Navigating the Contractual Minefield of Construction 4.0
In the excitement of implementing innovation and new ways of working (or indeed, conversely, trying to ignore it entirely), the construction industry habitually forgets the thing that could undo all the progress and benefits. A vague, uncertain, or unsatisfactory contract can lead to differing understandings, disputes, and dissatisfaction.
Clients may not get what they expected, and the project team may perform more services and work than they had anticipated or budgeted for. On a related note, the division of duties, obligations, and rights between the parties will consequently be equally open to different interpretations and consequent disputes or waste of time and costs.
What is the starting point to avoid such a fate? Some key issues to consider are the contents of the contractual and technical documentation.
To learn more about the legal challenges of implementing digitization in construction, please refer to the chapter “Legal Implications of Digitization in the Construction Industry” by the author as part of a Springer book Industry 4.0 for the Built Environment, edited by Marzia Bolpagni, Rui Gavina, and Diogo Rodrigo Ribeiro.
New requirements for documentation
What is already mentioned in the contract about the intended use of technology? If it is unstated, consider what technology or processes parties want to use and what the result or deliverables are designed to be. Are those set out in the documentation? Is it detailed who does what, when, and how?
Has all of that made its way into the binding contractual documentation, or are vital specifications set out in non-binding documents? The latter carries excellent risks as parties can refuse to comply halfway through the project or have to perform extra, unpaid services or works.
Where the extent of services or works that need to be performed, or deliverables to be issued, are vague or changing, it becomes crucial to ensure proper records are kept of discussions and oral clarifications. Hence, there is no pointless debate later, particularly given that the parties reaching those agreed discussions will differ from those considering the matter some years later.
Disputes and unintended liabilities cannot be entirely avoided
Equally importantly, if one is undertaking specific technology or technology-related services for the first time, it seems sensible to check with one’s insurance brokers to confirm that such services are fully insured than get a nasty surprise later if a claim arises.
However, risks of dispute and unintended liability cannot be entirely avoided. Apart from those risks already highlighted above, issues arising in this area often fall within a few categories, regardless of region, technology, or process.
The first is an unstandardized use of terminology, acronyms, and jargon. Undefined use of language, such as “BIM Level 2”, can be fraught with danger as parties unknowingly have vastly different interpretations of what the phrasing or terminology means and requires of them. Other issues include that copyright and ownership and matters of process and data handling.
BIM and standardization give rise to new issues
Digital processes may produce new types of data or new categories of products. For example, from a copyright perspective, a BIM model consists of the design, the model itself, objects within the model, existing data, and new or potential data. All of these may belong to different parties or be subject to varying types of copyright ownership.
Turning to process and data, again, a lack of standardization can give rise to the risk and unintended disputes, but this time about processes and procedures, for example naming conventions, checking processes, and security or confidentiality protocols. The widely recognized interoperability issue also rears its head in implementing many digital and technology services and procedures.
The construction industry’s future—and increasingly its present—is digital. Ignoring the consequential legal and contractual issues and risks will lead to misunderstandings, differing expectations, and potential disputes. The longer-term clarity brought by legislation and case law will take time and is unlikely to be uniform worldwide. The global construction industry cannot wait for this, and for now, clarity within documentation and clear risk-managed processes make sense.
About the author
May is Global Director of Commercial, Legal and Digital Risks at the international engineering organization, Buro Happold. She is a senior construction lawyer and recognized legal specialist in BIM and construction technology. She has led the authoring of a number of key documents in this area, including the ISO19650-compliant Protocol template and accompanying legal guidance, and speaks worldwide on these topics.