The last decade has seen a significant uptake in digitisation and the implementation of more collaborative processes in our industry. The question is: how has this happened, in an industry not generally known for either its fast, transformational change in construction projects, or collaborative mindset? May Winfield of Buro Happold takes a look
Some have said transformational change in construction projects was necessitated by the economic pressures of survival to design and build better, more affordably and faster – as anticipated by Mark Farmer’s aptly titled 2016 report, Modernise or Die.
One could also argue the practical impact of the global pandemic has further sped this up, as working practices often became remote, and necessarily digital. (This is not to say modernisation and digitisation have been either fast or consistent, of course, often being unnecessarily slow and inconsistent across the industry and in different regions).
The benefits of digital and transformational change
The benefits of digital and transformational change in construction projects are notable – ranging from reduced cost and time to increased quality, safety and profitability. While evidence up to now has been generally anecdotal, there’s an increasing amount of published information which confirms what has generally been felt.
A secondary benefit becoming increasingly clear is that all this technological progress makes our industry more attractive to the next generation – it addresses the construction industry cliches in their head and makes it (almost) comparable to a role in the tech industry. Given the talent shortage we face, it’s a benefit that should not be overlooked.
There is, however, a potentially big hiccup in all this great progressive change…
Change inevitably brings a degree of uncertainty, through new working methods and differing expectations about what’s possible, and where responsibility lies. If not mitigated, these in turn can result in unexpected risks, misunderstandings, disappointment and expensive, time-consuming disputes. If you simply digitise and change your business while ignoring such issues, you do so at your peril. Disputes and unintended liability will only detract from the benefits of any transformational and digital change. For example, many organisations have experienced at least one of these in their implementation of Building Information Modelling. So the question becomes: can we learn from this and avoid putting our legal/liability heads in the sand this time?
In this short article, I summarise some of the most likely potential causes of dispute and loss. Think about how they may apply to you. Raise them with your professional advisers. Risk-manage through contract clarity and targeted processes.
Copyright and ownership in digital processes
Digital processes – and the additional exchange of data and information they result in – introduce more variables to the questions of “Who owns what?” and “What do I want to own?”. One may assume that the answer remains unchanged for the designs themselves. However, the services and deliverables in question may have more significant future potential for use or continued development in new business services than more traditional design. For example, where the design and deliverables include modular designs, software or even kit-of-parts.
Many contracts, as standard, do not divide up ownership of the various materials and outputs. They often either keep ownership with the author, with the client receiving a royalty-free licence, or have ownership transferred to the client. This may not be appropriate for digital or transformational change in construction projects. So what do you do?
Whether you are the client, consultant or contractor, sit down at the beginning of the project and list the outputs, documentation, designs and knowledge that you regard are important for you to retain ownership or control over (and why so you can explain it to the other party!). For example, a designer may anticipate needing to retain ownership of the coding, templates, internal notes, strategy documents and software for these services to other clients. Conversely, a client may want to prioritise ownership of or restrictions on any elements which are specific to its project or business to avoid a directly competing product or deliverable.
Liability and risk
The next vital question comes from a core cause of dispute – Who is responsible for what?
Is the documentation, ie scope, technical documents and contract, clear and unambiguous? Is everything being asked for actually achievable, and falling within your professional indemnity insurance policy? Remember that terminology and jargon, such as “digital twin”, “net zero carbon” and “smart building” likely means different things to different parties due to the lack of standardised terminology across the industry and between regions. A client’s understanding of what it will receive when simply asking for a “smart building” or “sustainable” asset is likely to differ radically from that of a specialist consultant.
Is it also clear, and understood, when the risk passes between parties for the deliverables and work in progress? Is a designer responsible for how a modular manufacturer interprets their design and/or for ensuring the design can be manufactured by the selected manufacturer? Are they responsible if another project team member uses their output for a purpose beyond what was initially intended, eg using schematic models for detailed design? Is the project team warranting that certain sustainability aims will be achieved, or only based on information currently available and certain use of the asset? Are parties entitled to an additional fee for updating deliverables based on new knowledge gained – bearing in mind how quickly these areas are progressing?
The answer to all of these questions is the quintessential legal answer of “it depends”. Without specific contract terms or other agreement on the position, parties may find too late in the day that they have radically different understandings. Remember that if this happens, you can waste a lot of time and money proving you are right, and that the other party is unreasonable.
In this new way of working, parties are exchanging vast amounts of complex, and sometimes incomplete, data at regular intervals. Can a party rely on the data and models provided by another project team member, or will they bear the time, cost and liability if their deliverables are defective due to relying on bad data or errors within a model received?
There is then the important issue of confidentiality, even more important for some of these new, cutting-edge processes and projects. Despite confidentiality terms in contracts, a party could accidentally give access to the data-sharing platform to the wrong parties (or give access to the wrong sections), or fail to withdraw access from terminated sub-consultants or ex-employees. Who is controlling and monitoring access to the data-sharing platform, to control security and ensure parties are working to the correct versions, folders and naming conventions? A lack of this oversight could lead to a chaotic environment very quickly.
The new international standards, the ISO19650 series, contain helpful direction on parties’ roles in data and information management to facilitate understanding and success in such projects from the outset. Do refer to the UK BIM Framework website, which provides detailed guidance on implementing the ISO9650 series processes, as well as a Protocol contract template for ease of implementation from the contract side too.
Future thinking and change cannot succeed without collaboration
The above is a brief snapshot of some of the common causes of disputes that can and do arise in this area but are by no means exhaustive. Think at the outset about your internal processes and needs, any particular risks inherent in the digital processes being implemented (eg who is responsible for keeping the modular components safe during transport and installation), and the aims and vision of the project, client and project team in question.
What could (realistically!) go wrong? How can each of these risks be mitigated, eg by process, clarity or roles and tasks, insurance or even something as simple as keeping records of collaborative discussions (ie talk to each other openly and regularly – future thinking and digital change cannot succeed in silos without such collaboration).
If I could give one tip on this, use these risk mitigation steps to avoid any large gaps in the project’s nexus, eg actions, responsibilities or risks that are not allocated to any party. Otherwise, parties may have – or develop – very different understandings of where the duty or risk should lie, leading to heated disputes and a loss of all the time, cost and efficiency benefits of the digital, transformational way of working.
This article is not legal advice and professional advice should be obtained before acting on any suggestions contained in this article.
May Winfield
Global director of commercial, legal and digital risks
Buro Happold
Tel: +44 (0)2079 279 700
