Out-Law / Your Daily Need-To-Know

How industrialised construction will change how disputes are managed

Out-Law Analysis | 22 Nov 2021 | 12:19 pm | 3 min. read

Technology and data can be used to reduce the scope of disputes that routinely arise in the construction sector because it will give industry greater, and more immediate, oversight of the progress of projects and root cause of issues.

The move to industrialise construction processes will involve construction companies making greater use of digital technologies, such as connected ‘smart’ machinery, 3D modelling and drones, and this in turn will generate vast amounts of data. Some of this data will be useful for heading off and resolving disputes early, providing it is managed correctly.

The role for tech and data

Though some traditional types of construction dispute should reduce with industrialised construction, other forms of dispute are likely to emerge in their place. Technology and data, however, have a potential role to play in reducing the scope of disputes and in the way they are managed.

Waddel Helen

Helen Waddell

Partner

The ability to track progress, and expenditure, in real time will enable greater understanding of the cause of problems

Traditional disputes in the construction sector typically revolve around time and money. In the future these types of claim should be able to be dealt with more promptly where electronic single source cost and project management software are used. The idea of waiting to the end of a contract to raise claims and resolve disputes will also continue to be discouraged with the move towards more collaborative contracting. Daily financial updates on projects are common, and parties manage the contracts as they go, working fast to fix problems. This should avoid issues escalating and large-scale disputes arising at the end of projects.

A lot of data will be generated automatically from the operation of smart machinery and, allied to data input into BIM systems, this will give contractors a better handle on the progress of projects in real- or near-time.

The ability to track progress, and expenditure, in real time will enable greater understanding of the cause of problems. Identifying causation is a major factor in why disputes arise in the first place. Ubiquity and transparency of factual information combined with artificial intelligence (AI) will mean that it is difficult to argue how and when a project is delayed. A greater understanding of the root cause of issues will also enable lessons to be learned and changes to be made to the same or other projects much more rapidly.

The ability to access and analyse construction data will also give businesses an early warning of potential problems and should enable parties to deal with issues sooner, and sometimes before they even arise, or negotiate an early settlement of claims.

A wider range of evidence will also be available, as a result of the increased access to data, and this should enable disputes to be resolved more swiftly. Drone and webcam footage, for example, is already helping to quickly identify the cause of health and safety incidents, while it should be clear from 3D modelling systems where design faults arose and who is responsible.

Data risks

The benefits of digital technology and data can only be realised if data is managed properly. Connected construction sites of the future will generate vast quantities of data. This can be overwhelming. Businesses can get lost in how to use this data, and risk using it in a way that is not permitted under law or contract, without having the right underlying systems, processes and policies in place.

Beyond issues of data protection, security, data ownership and intellectual property rights associated with data that need to be navigated, industry will need to be aware of data localisation or sovereignty requirements that exist in some parts of the world which can prohibit their or others’ access to the data beyond the country in which it was initially produced.

Technology-enabled disputes

Technology is also increasingly central to enabling mediums for dispute resolution to operate. Remote mediation and other forms of alternative dispute resolution have grown in popularity during the Covid-19 pandemic.

Rights to a physical hearing do need to be carefully considered, particularly in the world of international arbitration given the results of a survey conducted by The International Congress for Commercial Arbitration. However, many parties involved in disputes are embracing virtual hearings given the time and cost savings available and the growing climate change agenda.

We expect to see AI-powered document review processes and document-only disputes – where arbiters consider written arguments and evidence and do not conduct any oral hearings, physical or virtual – become more popular too.