Pre completion risks are risks that happen during the construction phase of the project. If the project is unique, has never been done before, something like the channel tunnel in the UK, it's less likely the plan will work out as expected.

If the project relies on unproven technology, such as the UK London Bike Hire Scheme, which relied heavily on a PIN code driven bike release system, this will cause more problems.

If low plant performance is experienced, such as the notorious Denver airport baggage system, which never really worked, this can also cause huge overruns. These are all examples of risks happening prior to the project being operational. So the question is, how can investors be protected against these risks? The first issue is who is best able to manage these risks? In most cases, you want to pass these risks to the contractor as they're best able to control whether they're going to build a project correctly and on time. If they don't do that, you wanna make sure there are penalties in place. In most large projects, there's what we call a turnkey construction contract. Often it's abbreviated to TKCC. The contractor can use that contract to raise money. In other words, they can fund their own costs by going to lenders and saying, we've got this contract with the SPV. Can you lend us the money to help fund things like working capital? So how else can we protect the investors? Well, firstly, you want to have a maximum cost ceiling. You say to the contractor, your costs can't go beyond this level. If there are things like delays or if the construction isn't to the standard required, you want damages. Typically, these will be what are called liquidated damages. These are damages up to putting things right. Normally, the contract will be backed up by bank warranty, and that kicks in if the contractor fails. The contract is also supported by an insurance policy. This usually called the ALOP, and this stands for an advanced loss of profit. The ALOP will kick in if there are delays to the construction phase, which then push out profits to further years. A good example of this is the Crossrail project in London, a tunnel mainly, which was delayed by at least a year. The problem is that in this year of delay, there were expected to be around 600 million pounds worth of revenues. And this meant that you not only had cost overruns during the construction phase, but you also had 600 million worth of income that was going to be delayed by a year. And this is the kind of thing the ALOP policy should protect against.