A dubious revenue stream

I recently met with an old friend who is now a leading Engineer in mega construction projects (I’m talking multi-billion dollar projects here). He told me that most of the lead construction companies struggle to make a profit from the main contract due to underestimating or perhaps just competitive bidding to ensure a pipeline of revenue. However, they remain highly profitable from a revenue model that surprised me.

Right from the start of the project, the big constructors plan out their strategy of claiming maximum professional indemnity (PI) insurance from every one of their sub-contractors. My friend says that every one of his projects ends up in court.

In my many years in the telco / OSS industry I’ve seen prime contractors under-quote and seek variations as a way to increase profitability but I’ve never heard of a PI claim, let alone systemic claiming. Have you?

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One thought on “A dubious revenue stream

  1. Wow that’s crazy. Would be interesting to hear what this guy would make of a task management system approach like inmach… could be of benefit to solve a inmach just like this one in capital infra type projects. ..note you’ve really got me thinking Ryan..?

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