Construction Research and Innovation

ISSN: 2045-0249 (Print) 2475-6822 (Online) Journal homepage: https://www.tandfonline.com/loi/tcri20

Will digitalisation end construction disputes?

By Charlie Woodley

To cite this article: By Charlie Woodley (2019): Will digitalisation end construction disputes?,
Construction Research and Innovation, DOI: 10.1080/20450249.2019.1589140

To link to this article: https://doi.org/10.1080/20450249.2019.1589140

Published online: 08 Mar 2019.

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CONSTRUCTION RESEARCH AND INNOVATION
https://doi.org/10.1080/20450249.2019.1589140

Will digitalisation end construction disputes?

By Charlie Woodley*

A study of more than two hundred projects has revealed that claims and disputes are caused by the complex interplay
among multiple factors, suggesting that simplistic approaches to dispute avoidance will not work. Digitalisation,
however, should act as “dispute avoidance by proxy” because most causation factors identified are mitigated by the
improved situational awareness and “information liquidity” that digitalisation brings. It is predicted that, as digital
techniques pervade construction, parties will spend less time arguing over the facts of disputes, and will progress more
quickly to negotiated settlements, cutting cost and time.

To understand claims and dispute causation better in
the construction and engineering sector, and the likely
impact of digitalisation, our team collated and analysed
data and expert opinion on 257 projects, together
valued at more than $400bn, where HKA provided
claims consulting and dispute resolution services. We
identified numerous causes, and the interrelationships
between them, which we believe more truly reflects the
constraints on parties and projects (Woodley, 2018).
The top ten causes of disputes will surprise few.
They are, in order:
(1)Slow progress
(2)Variations
(3)Extensions of time
(4)Late availability of information/design
(5)Change of scope
(6)Managing – time
(7)Different interpretations of the contract
provisions
(8) Adversarial culture
(9) Design errors/buildability
(10) Lack of communication
More interesting, however, is that our research
showed an average of 13 interrelated causation fac-
tors per project, which debunks any attempt to
reduce dispute causation to a few headline factors.
There are primary, secondary, even tertiary causes,
and they shift depending on which party in the dis-
pute – owner, contractor, designer – is examined. Put
simply, it’s complicated.
Looking at the top ten causes, we believe that
digitalisation in the industry will have an ameliorative
effect on disputes as “information liquidity” extends
through supply chains. By information liquidity, we
mean the ease with which records, and the data they
contain, can be converted into knowledge.
For instance, a major challenge in dispute resolu-
tion is trying to establish what the facts were on site.
Retrieving as-built data has traditionally relied on
paper-based site diaries, which site agents can
neglect to update, or can fill with inappropriate
information. Where there is ambiguity around the
facts, parties entrench. The advent of relatively sim-
ple smartphone apps, complemented by photogra-
phy, which can export data in a structured format,
allows the facts to be established much faster, and
with less expense. Rather than fight over the facts,
parties can progress more efficiently to negotiating
a settlement.
The savings in time and cost can be dramatic.
Recently we assisted with a delay claim and used
automation techniques to extract progress data and
plot S-curves in about four hours, whereas a manual
process might have taken three weeks. Extrapolated,
this type of time and cost saving supports the claim
that the forecasted value-add of digitalisation is in the
trillions of dollars.
Let’s probe some of the different aspects of digita-
lisation, and how it might reduce conflict and cost
associated with construction disputes.
3D models
The use of 3D models in the industry at large, and
within dispute resolution, will only increase over time
as BIM continues to gain traction globally and
becomes business as usual.
As awareness of the value of information models
grows, we expect them to be requested and their potential
to connect with non-graphical data to be evaluated as
a matter of course. This will be reinforced as the dispute
resolution community shifts focus to data rather than
documents.

*
Charlie Woodley is director and CRUX programme lead at HKA, a consulting, expert and advisory firm.
© 2019 CIOB
2 C. WOODLEY
“Listed companies that fail to embrace technology will, over time, lose competitiveness.”
With both industry and advisors digitally matur-
ing, it is not unrealistic to expect 70% to 80% of
future contentious commissions to have models avail-
able within the next five years, reversing the current
position.
Legal and dispute resolution practices with the
capability to take advantage of their clients’ existing
digital investments in 3D modelling and connected
data will have a distinct competitive advantage. In
this context, complex projects that do not rely on
3D models will quickly become a thing of the past.
Project controls
The impact of digitalisation on project controls has
the greatest potential to profoundly improve industry
performance and stakeholder outcomes. By first
understanding the flow of information, organisations
come to understand the transformative nature of
information liquidity.
By understanding data flow and information
architecture, organisations can streamline reporting,
making decisions faster and sooner to derive addi-
tional value. We believe this data epiphany can give
leaders the resolve needed to drive through cultural
change, catalysing digital transformation, first in their
own organisation and then within their supply chain.
Note: the whole industry does not have to digitalise
all at once. Pockets of change spark more pockets of
change. Information requirements that include
machine-readable formats for data interchange will
result in a trickle-down effect, improving data flow
throughout the supply chain. This process will acceler-
ate as parties recognise the value of data flow, and such
provisions become standard inclusions in contracts.
Digitalisation should result in more comprehen-
sive records that improve overall project control. By
connecting the decision-maker to the underlying
data, situational awareness is improved. This allows
informed decisions to be made, reducing the number
of disagreements and improving the prospect of set-
tlement in commercial negotiation – in turn reducing
the number of disputes.
Administering the contract
Given the nature of dispute resolution, it is probable
that contract-related causation will continue to fea-
ture highly. In the long term, as organisations come
to rely more on technology to assist them with the
management of projects, we expect to see an
improvement in contractual compliance and
a reduction in disputes. This should accelerate should
smart contracts gain traction.
In the short term, the inability to properly admin-
ister the contract is a good indicator that there are
underlying problems, be that information overload,
poor communication, or indeed a different interpre-
tation of the contract. For this reason it will continue
to rank highly as a cause of dispute.
As BIM gains traction there should be an increase
in collaboration. The increased information transpar-
ency and interaction between supply chain members
should flush out ambiguity in project documentation
and reduce disputes.
As organisations digitally mature and smart con-
tracts are implemented, the burden of administering
contracts reduce, as will non-compliance. This should
result in poor contract administration falling in the
overall dispute-causation rankings.
 CONSTRUCTION RESEARCH AND INNOVATION 3

Dispute avoidance by proxy Listed companies that fail to embrace technology

will, over time, lose competitiveness, which should be
Overall, we believe the aggregated impact of digitalisation
reflected in their share prices. This provides an
will be “dispute avoidance by proxy” because most cau-
opportunity for disruptors to digitally enable organi-
sation factors listed above are mitigated by improved
sations, improving efficiency and margins before flip-
situational awareness and information liquidity that digi-
ping them for sizeable gains at minimal risk.
talisation brings. Generally, digitalisation facilitates better
This picture has a wrinkle, however. As digitalisa-
collaboration and discourages adversarial relationships.
tion of the engineering and construction economy
For their part, SMEs will use technology to
accelerates, our experts see evidence that the increas-
improve record-keeping, enhance claim submissions,
ing volume and complexity of data on projects is
and reduce write-offs. We’re seeing this already.
outstripping stakeholders’ ability to process and
Data-driven decisions will reduce the likelihood of
thereby derive value from it. The misapplication of
disagreement escalating through formal proceedings,
technology could negate potential benefits, introdu-
while the ability to better evidence or rebut claims
cing risks such as information overload or decision
with readily accessible data will reduce wrangling and
paralysis in the supply chain. A knock-on effect of
push parties to faster commercial settlements.
this is the erosion of executive confidence that tech-
Digitalisation enables the coordination of numerous
nology investment will reap the forecast returns –
records into a single medium to improve understand-
something that can stifle innovation.
ing and presentation of complex issues. Directly con-
As information systems have increased, so too has
necting dispute resolvers with data removes the burden
the illusion of control. Disputes all too often expose
of information requests. So, the cost of disputes will be
flawed record keeping and situational awareness
driven down as machine-readable formats improve and
compromised by poor information flow.
expedite discovery, and as more structured data cuts
With these considerations in mind, it is necessary
the time and cost of preparing records for analysis.
to take a balanced approach to people, process and
technology during the digital transformation.
Beware overload and the illusion of control
Information technology is critical to our ability to man-
age complexity, inform decision-making, improve pro- References
ductivity, and reduce uncertainty, thereby mitigating
Woodley, Charlie. 2018. Claims and Dispute Causation:
risk. The days of instinctive decisions in the industry A Digital Perspective. HKA. https://www.hka.com/crux-
being made on gut feel and experience are numbered. insight-claims-and-dispute-causation/