Don’t Be Afraid of the Weather

1. Don’t Be Afraid of the Weather AMEC Earth & Environmental Stephen Green

2. “Big Blue” The Miller Park crane accident (1999) • Lampson TransiLift III with a 340 ft main boom and a 200 ft jib, was setting a 100 × 180 × 16 ft open truss panel roof section weighing close to 500 tons at a lift height of 230 ft. • Three ironworker fatalities and hundreds-of-million dollar damages resulted from this mishap. • Lampson’s quality assurance manager Bruce Stemp on 19 July said that “all indications are pointing to the wind conditions” and that “any failure of any of the crane components was a result, not a cause of the accident.” • Reports of the wind speed at the time of the collapse vary between 23mph and 30mph. • 15 July the Milwaukee Journal Sentinel reported: “Construction officials have said repeatedly that it would be unsafe to do a roof lift in winds of more than 10mph.” • On 8 January, was delayed for 17 days by the wind and that the second one, due on 5 March, was postponed because of 20mph winds. There has been speculation that pressure to stay on schedule to meet the completion date, or risk financial penalties, could have been a factor.

3. Wind Incidents and Crane Operations • Winds blamed for Md. crane collapse DUNDALK, Md. (AP) - A company spokesman says high winds apparently caused a crane to collapse at a steel mill just east of Baltimore. Two workers were trapped 50 to 75 feet above the ground when the crane collapsed during a storm Wednesday ... Creating value for clients through the application of knowledge, innovation and technology and the use of alliances and interactive partnerships. • Overloading a crane and failure to take heed of high winds The boom that fell from the 37th floor of the construction site in Xinyi District on Friday smashed the back of a tour bus carrying 25 tourists from Guangdong Province, China, leaving two passengers dead and four injured. • Winds may have weakened crane High winds earlier this week may have weakened metal fasteners in the base of a giant construction crane that collapsed in Bellevue Thursday night, killing one man and severely damaging three downtown buildings.

4. Crane Insurance Rates to Rise(www.financialweek.com) • The use of a tower crane is a particularly dangerous construction practice, yet they are used most frequently in dense urban areas because they have such a small footprint. • Most in the industry say it's too early to tell how much insurance costs will rise because many factors other than just claims play a role in determining industry-wide rates. But given the trends, it looks as if higher insurance costs are inevitable. • Peter Tulupman, a spokesman for AIG, a major commercial construction insurer, said that although contractors may not see a big rise in premiums, they should probably anticipate a big jump in deductibles on projects that require a crane. • For example, a $100 million project in Manhattan requiring a tower crane could well see its deductible rise to $1 million per occurrence from the current $250,000 for workers' compensation and $500,000 for general liability, he said. Additionally, the project will face much tougher underwriting standards when it comes to safety

5. Case Study – Company X • US Crane Contractor (currently in litigation). • No failures of equipment. • Forecasts were obtained from local television to support operations. • Remote site, nearest Government weather station approximately 80 miles away. • Due to winds measured on site (crane anemometer) wind speeds were above acceptable safety criteria. • Contractor was fully covered in their contract for winds above criteria. • Cost overruns due to winds were estimated at 5M. • Client initially accepted financial implications and requested measured data and anemometer specifications, as part of due diligence. • Wind measurements were recorded in log book, system did not have electronic recording. • Last anemometer calibration was 6 years ago. • Client refused to pay 6M as log book is not a controlled document/recording and anemometers are required to have yearly calibrations.

6. Case Study – Company X contd.What Could have Been Done Differently? • Purchase reliable wind monitoring equipment. • Industry recognized • Internal data logging • External display • Estimated cost 4 to 8k • All equipment should undergo annual calibrations. • 14 pt wind speed calibration from 0 to 30 m/s • Estimated cost 1 to 2k • Recommendation, for a minimum of three cranes in operation have one calibrated spare. • Conclusion: for a 10k investment Company X would have saved 5M!

7. Case Study - Heavy Lift Forecast Support • Heavy lift campaign that involved moving topside modules onto the SeaRose Floating Production, Storage and Offloading (FPSO). • Module weights up to 1250 tonnes. • Requires weather windows with wind velocities below 22 miles per hour. • Utilizing a Lampson 2600 Trans-lift crane. • 4 hour operations with a 2 hour safety margin required. • During campaign an AMEC meteorologist was stationed at site providing forecasting and consultation services. • AMEC provided an on-site meteorological station. • Campaign completed safely ahead of schedule with 17 successful lifts over a 6 week period. SeaRose FPSO

8. Case Study - Heavy Lift Forecast Support contd. “Stephen, this is to acknowledge the thoroughly professional job that your meteorologist Terry Bullock performed for the Heavy Lift Team during our recently completed and very successful Heavy Lift Campaign. Terry produced easily understood forecasts in a timely manner that enabled the heavy lift team to make informed decisions and plan the operations in an efficient way,” wrote Rod Hogg, assistant operations manager, Heavy Lift Operations Aker Maritime Kiewit Contractors (AMKC) to meteorological & oceanographic lead Stephen Green. “Thanks again for a job well done. SeaRose FPSO

9. Why Should I Care? Due Diligence (DD) is a term used for a number of concepts involving either the performance of an investigation of a business or person, or the performance of an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations. Due diligence in civil litigation is the effort made by an ordinarily prudent or reasonable party to avoid harm to another party. Failure to make this effort may be considered negligence. This is conceptually distinct from investigative due diligence, involving a general obligation to meet a standard of behaviour. Quite often a contract will specify that a party is required to provide due diligence.

10. Due Diligence Implications Insurance Industry Recommendations • The insurance industry is entirely about risk management. • Internal recommendations, currently under considerations, for heavy lift companies are: • Monitoring equipment must be from a certified list of suppliers; • Documented annual calibrations are required from a certified service provider; • If the lift is over 50 miles away from a government issued forecast site (e.g. a city, airport, etc.) a site specific forecast is required; • Depending upon the dollar value, and weather window requirement of the lift it may require sign of from a meteorologist.

11. Understanding the Environment

12. How DD Can Help Increase My Bottom Line? • Allows you Manage Risk – by identifying weaknesses early can reduce the risk of future failure. • By understanding the environment you can strengthen your negotiating position spotting potential issues (cut a better deal). • Increase your credibility, your goal is to perform lifting operations in the most efficient and safe manner possible. • Improve returns – raise post deal performance levels with a deeper view of risks and opportunities. E.g by a clearer understanding of the environment better able to assess potential of financial penalties or bonus. • Increase your value and your client’s.

13. Thank you!