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Whether the weather: A good reinstatement strategy is a must these daysBy: Daniel Henn, partner, Tuffin Ferraby Taylor

Daniel Henn, Tuffin Ferraby Taylor

Extreme weather conditions are on the increase due to a number of causes, but the most established scientific belief is that the increased intensity of the weather is caused by climate change. Severe weather brings a heightened risk to commercial property, from the damage caused by the winter snows to the more recent summer floods, so it is important for real estate managers and owners to have a comprehensive insurance strategy and a practical reinstatement strategy.

The primary risks to real estate are fire and water - unfortunately, the most damaging incidents tend to happen at night, when small problems that would be detected in the day grow unhindered into a serious incident.

A good strategy should consist of two key elements:
1) A calculated reinstatement cost assessment
2) A plan for responding quickly when reinstatement is needed. With careful forethought and good planning in place, reinstatement procedures can provide the speed, expertise and flexibility you need to deal with an emergency situation successfully and efficiently.

Time is of the essence when disaster strikes, the issue needs to be responded to quickly by someone who understands the insurance process, business planning and building pathology.

Estate managers need to know that their appointed expert understands the following issues:

  • Building construction: The damage to a property will usually go deeper than the eye can see and any work carried out needs to ensure that potential risks to the building’s structure, services and fabric is identified and assessed correctly before being dealt with.
  • Temporary works: After the event it is not only the long term solutions that need to be considered but, crucially, what direct action can be taken to stop the problems escalating. This could vary between the need to provide temporary accommodation for occupiers and securing the site to make it structurally safe to prevent further damage.
  • Repair and remedial work: It will often be possible to repair the building as it is, but it is important that the work repairs the building’s structural integrity, not just the damage, which can be seen on the surface.
  • Building regulations: these regularly get changed and updated and it is important to seek advice from an informed consultant before carrying out reinstatement works. A quick example of a recent change would be Part L2, which refers to the conservation of fuel and power. This lists a number of environmental considerations that must be managed.
  • Leasehold obligations: The terms of a lease outline the different obligations that the tenant and landlord will have. It is therefore financially prudent to ascertain from the outset of disaster what the obligations of each party are. It would be poor resource management to cover obligations that you are not contractually obliged to cover.
  • Business continuity: Damage to property inevitably leads to business disruption, this needs to be considered and planned for when preparing the reinstatement process in order to get the occupiers trading and fully operational as soon as possible. On the positive side, this provides a good opportunity to look at the way the building is being used and to assess whether it still meets the needs of the occupiers. If not, this is a convenient time to reconfigure the premises in order to make it serve a business better.
  • Recovery of Loss: With most disasters there is a need to recover the loss, it is important to bear this in mind from the outset of the process. It can be useful to bring in an independent reinstatement specialist who is experienced in acting as a factual witness and producing expert reports. They can help with indexing and evidencing any claim in the future.

About the author

Daniel Henn, MRICS, MAPM, is a partner at Tuffin Ferraby Taylor (TFT) and heads TFT's project consultancy group. He specialises in commercial project management and development monitoring, particularly insurance reinstatement works. He also sits on the London Branch Committee of the Association of Project Management and is a member of the British Council for Offices. Dan is a family man with two young children. He enjoys motor-cycling, SCUBA diving and running. 

Features September 2012

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