Severn Trent Water – Gloucester 2007 Floods / Business Interruption Claim and re-instatement of all Assets

One of the largest water companies in the UK sustained serious losses and suffered massive property damage to just under 200 sites following the unprecedented floods in 2007.

ZR Consultants were appointed to initially assist with the implementation of a document and retrieval system in order to capture all the crucial documentation and evidence of the actions taken by key personnel during floods. The evidence was then used to produce a final report for the public domain and to assist with 6 external enquiries made against the client.

Following the successful conclusion of the external enquiries, ZR consultants were appointed to project manage the reinstatement of all the damaged assets and to manage the insurance claim, ensuring that recovery was maximised. The scope of the damage covered just under 200 sites and included Sewage Pumping Stations, Sewerage Treatment Works, Booster Stations and Water Treatment Works.

The project was initially estimated at £20m, however when ZR Consultants carried out a full forensic investigation on all the costs and all the various budget codes a huge amount of recoverable costs were identified. ZR Consultants also negotiated with insurers in order to agree precedents that were beneficial to our clients – in particular in the case with cables, ZR Consultants were able to recover at least £4m more than what had been expected and the forensic investigation also identified a additional £4.5m of costs. The number of savings identified enabled ZR Consultants to settle the claim at a whopping £31m. As well as the recovery ZR Consultants engaged various suppliers to cover different regions and sites and implemented a programme by which all the damaged sites were to be replaced within 2 years.

ZR Consultants identified synergies and instructed suppliers to identify areas of betterment in order to make the existing sites more robust against future incidents. The total value of the project was £45m, every penny of which was controlled, reviewed and evidenced by the ZR Consultants team. ZR Consultants also assisted the clients in maintaining their cash flow by negotiating interim payments with insurers and were able to successfully double expectations at the start by achieving a £10m interim payment instead of the £5m initially offered by insurers.

As well as assisting the client with insurance policy issues, ZR Consultants also assisted with the accounting policies for booking the money received from insurers and implemented correct accounting procedures for accruing costs and transferring to P & L and Balance Sheet. ZR Consultants also engaged with the clients Auditors in order to sign off the impact on the financial statements following the recording of an Exceptional item.

We were able to successfully use our accounting and project management skills in order to far exceed client expectations and to deliver a superb result by recovering £11m more than originally expected.

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