UAA working with the industry to help mitigate risk.
The wind farming industry is certainly increasing demand and a number of key crane hire companies are diversifying to service the sector. George Grasso, global chief services officer for UAA explains how pressure to complete work within unreasonable time frames is leading to unacceptable and costly accidents occurring. He also explains how UAA intend to handle the issue.
“Typically, the principal contractors in this sector are putting pressure on sub-contractors, including crane hire companies. These expectations are around work being completed within certain periods of time and these periods can be unreasonably short, forcing sub-contractors to push work practices to the limit.
“These principal contractors are also expecting sub-contractors to sign unreasonable contracts whereby all liability is wavered away from the principal contractors, meaning the crane hire companies are taking on the majority of the risk.
Within the last 18 months there have been two major incidents involving large cranes on wind farms, fortunately there were no deaths and no injuries. The tolerances to operate these machines in a ‘walking’ configuration are so fine there is almost zero room for error. Any variable, however slight, such as a change in ground conditions, an incline or decline of a road can dramatically impact on the stability of these machines quite quickly and quite dramatically.
“Generally speaking, this sector is being serviced by large cranes with plenty of boom reach and major counterweights required for wind farm construction and maintenance. These incidents involved large mobile cranes with 750t capacities. It is obvious such large machines are required to get to the heights of the turbines. The cranes were dressed and featured boom lengths well over 50m,” said Grasso.
“In essence, such cranes can often be fully dressed and are walked on surfaces that can be unstable. The principal contractors may often rely on the crane hire companies to sign off on the road conditions again deflecting the liability to crane hire companies and not taking responsibility themselves.
“In such cases, cranes are working in areas where they need to walk from one turbine to another. We understand these cranes are designed to be walked with their outriggers fully extended with the idea that if the machine becomes unstable the outriggers are in position to help stabilise and ‘catch’ the crane,” he said.
“In some circumstances as they walk from one turbine to another, the crane will have to navigate through gates. Invariably some of those gates are not wide enough to accommodate such a large machine especially when you consider its width with the outriggers extended. In this scenario, the crane hire company is forced to retract the outriggers to navigate through the gates and then extend them out again.
Obviously, it’s a lot quicker to ‘walk a crane’ without pulling down the machine to OEM specs and reassemble it. It’s a risk verses reward’ particularly when unreasonable time frames are already stressed upon the crane industry,” said Grasso.
There is considerable risk involved with these sorts of actions and they can impact on a crane hire companies indemnity within their insurance policies and not to mention the potential risk around serious personal injury and possibly death if these types of practices continue, says Grasso.
“It is only a matter of time before someone could get seriously hurt or killed if such practices continue and with WorkSafe further enforcing safe practices, we would hate to see anyone in the industry face serious charges and or possible prosecution.
We’ve examined the issue quite intensely to see what we can do as an insurance market leader to drive better behaviours in the industry. At the end of the day, the industry needs to drive this improvement as experts and come up with appropriate solutions. All we can do is prevent undue risk to ourselves by enforcing that certain conditions and processes are met in the form of a walking of cranes and having it endorsed on our policy. Non-adherence to these agreed conditions and processes that results in unsafe practice could mean an insurance policy may not respond to a claim/incident under certain circumstances. We are working with key industry stakeholders to help with some of these terms and conditions that are appropriate, realistic and workable for all parties involved but ultimately greatly reduce the risk of these incidents occurring” he said.
Grasso recognises the renewable energy and in particular the wind farm sector is only going to get busier and confirms UAA is excited to support and be a part of it, he explains what this is going to mean to crane hire businesses servicing the sector.
“A key point to make is that UAA and any insurer specialising in the crane sector collects premiums to create a pool of money over a 12 month period to then pay claims. We measure the performance of the crane industry alone and look at measuring the performance of the crane sector specifically over a 5 year period. We continually examine and manage the premium pool. Like any business, we hope that at the end of a year, there will be some money left over for a profit.
“Over the last five years, the crane industry has been performing very poorly in terms of insurance and the number of incidents occurring across Australia. This has had a dire effect on the premium pool collected. Any incident impacts the entire industry, and certainly incidents relating to wind farming can further compound a diminishing pool quite dramatically. Our only option as an insurer is to examine ways to reduce risk exposure, often in consultation with a client and industry, in addition increase premiums and excesses, after incidences occur so to sustain a premium pool that allows an insurer to continue supporting the industry,” said Grasso.
Grasso explains how much is involved in retrieving a large crane from a windfarm incident.
“The recovery process for such cranes is extremely lengthy, and in most cases, it’s very complex. The recovery of these machines can involve up to four to six weeks of detailed planning before anything starts. Similar capacity machines are also required to assist with the recovery and in many cases earth and civil works are required to make the ground safe for the recovery crane to be set up and operate.
“There is also the exposure of expensive third-party economic liabilities due to an incident that can come in various forms such as downtime and the impact on the timing of the project itself as well as personal injury, and not always physical injury neither. Then there’s the logistics involved in getting the damaged crane, including the transportation from the site to the repair facility. There are so many factors that come into play which are all add up to this being a very expensive exercise. As an example such incidents can cost in the region of $3.5 million of damage to a machine plus circa $100,000 in civil works, plus anywhere between $500,000 to $750,000 for potential recovery costs for the use of other machines to recover the crane, plus the other third party liability demands that could be in the $millions. Incidents like these can easily exceed $5 million just in material damage losses if the machine is not a total loss in itself. The value of these machines can range anywhere between $6 million to $13 million, in value as an example,” he said.
Crane hire businesses can expect to see some changes to their insurance policies as UAA looks to stamp out non-compliant, poor and unsafe practice’s says Grasso.
“We realise accidents occur and that’s why insurance exists. We will continue to stand by our clients under these circumstances as we always have, but clear breach of safety process and guidelines, without adequate supervision and planning cannot allow to continue.
“We are making changes to our policies which under certain circumstances could in effect exclude incidences relating to walking of cranes at windfarms in unsafe configurations as a practice. UAA has been working with some members of the crane industry to establish an agreed, fair and workable solution for both insurance and crane industry. It’s pretty important to us that the industry has input and joint ownership of this solution.” he said.
Grasso confirms these new guidelines, will mean more time needed for lifts to be completed but can’t see any other way around the practice, things can’t continue as they have been otherwise insurance costs and indemnities will become unsustainable and more difficult to support the industry. The industry has been very good at self-regulating and taken positive steps in mitigating risk and making worksites safer for everyone. UAA will continue to support the industry and each other, working together to further improve and fine tune UAA’s niche crane insurance and services thus improving outcomes for both UAA and the crane industry.
“We understand this could mean more time will be needed to complete the tasks. It will mean cranes may need to be on site for longer, once work is completed on turbines then the crane will need to be packed up to appropriate OEM standard and or if required local road authority travel requirements and then moved. It will mean the crane hire companies will have to push back on principal contractors the fact that unsafe work practices will not be tolerated, implied nor expected.
Unreasonable time frames and costs imposed to crane hire companies should not be accepted as it forces unsafe practices.
“The expectation is for crane hire companies to go back to the principal contractors and explain they will be unable to complete the work within unreasonable set time frames and therefore can’t work for the prices agreed to in the past if it endorses unsafe practices. Insurance clauses will only become more tighter so not to condone such unsafe practices and particularly if there is no guarantee that the roads provided are suitable enough let alone exposing a crane hire company to work outside the very fine tolerances needing to work within.
Such projects are going to require more time, care, planning, real experience, competency based training and most importantly diligent and ‘experienced’ supervision.
This maybe more time and cost to the principal contractors, but it’s a combined team effort to ensure everyone takes responsibility, everyone to be fully informed before any action and no-one should feel pressured to take unsafe risks,” and that’s the bottom line to ensure ‘safety’ said Grasso.
It will come back to crane hire companies checking very closely the terms of any contract and standing their ground and the principal contractors understanding that nobody is going to be prepared to take the risks they might have considered before. The principal contractors need to take this seriously and take ownership of this also, says Grasso.
“It is important to note, although the wind farm sector is set to boom there is a minimal and niche level of experience for this type of work in the crane sector, particularly when it comes to the levels of expertise with operators and crane crews. We see industry training as a huge factor around the subject of operating cranes in the wind farm sector and particularly the subject of walking cranes. We believe the focus on this needs to be significantly ramped up.
“This needs to be a focus for the industry as a whole, including the crane OEMs as well as the principal contractors making sure the appropriate and specific competency training is put in place. It is a major issue which is now impacting the whole crane sector and it needs to be looked at in a coordinated and combined manner.
Interestingly, the study conducted by RMIT on Crane Safety and the increase of incidents over the past several years also relates to many of these points and it must be addressed and taken seriously, says Grasso
“In summary, the losses have been far greater than the premium pool for over 5 years which is clearly unsustainable, however we continue to engage with the industry as we have in the past to find mutually beneficial solutions that ultimately provide a safer and more sustainable workplace for all. Our commitment to this industry is unwavering and we will continue to support it like they have supported us for over 48 years,” said Grasso.