• Home
  • Gallagher News and Insights

3 of the biggest disasters in construction history

August 28, 2019

Construction is one of the oldest industries around (it dates back to around 9000 BC) and its history is rich with astonishing triumphs and, unfortunately, devastating disasters.

In this article we explore three of the biggest disasters in construction history, discussing where they went wrong and what lessons can be learned from them. In each of these cases poor planning and improper risk assessment were often the root causes of disaster, reiterating something we already knew: risk management and comprehensive insurance is essential for any development project.

1.    The Panama Canal

thumbnail-biggest constuction disasters 12It’s one of the most important waterways in the world and a key channel for international maritime trade, but the construction of the Panama Canal was nothing short of a disaster.

Construction began in January 1881 with a workforce of around 40,000. And though the project had initially attracted reputable engineers from Europe, infectious disease, corruption, natural disasters and persistent engineering problems meant progress was slow. By 1889 – nine years into the project – the canal was only 40% complete, more than US$200 million had been spent and the death toll had reached over 20,000.

The canal was eventually completed in 1913, under new management, and was in use a year later. It took years of preparation (think asset cataloguing, infrastructure investment, contract negotiations and recruitment) to make the project an eventual success.

Lessons learned

The Panama Canal experience is proof that leadership and preparation make a big difference in construction projects. Taking the time to properly assess your risk exposures and address workplace safety can mean the difference between failure and success. Of course, management liability insurance and workers’ compensation help too – especially if you’re contending with infectious disease!

2.    CityCenter Las Vegas

thumbnail-biggest constuction disasters 22CityCenter was one of the largest privately funded construction projects in the history of the United States, but some say it was more ‘mega disappointment’ than mega development.

Spanning more than 1,000,000 square metres, the mixed-use complex on the Las Vegas strip included plans for hotels, condominiums and a high-end mall at a cost of US$9.2 billion. The project was an eventual success, but it wasn’t without its fair share of disaster: six workers died during construction which was then halted for several weeks after workers walked off site in protest of unsafe working conditions.

Furthermore, construction of the Harmon – one of the complex’s high rise buildings - was stopped just a year after it began due to discovered defects. The building was eventually finished (at reduced scope) but the Harmon was never opened. It was eventually demolished in 2015 at a cost of US$11.5 million.

Lessons learned

A little due diligence and risk evaluation goes a long way. A complex development project with many different contractors, architects and developers requires careful risk management (which includes a project risk assessment and due diligence with respect to contract indemnity). A tailored construction insurance solution is critical for protecting your interests in high-stakes development projects.

3.    The Sydney Opera House

thumbnail-biggest constuction disasters 32Arguably less disastrous than the Panama Canal and CityCenter, the construction of this harbourside icon remains a stunning example of project planning failure.

The Sydney Opera House was plagued with highly-politicised planning and funding problems from the beginning. The project was eventually completed (ten years late in 1973) but by then the initial budget of AUD$7 million had been blown by a mind-numbing 1,400%. In today’s money, that represents a total cost of AUD$927 million.

Lessons learned

‘Cost underestimation,’ according to economic geographer Bent Flyvbjerg, ‘is disruptive, sometimes in drastic and unexpected ways.’ This is why it’s important to maintain good working relationships with your stakeholders – including your insurers – so that you have a comprehensive understanding of your project risks, dependencies and contractual obligations.

Got any more construction horror stories?

What other disasters in construction history contain valuable lessons and insights? Let us know in the comments below.

Safeguard your projects

Read more about how you can keep your project off this list with our industry guide!

Access the ultimate guide to insurance for the construction industry here!