The recent fire at the One Bayside construction site in Gibraltar is a timely reminder of the serious consequences that construction-site fires can have. While the immediate priority is always the safety of workers and emergency response, the financial consequences for a construction project can continue long after the fire has been extinguished.
Construction-site fires can arise from a number of sources, including hot works such as welding and cutting, faulty cladding installations, electrical issues and the presence of combustible materials such as timber, insulation and fuels.
The resulting financial impact can extend well beyond the cost of repairing the physical damage. A fire can interrupt works, delay completion and require sections of a project to be repaired or reconstructed. This may lead to increased labour and material costs, extended site overheads, disruption to planned activities and, depending on the circumstances, loss of revenue or other financial losses.
From physical damage to financial loss
When a significant fire occurs, establishing the financial impact can be complex. The cost of physical repairs may be relatively straightforward to identify, but the wider consequences for the project can be more difficult to quantify.
For example, if works are suspended following a fire, the project may incur additional site management, plant, accommodation and other overhead costs during the extended period. Labour and subcontractor costs may also increase, while changes to the construction sequence can result in disruption and inefficiencies.
Where completion is delayed, there may also be financial consequences for the developer or other project participants. Establishing the extent of those losses requires careful consideration of the contractual arrangements, project records and circumstances surrounding the delay.
The role of the quantum expert
This is where a quantum expert witness can play an important role. A quantum expert may be instructed to assess and quantify the financial losses arising from a fire, drawing on evidence such as contracts, project programmes, contemporaneous records, payment applications, cost reports, invoices and other project documentation.
Depending on the circumstances, their analysis may include:
- the cost of repair and reconstruction works;
- additional labour and material costs;
- prolongation and extended site overheads;
- disruption and associated inefficiencies;
- the financial consequences of project delays; and
- loss of income or other financial losses where these form part of the claim.
The expert’s role is not to determine who is responsible for the fire, but to provide an independent assessment of the financial consequences and the quantum of loss claimed.
Their analysis can assist insurers, solicitors, contractors, developers and, where necessary, the courts in understanding the financial impact of an incident and assessing the evidence supporting a claim.
Preparing for the financial consequences
Fire prevention and robust site safety measures remain essential on every construction project. However, when an incident does occur, understanding and properly documenting the resulting financial losses is also critical.
Contemporaneous records can be particularly important. Maintaining clear records of costs, programme changes, delays, remedial works and project impacts can help establish the financial consequences of an incident and provide the evidence needed to substantiate a claim.
A quantum expert can bring this information together, assess the available evidence and provide an independent opinion on the losses arising from the incident.
With more than 20 years of experience consulting with clients in Gibraltar, the Adair team understands the complexities that can arise when construction incidents lead to financial claims.
Construction fires can have consequences that extend far beyond the immediate physical damage. Where significant financial losses arise, a robust and evidence-based assessment of quantum can be critical to understanding and resolving the resulting claim.
