tallest”: the Kingdom Tower, which has a total insured value of $1.5 billion.

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The Kingdom Tower compared with the London Skyline

For insurers, each project must be planned and assessed on its own merits and specific risks. Timelines may extend, design plans may alter and engineering challenges may arise. Regular sharing of accurate management information to all stakeholders is crucial. Close evaluation of past claims is essential in preventing future claims.

New risk challenges continue to emerge post-construction as demonstrated by increasing concerns over the potential impact of glass facades on the surrounding locality. Unexpected consequences of building so high with such materials highlight the need for ongoing risk mitigation.

Appropriate insurance coverage is a key part of any holistic risk management strategy. As well as providing all risks building and construction protection, insurers also provide after construction coverage, protecting policyholders against physical structural damages arising from defects in design, materials or workmanship.

Assessing the key risks with the world’s tallest buildings

Claims and risk consulting services are especially important on a construction site, even more so when dealing with increasingly complex high-rise building projects, which can present a number of significant challenges. For an insurer or reinsurer acting on projects of this nature, one of the key issues is to assess what level of risk – and impact – any seismic or natural catastrophe activity might have on the structure in question.

Fig. 3 How's the world's tallest buildings have grown

“If an event such as an earthquake or another natural hazard was to occur, it could obviously have a potential impact,” says Clive Trencher, senior risk consultant at AGCS. “Therefore, the foundations need to be adequately designed and constructed to withstand such an event. Consideration also has to be given to potential exposures such as flash flooding, which may pose a risk when initial building work starts on such projects because there will be large excavations in the ground.” For example, Jeddah has a potential exposure to this risk [the city experienced flooding in 2009, in part due to inadequate drainage infrastructure] so a factor like this needs to be taken into account on the risk register.

The choice of building materials also poses challenges. Glass panels need to be thicker and more durable for the higher stories, while concrete mixes designs also have to vary so they can withstand the differing buildings loads that vary with height.

Fire risk in tall buildings, both during the construction and occupied phases, is a multiplied risk factor and represents a considerable challenge for designers and engineers. Evacuation of a building that has multiple purposes like hotels, restaurants, residential areas, shopping centers and offices is crucial, especially considering the number of people to be evacuated within a short time period. Thus an enormous focus lies on the design of sprinkler systems, escape rooms and fire resistant structures at an early stage of design.

Managing unique complexity

Although many of the technical issues that the latest high-rise building projects face may appear similar to previous supertall and megatall developments, AGCS experts advise against making assumptions that the same technical solutions can be used.

“Such constructions are unique projects facing unique risks. Every construction project faces challenges and the more ambitious and large-scale the project might be, the more challenges it will create,” says Trencher. “Each project has to be planned and assessed on its own merits and specific risks. While we may learn some techniques from the construction of other tall buildings, it would be wrong to assume that they can be fully risk assessed or planned just because they have been used on similar tall structures.”

Another aspect of supertall and megatall building projects is their unique complexity. Such construction projects are time-consuming – spanning at least five years in the case of Kingdom Tower. Joint ventures, clients, consultants, subcontractors and suppliers need to work closely and act as a team. Organizing and managing subcontractors and suppliers require a dedicated and highly experienced team. Strong management becomes vital for the success of such a project. Regular and accurate management information on the building’s progress and any emerging risks is crucial.

New challenges

The risks don’t stop when construction is complete. New challenges continue to emerge as demonstrated by the recent case in London when the glare from the 37-floor skyscraper at 20 Fenchurch Street, more commonly known as the “Walkie-Talkie” impacted parked vehicles and shops. As a result, a permanent sunshade is now to be attached to the “Walkie-Talkie” to prevent reflected sunlight from causing further damage.

Such an unexpected consequence of building so high with such materials highlights the need for ongoing risk mitigation strategies. Appropriate insurance coverage is a key component of any holistic risk management strategy and as well as offering all risks building and construction protection, insurers such as AGCS can also provide after construction coverage, known as Inherent Defects Insurance (IDI). This protects policyholders against physical structural damages arising from defects in design, materials or workmanship and is a first party insurance that does not require proof of negligence.

This article is from Allianz Global Corporate & Specialty SE risk bulletin, Supertall Buildings: Construction Risk Assessment in the 21st Century.

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