Establishing limits with LOLA
Steer has brought innovation to the assessment of technical limits of liability.
Steer Davies Gleave has brought innovation to the assessment of technical limits of liability in its role as Lenders’ Technical Advisor for a highway PPP in Belgium.
Investors in major infrastructure projects naturally want to see projects succeed, but they also keep a close eye on the possible downside scenarios, especially in the current economic environment where the risk of contractor default looms large.
Other significant risks with commercial implications also dominate the lenders’ horizon, yet the judgement on appropriate limits of liability of the Engineer, Procure and Construct (EPC) contractor can be remarkably subjective.
SDG has been developing a Limit of Liability Assessment tool nicknamed LOLA© to provide some consistency, transparency and objectivity to the development of EPC technical liability limits. By taking inputs from the consortium’s financial advisor, and assessing the contractor’s project profile, we can articulate the technical liability exposure at each stage of the project in a graphical format.
This allows lenders and ratings agencies to understand the risk profile of a project and to set liability limits accordingly.
We have been Lenders’ Technical Advisor to the Via Brugge consortium for the A11 Brugge highway project in Belgium. As part of our services, we have tailored LOLA© to the specific needs of this project in coordination with Deloitte, the Lenders’ Financial Advisor.
The project second stage bid has now been submitted, and we look forward to a successful conclusion for our client.
