What is a Wrap

Transcription

What is a Wrap
Proprietary Work Product of
Global Risk Managers, Inc.
Transportation Research Board
Disadvantaged Business Enterprises (DBE) Committee
Innovative Funding for DBE Support Services;
Brad Anderson & Jerry L. Malone
Global Risk Managers, Inc.;
Americans Rebuilding America™
An Economic Stimulus Program
• Owner Controlled Insurance (OCIP)
• Workforce Development (WPA3 ™)
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INTRODUCTION
With strong leadership and encouraging dynamic approaches to risk
management and workforce training, such as the AASHTO OCIP, BOWD
and WPA3, the American economy will recover and remain strong both
now and in the future.
 Increase jobsite safety
 Increase insurance and warranty coverage
 Reduce construction claims delays
 Increase DBE contractor participation
 Reduce construction insurance cost
The resulting savings can fund economic development initiatives that
promise to improve the quality of life for all of its citizens in the
following ways:

Create high paying jobs

Reduce welfare dependency and reduce crime rates

Improved quality of life for citizens of America
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Agenda
Introduction
AASHTO OCIP
Review
•OCIP and WPA3 program
benefits
•Benefits to the economy
•Overview of programs
•Workforce development
Conclusion
Discussion & Next Steps
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VISION
More jobs , better employment opportunities and safer work places
all across America.
MISSION
To leverage leading risk management strategies to create better
workplace outcomes, savings, economic and workforce
development opportunities for federal, state, municipal and other
project owners pursuing large scale infrastructure development
projects.
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THE OPPORTUNITY
By taking a proactive stance, our government leaders can take
advantage of the resources they are already deploying to allow more
of our citizens to become gainfully employed.
This opportunity is increased dramatically by the potential
multiplier effect of the proposed stimulus package.
The recovery of the American economy can be accelerated by strong
leadership encouraging a dynamic approach to risk management
and workforce development, education and training , such as the
AASHTO OCIP, BOWD and WPA3.
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THE OPPORTUNITY (cont…)
• Global serves as exclusive OCIP Consultant to American
Association of State Highway & Transportation Officials
(AASHTO), has a relationship with the National Conference of
Black Mayors and the National Association of Minority Contractors
(NAMC).
•
Global, founded in 1991, provides risk management and workforce
development services to public and private entities. Global is a
minority owned and managed company. Global has been engaged by
AASHTO to design OCIPs to fund Business Opportunity and
Workforce Development (BOWD) services for federal, state and
local governments.
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Overview of Program
AASHTO OCIP
Contractor
Assistance
Professional services to
Small and MBE/FBE
contractors
 Enable contractors to
secure bonding credit

Substantial Savings
 Consistent Coverage &
Limits
 Coordinated Claims
Handling
 Increased Small &
Minority Participation
 Workforce Development
Surety
Bonding

"Contractor friendly"
bonding services
 Identify qualified
contractors
 Increase surety
bonding capacity

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What is a Wrap-Up (OCIP)?
An insurance program for any large transportation or infrastructure
construction program in which:
 The owner procures certain insurance policies on a long term basis (up to 10
years) protecting both the owner and various contractors involved rather than
relying on the individual insurance policies of the various contractors
purchased on an annual basis which are subject to changes in the
marketplace.
 Typical OCIP insurance policies are:
o
Workers compensation
o
General liability with extended completed operation coverage
o
Umbrella liability
o
Builders risk insurance
o
Can include professional and environmental liability
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National Economic & Social Benefits
Transportation is at the leading edge of the Nation’s economic recovery
and can serve as a model for investing infrastructure dollars to stimulate
state and local economies by creating high paying jobs in many
communities . By undertaking innovative economic development
initiatives in the transportation sector, we have the opportunity to
improve the quality of life for all of our citizens. To do so, government
leaders must take a proactive stance by taking advantage of emerging
resources that could allow more of our citizens to become gainfully
employed. Encouraging dynamic approaches to risk management and
workforce training such as the AASHTO OCIP, BOWD and WPA3
would help create high paying jobs, reduce welfare dependency and
lower crime rates, leading to an overall improvement in the quality of life
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for the citizens of America.
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Sample OCIP Savings
Analysis
OCIP vs. Traditional Approach
Contractors
Insurance Cost
$121,000,000
$101,000,000
$81,000,000
$61,000,000
$41,000,000
$21,000,000
OCIP
Insurance cost based on
Claims experience
$1,000,000
Traditional
OCIP (Deductible)
$0
$20,718,244
$31,077,366
$36,256,927
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Contractor OCIP Safety Program - Benefits






Increases safety awareness
Enhances peer support for a safe working environment
Provides a reward for safe working behavior of contractor employees
Impacts the safety culture of all contractors
Can be combined with existing safety programs to increase rewards
Specific loss reduction goal focus
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America Benefits from AASHTO OCIP
•
The AASHTO-Global OCIP can develop a savings of up to $30 million
on a $1 billion budget (up to 3% of construction values) which may fund
the BOWD and Workforce to Eradicate Poverty in America (WPA3),
which will develop a workforce to help eradicate poverty in America.
The program will target four groups:
• the chronically unemployed,
• the newly unemployed,
• the underemployed
• the currently employed looking to improve their skills.
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Global OCIP Overview
Global works with private and public organizations to implement
Owner Controlled Insurance Programs (OCIP) on capital
improvement construction projects. As a result, savings from the
OCIP can be used to fund Workforce Development (WPA3)
programs such as:
• apprenticeships
• internships,
• scholarships
• training programs
and other economic stimulus, high paying jobs, training and
education initiatives at institutions like the Gates Foundation,
National Urban League, UNCF, community and technical colleges,
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and labor organizations.
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America Benefits from WPA3
The Global OCIP can develop savings which should be authorized to fund
the WPA3, which will develop integrated social services to eradicate
poverty in America such as:
• Mentor/Protégé,
• Transfer of technology,
• At risk youth,
• Summer interns,
• Daycare,
• Access to mental health services,
• Clothing,
• Housing and transportation assistance
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Workforce Development Programs
Channel part of the savings from OCIPs to fund:
•apprenticeships
•internships
•scholarships
•training
•workforce development programs
•contractor incentives (contractor safety bonus, share in OCIP
savings)
•private incentives (tax credits & empowerment zones)
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Workforce Development Targets
The program will target four groups:
- the chronically unemployed,
- the newly unemployed,
- the under-employed and
- the currently employed looking to improve their skills.
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Overview of Global Programs
OCIP
Contractor
Assistance
Professional services to
Small and MBE/FBE
contractors
 Enable contractors to
secure bonding credit

Substantial Savings
 Consistent Coverage &
Limits
 Coordinated Claims
Handling
 Increased Small &
Minority Participation
 Workforce to Eradicate
Poverty in America
Surety
Bonding

"Contractor friendly"
bonding services
 Identify qualified
contractors
 Increase surety
bonding capacity

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Surety Bonding Assistance Program Benefits





Provides the most innovative, comprehensive, efficient and
'contractor friendly' level of bonding services.
Program is consistent with the need to increase Small and DBE
participation of prime contractors
Enables the contractor to increase surety bonding capacity
Identifies contractors who will qualify through coordinated surety
support and outreach programs
Bonds are underwritten through an exclusive ‘A’ rated surety
program using non-traditional, negotiated underwriting guidelines
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Proprietary Work Product of
Global Risk Managers, Inc.
Overview of Program
OCIP
Contractor
Assistance
Professional services to
Small and MBE/FBE
contractors
 Enable contractors to
secure bonding credit

Substantial Savings
 Consistent Coverage &
Limits
 Coordinated Claims
Handling
 Increased Small &
Minority
 Participation
 Workforce to Eradicate
Poverty in America
Surety
Bonding

"Contractor friendly"
bonding services
 Identify qualified
contractors
 Increase surety
bonding capacity

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Proprietary Work Product of
Global Risk Managers, Inc.
Contractor Assistance Program Benefits

Provide professional services to Small and DBE contractors in the
areas of:

financial

estimating

scheduling

business management services

legal

computer training

apprenticeship programs

mentoring programs
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America Benefits from AASHTO
OCIP and WPA3
•
•
•
•
•
•
•
Substantial savings of up to $30 million on a $1 billion budget (up to 3%
of construction values) over contractor- provided insurance program
Centralized/financially stable insurance carrier for all contractors;
consistent coverage and limits
Coordinates coverage for cross suits and eliminates insurance carrier
subrogation
Potential for increased participation of small and minority-owned
contracting firms
Standardize insurance for all contractors
Minimize claims and litigation cost
Provide a funding source for additional construction workforce
development, training and new jobs
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NEXT STEPS
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Proposed Course of Action
Upon the TRB’s approval, Global will update the current National
Cooperative Highway Research Program (NCHRP) Synthesis 308: Owner
-Controlled Insurance Programs (OCIPs) with recommendations for the
use of OCIP savings to fund Supportive Services for Transportation
construction projects
Develop guidelines for the use of OCIP savings to fund Supportive
Services for Transportation
 Review State and federal regulations
 Develop schedule of specific projects to be included
 Meet w/ large and small contractors and associations
 Prepare OCIP to accommodate suggested changes by US DOT or the
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states
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Global Risk Managers, Inc.
AASHTO Global OCIP benefits








Experienced OCIP administration and implementation
Reduction of owner’s administrative burden and responsibilities
Effective federal-aid eligible OCIP program design
Unbiased selection of appropriate insurer and other service providers
Comprehensive project safety and cost management
Builds a team player philosophy with owner and contractors to design and
implement OCIP
Can lead to the resolution of ethical and moral issues such as bid rigging &
conflict of interest
Worst case OCIP cost don’t exceed contractors traditional insurance
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Summary
&
Conclusion
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Team Strengths
Global
Marketing
Strength
DBE
Resources
Administrative
Services
Professional
Qualifications
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Appendix
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OCIP Benefits & Burdens to States
Benefit
Burden
Source
Savings - (2% of budget)
will allow for additional
construction projects to be
included
Contractors reduced profits from
insurance rebates
Increased Safety
Requires Education & Cooperation TRB Report
of the Owner and Contractors
Guidance and Limits on Federal
FHWA Memorandum, dated
Reimbursement of Insurance Costs January 8, 2002
Federal-Aid
Reimbursement
Eligibility
GAO Report
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Owner Controlled Insurance Program
The FHWA memorandum dated January 7, 2002 says:
“ Owner Controlled Insurance Programs (OCIPs) are an effective way
to improve the safety of construction operations and reduce the cost of
insurance on large projects. Additionally, federal-aid funds can be
used to participate in OCIPs on Federal-aid projects.”
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Excerpt from GAO Report on OCIPs
(Demonstrated Savings)
Dollars in millions
Project name
Total project
and location
cost
Blue Water Bridge, Michigan
Insurance Costs
Traditional
Wrap-up
Insurance
Savings
$97.2
$10
$7.1
$2.9
$10,800
$1,030
$765
$1,600
$52.2
$22.3
$265
$29.9
$408.7
$32.5
$21
$11.5
$992
$20
$11
$9
$952
$27.1
$17.2
$9.9
Boston Central Artery Tunnel,
Massachusetts
I-15, Salt Lake City, Utah
CTA Green Rehabilitation
Chicago, Illinois
Hudson-Bergen Light Rail (initial
segment)
Tri-Met, Westside Light Rail,
Portland, Oregon
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Proprietary Work Product of
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Excerpts from TRB Report
• “DOTs are using OCIPs both for individual transportation projects and
for groups of projects. “
• “Because OCIPs enhance risk management, more then 10 state DOTs
have used some form of controlled insurance on one or more of their
projects. “
• “The idea behind these programs is for the sponsor to purchase
workers’ compensation and liability insurance for all parties working
on a project.”
• “The OCIP provides a single point of contact for all liability issues,
prevents insurance coverage gaps or redundancies, and should reduce
underwriting and claims administration expenses.”
• “The results of such a program are a safer jobsite and lower
construction costs.”
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Excerpts from GAO Report
• Results in Brief, Page 1: “Owners of transportation projects, such as
transit agencies and state departments of transportation, experience a
number of advantages and disadvantages when they use wrap-up
insurance.
• “Major advantages include savings from buying insurance “in bulk,”
eliminating duplication in coverage, handling claims more efficiently,
reducing potential litigation, and enhancing workplace safety.”
• “According to insurance industry officials, wrap-up insurance can save
project owners up to 50 percent on the cost of traditional insurance, or
from 1 to 3 percent of a project’s construction cost, depending on its
size.”
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Excerpts from FHWA Memo
• Paragraph 1: “Overall, the use of an OCIP can save money …
through lower bulk insurance rates, improved safety management
processes, and reduced disputes between contractors over who was
responsible for a particular loss.”
• Paragraph 7: “Federal aid funds can be used to participate in OCIPs
on Federal-aid projects. OMB Circular A-87 provides guidance and
establishes limits on Federal reimbursement of insurance costs.”
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Key Consultants
• Clifford J. Schexnayder, Ph.D., P.E. Emeritus Eminent Scholar
Del E. Webb School of Construction, Arizona State University
Prof. Schexnayder brings to this OCIP team practical experience
having both an owner and construction industry perspective. He has a
good understanding of how owners view risk from his OCIP research
and authorship of the NCHRP Synthesis 308 for TRB and his
experiences in the Corps of Engineers.
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Key Consultants…continued
• Algerine McCray was the former Deputy Director of California
DOT (Caltrans) from 1999 to 2003.
Ms. McCray was the primary Caltrans Official responsible for
Caltrans’ MBE and DBE programs and for all external and internal
civil rights activities. In that capacity, she was responsible for
developing, implementing, monitoring all civil rights issues, including
contracting and contract compliance.
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Professional Qualifications

Team qualifications include:
CPCUs
 Professional Engineer (PE)
 Certified Safety Professional (CSP)
 Certified Public Accountant (CPA)
 PhD

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Proprietary Work Product of
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America Benefits from AASHTO
OCIP and WPA3
•
•
•
•
•
•
•
Substantial savings of up to $30 million on a $1 billion budget (up to 3%
of construction values) over contractor- provided insurance program
Centralized/financially stable insurance carrier for all contractors;
consistent coverage and limits
Coordinates coverage for cross suits and eliminates insurance carrier
subrogation
Potential for increased participation of small and minority-owned
contracting firms
Standardize insurance for all contractors
Minimize claims and litigation cost
Provide a funding source for additional construction workforce
development, training and new jobs
37

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