CONSTRUCTION | DISPUTES
Construction Dispute Statistics Show the Impact of Technology
Statistics show the value of construction disputes in the UK almost halved last year.
Consulting group Arcadis found the average value of construction disputes fell by 47% with one of the reasons being put down to firms’ greater use of technology.
18.07.2019 // 4 minute read
The value of disputes in the UK averaged £14.1m in 2018 – well below the global average of £26m. In comparison, 2017 saw an average dispute size of £26.7m in the UK.
Implementing innovative technologies – and budgeting for them – is becoming critical for construction companies to remain competitive in the industry when it comes to disputes, as well as other areas such as bidding for projects. Digitalisation can be deployed across the lifecycle of the build - from business case to maintenance, providing a single source of truth and digital asset for asset owners. This digital approach is giving organisations who adopt it competitive advantages when making bids, improving estimation and organisation.
Average Dispute Value (US$ Million)
However, the misapplication of technology has nullified some of the benefits. Lack of training to new processes, introducing unfamiliar risks and information overload is leading to decision paralysis and poor information flow.
Construction disputes have a way of uncovering inadequate record-keeping due to siloed information. To reduce the prevalence of disputes, our industry must better understand and manage complex processes. Digitalisation is the way forward.
Here are the 4 areas we see digitalisation having the most impact on disputes:
1. On-site record keeping
Digitalisation is affecting the way claims are made and dealt with in many different ways. Not only is it making important information more accessible, but also easier to share with those who need it, whether that be solicitors, stakeholders, adjudicators, or governing bodies.
The use of written on-site records continues to be a challenge in the use of project delivery recording. A frequent complaint from stakeholders is that siloed information results in an uncoordinated project. On the design side, this can result in ambiguities, errors and omissions in the construction documents. During construction, it can lead to pricing errors and rework. This inevitably leads to disagreements about how, when and why elements of the works were constructed. The use of visual, evidence-based tools and systems that are completely digital can lead to a greater degree of risk reduction within projects and therefore a reduction in disputes.
The digitisation of important project documents and reports can reduce the information silo by ensuring important information is available, accessible, and shareable with stakeholders throughout the project lifecycle.
2. Real-time progress monitoring through the use of digital twin
A digital twin is an exact replica of a physical building or infrastructure asset hosted in a piece of software. Its able to accurately capture all aspects of the element—from design, project delivery to maintenance logs—efficiently in a singular platform. Not only can static data be hosted in the digital twin, but a plethora of real-time IoT sensor data can be integrated, creating a fully simulated site or “reality”, which is all then collectively harmonized and visualized contextually using the 3D geometry of the area or building. In a digital twin you have a clear, permanent, visual record of everything happening on site. This enables owners and contractors to manage and avoid disputes.
Developers and owners can lose millions through construction re-works, delays and contractual disputes. In fact, McKinsey found that 98% of megaprojects experience cost overruns of more than 30%; 77% are at least 40% late.
Legal and dispute resolution practices with the capability to optimise the use of digital twins and connected IoT data will have a competitive advantage.
3. Health and safety monitoring and risk detection through IoT sensors
IoT sensors and wearables are able to detect hazards - both to people and to expensive machinery. These applications are assigned to each worker based on their individual role and related sensors. The technology is able to identify potential safety issues, such as proximity to danger, worker fatigue or heat stress, and then initiate preventive action before an accident ever occurs.
Afterwards, information can be stored to an online dashboard which monitors risks and warns of long term issues. With these dashboards, incidents, safety observations, near misses and hazards can be recorded, kept up to date and accurate. Real-time IoT data is very difficult to argue with, therefore creating a neutral and unbiased view for more effective dispute resolution.
4. Upskilling workers and management
As the construction industry undertakes the task of driving innovation, productivity and economic growth, teams need to prepare for the skills required in order to succeed in this digital uplift we’re currently experiencing. Without training in digital practices, the impact of digitalisation will be limited.
Teams that operate in silos and move from project to project failing to incorporate best practices will not only fall behind but will be a primary driver of disputes.
The World Economic Forum estimates that full-scale digitalisation within infrastructure will achieve savings equivalent to between US$1 trillion and US$1.7 trillion annually within 10 years. With such a large upside, digitalisation will impact hiring and the development of existing employee skills as the demand for digital continues to grow in the face of disputes.
As the UK struggles with a skills shortage in the face of an uncertain Brexit, it will be interesting to see how the industry adapts to this huge demand.
Where these technologies are embraced, results have proven that efficiencies have been made and losses have been reduced due to construction disputes.
Where to go from here?
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