Minimizing Disputes
and Legal Claims Risks
via Construction Tech

Capital projects have long contended with blown budgets, compromised timelines, scope changes, design errors, change orders and inefficiencies, all exacerbated by manual practices. And the consequences have often resulted in costly construction disputes and lawsuits. It’s no wonder the industry has become a litigious one.

Digging out of a legal ditch consumes precious time, money and staff resources. Ironically, the one essential thing that can keep conflicts and legal claims at bay is the very thing the industry has been slow to embrace: construction technology.

While fending off lawsuits isn’t the sole intended purpose of any tech solution, such attributes can have a fortuitous knock-on effect. Functionalities found in different construction technologies allow more control over the issues that tend to trigger disputes in the first place. Project owners and construction managers stand to benefit from what these technologies can do to help minimize the risk of incurring expensive legal fees.

Gain consensus on design while reducing errors

Design-related mistakes consistently rank among the top causes of construction lawsuits. One solution in particular can dramatically reduce the incidence of design-based claims: building information modeling (BIM).

Simultaneously a technology and a process, this intelligence-based 3D modeling process is unique in its ability to link each element within the model — from the largest steel beam and volume of concrete down to the smallest hex nut — to all its evolving usable data such as model number, dimensions, quantity, manufacturer details, warranty information and so on. All this linked data is stored and made visible and accessible through a common data environment (CDE); think of it as a single source of truth for BIM.

With this linking capability, BIM enables designers to build the structure virtually, cutting the risk of disputes in two ways. First, design and materials options can be simulated and explored to make modifications and choices before ground is even broken. And second, it generates a realistic view of what the project looks like inside and out; this is where design clashes and structural defects can be pinpointed and fixed ahead of time.

But the CDE isn’t merely a virtual data storage unit. Acting as a communication hub, it allows stakeholders to make suggestions, relay updates and resolve issues together in real time, leading to faster, better understanding and refinement of the design deliverables. This interaction ultimately facilitates agreement on final decisions, which helps avert legal disputes that arise from a lack of consensus and the excessive change orders to make up for it.

And, with access to the level of detail and real-time communication capabilities afforded by BIM, there are fewer construction errors based on the misunderstandings that often result from incomplete, inaccurate or inaccessible project information.

Capture evidence with documentation

It’s said that the only constant is change. In construction, constant changes — in scope or through change orders — often top the list as reasons for filing claims. While changes are inevitable in capital projects, lacking a reliable, accurate record of their submission details and approvals opens owners and construction managers up to the potential for undefendable legal claims.

What is the best way to stem the tide of disputes and their associated legal expenses? Document, document, document.

But don’t depend on hard copies to do this. Technology-based documentation provides verifiable and more easily sourced evidence to fight construction disputes and lawsuits and curb financial outlay. Construction technology can do this for project information and the physical jobsite.

Let’s start with project information. We addressed BIM’s ability to store all design-related details in its accessible CDE and create accurate 3D virtual replicas of a structure. Beyond BIM, look to project management software with document control capabilities as this will help track scope modifications and change orders that become fodder for legal claims. They also allow control of access permissions for a digital trail of who viewed and edited a document, digitize approvals and streamline daily reports to show ongoing compliance with contract, building or legal requirements.

On the jobsite, drones are being used to record aerial images of site conditions and dangerous or hard-to-access areas (think treacherous terrain, high-rise buildings and the underside of bridges). These images are then sent back to the project team for verification or evaluation. Their nimbleness enables them to accurately capture job progress and quality to show compliance with project requirements. But drones also play a preventive role. They’re used to hazards and possible problems emerging on-site, allowing project teams to fix or plan around those risks to head off claims for personal injury or structural/ground instability.

Leverage data for proactive risk management

“What if…?” Such a simple phrase that invites possibility and analysis. Unfortunately, too many stakeholders don’t ask questions that begin with those words, which means they aren’t making use of what their project data could be telling them. Granted, construction managers and owners may feel like they’re swimming in data, but not leveraging it is a risk that could invite disputes.

An indispensable group of metrics, earned value management (EVM), is one to pay attention to.

It tracks project performance against what was established in the estimate. EVM’s two primary measures, schedule performance index (SPI) and cost performance index (CPI), are highly sensitive and responsive to internal and external risk factors. Whenever SPI or CPI ventures outside of normal operating ranges, they can warn that something requires attention or action before it threatens on-time and on-budget project completion and becomes subject to a construction lawsuit. Risk management software with user-friendly dashboard functionality is a simple way to proactively monitor these metric values.

EVM’s value isn’t just in delivering real-time performance monitoring; it also has a predictive function. It can help to answer hypothetical but realistic questions: What if equipment or materials are delivered unexpectedly late? What if certain materials were swapped out for something of lesser quality but more readily available? What if a late but necessary design change occurs? What if the economy slumps part-way through a long-term build? EVM becomes a tool to forecast the damage to timelines and costs so that appropriate contingency plans can be created to avert poor project outcomes and legal claims, including liquidated damages.

Centralize and organize project data in one single source of project truth

Approvals, data, documentation and contingency plans can’t help in a dispute, legal claim or audit if no one knows where they are or if there’s uncertainty about whether they’re the most current version.

This uncertainty is an unfortunate byproduct of siloed systems. Requiring arduous searching through mountains of information for anything that might support a claim, these disconnected systems offer no guarantee that the data is even correct once found.

Overcoming this fragmentation means connecting the disconnected. But even that can prove difficult when trying to stitch together incompatible software from multiple vendors. The best way to achieve visibility and access to real-time data and documentation is by centralizing it into a single source of truth (SSOT) found in a cloud-based integrated platform from a single vendor.

Aggregating project information into one data source accessible through one interface translates into more trust in its currency, veracity, and accuracy — in a word, certainty. And that data-supported certainty about status and progress can help reduce the potential for disputes over perceptions of project completion and compliance with requirements.

Reduce legal risks with construction technology

As capital projects continue incorporating sophisticated technologies and more complex designs and systems, the risk of disputes stands to continue its upward trajectory. Construction technology is pivotal in helping avoid these conflicts and the legal fees that follow them.

If you work on capital projects, it’s worth a conversation about how to make the right technology work for your company to best counter legal claims. Schedule a demo with us.

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