Construction Works Policy – (CWP)

Construction Works Policy

Construction Works Policy is designed to provide cover to an Indian contractor who executes a civil construction job abroad. The distinguishing features of a construction contract are that (a) the contractor keeps raising bills periodically throughout the contract period for the value of work done between one billing period and another.

(b) to be eligible for payment,the bills have to be certified by a consultant or supervisor engaged by the employer for the purpose and (c) that, unlike bills of exchange raised by suppliers of goods, The bills raised by the contractor do not represent conclusive evidence of debt but are subject to payment in terms of the contract which may provide, among other things, for penalties or adjustments on various counts. The scope for disputes is very large. Besides, the contract value itself may only be an estimate of the work to be done, since the contract may provide for cost escalation, variation contracts, additional contracts, etc. It is, therefore, important that the contractor ensures that the contract is well drafted to provide clarity of the obligations of the two parties and for resolution of disputes that may arise in the course of execution of the contract. Contractors are well advised to use the Standard Conditions of Contract (International) prepared by the Federation International Des Ingenieurs Conseils (FIDIC) jointly with the Federation International du Batiment et des Travaux Publics (FIBTP).

What are the risks covered by Construction Works Policy?

The Construction Works Policy of ECGC is designed to protect the Contractor from that may be sustained by him due to the following risks:

  • Insolvency of the employer (when he is a non-Government entity);
  • Failure of the employer to pay the amounts that become payable to the contractor in terms of the contract, including any amount payable under an arbitration award;
  • Restrictions on transfer of payments from the employer’s country to India after the employer has made the payments in local currency;
  • Restrictions on transfer of payments from the employer’s country to India after the employer has made the payments in local currency;
  • Failure of the contractor to receive any sum due and payable under the contract by reason of war, civil war, rebellion, etc;
  • The failure of the contractor to receive any sum that is payable to him on termination or frustration of the contract if such failure is due to its having become impossible to ascertain the amount or its due date because of war, civil war, rebellion etc;
  • Imposition of restrictions on import of goods or materials (not being the contractor’s plant or equipment) or cancellation of authority to import such goods or cancellation of export license in India, for reasons beyond his control; and
  • Interruption or diversion of voyage outside India, resulting in his incurring in respect of goods or materials exported from India, of additional handling, transport or insurance charges, which cannot be recovered from the employer.

Loss coverage:


Important Obligations:

  • Obtain indicative premium rate at bid stage
  • Seek post awarded approval from AD/WG on award of contract
  • Obtain in-principle approval
  • Seek cover after payment of premium
  • Advise progress of project in accordance with PEM guidelines
  • Declaration of overdue payments
  • Filing of claim within 12 months from due date
  • Sharing of recovery


  • Cover can be either for political or comprehensive risks
  • Cover for full insurable value including retention portion
  • Cover for third country exports as well
  • Premium can be paid in installments
  • Reduced loss coverage with proportionate reduction in premium.
  • Reduced premium for projects funded by Multi-lateral agencies.

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