Construction: avoiding legal disputes and their expensive costs is possible!

The CRUX 2022 report by HKA paints a bleak picture of the construction sector and the many disputes that clutter its daily life. Worldwide, 1.600 projects were analyzed. Result: cumulatively, 80 billion dollars were lost in claims and disputes, for a total of 840 years of delay! In Europe (28 countries and 431 projects analyzed), while the damages claimed are higher on average (38,5% of the average project budget), the delays (60,5% of the planned duration of the program) are slightly lower than the world average (68,5%).

In addition to the financial damage, legal disputes weigh on the various resources of the companies concerned, and potentially cause domino effects on other projects, jeopardizing the company's cash flow and results, and also harming its image. A vicious circle to the detriment of the project concerned of course, but which can pose a risk to the company as a whole.

Construction sector: proactivity vs. reactivity

Of course, not all disputes in the construction sector end up in court! When a conflict arises, employees can be trained to resolve them amicably, or the intervention of third parties, mediation and insurance can help resolve the problem. But all of these systems remain costly, complex and time-consuming, and require efforts on both sides to implement them.

In other words, the most effective is still the absence of litigation. This assumes perfect information and perfect mutual understanding of the parties involved in the contract. In this regard, digital construction management solutions guarantee greater efficiency and legal security for construction projects, in particular by improving the quality of documentation, without constantly revisiting the methods and processes of execution.

Document each stage of the project

Digital technology did not invent the concept of project documentation: plans, processes and contracts have always existed. But digital solutions provide additional data integrity and certification of the accuracy of recorded documents. In the event of a dispute, the audit trail can easily be traced back and thus provide rapid and reliable expertise of the elements produced in court.

Furthermore, before reaching legal disputes, digital systems are easily integrated into the value chain of a project: management of ongoing operations, validity of information accepted by each party, etc. De facto limiting the risk of litigation. Shared documentation, provided that it is complete and understandable by all stakeholders in the project, allows for increased proactivity, communication and effective and immediate resolution of problems and questions, before they turn into real litigation.

But the relevance of construction management solutions does not stop at potential disputes: in addition to the traceability of the actions of each person involved (who did what, when and why) and greater fluidity of projects, they also guarantee regulatory compliance, in a sector particularly subject to the constraints of legislators. Compliance also insurance-based, so that the co-contractors are guaranteed to be covered in the event of unforeseen events, before, during and after the delivery of the project.

Objective and efficient project management

Regulatory inflation, innovation, technology… the construction sector is becoming more complex and there are more and more stakeholders on the same project, multiplying the risks of defects, and therefore the associated legal risks. Bringing together all stakeholders around the same digital solution is the assurance of a better managed, less expensive and time-efficient project.

Upstream, planning based on precise objectives helps to streamline tasks, coordinate teams and project stages, and plan communication times, in order to provide clarity and accuracy to all those involved. During the project, the appearance of anomalies or delays is notified in real time, allowing resources and processes to be optimized, to resolve the defect observed without harming the overall progress of the project.

During and downstream of the project, digital technology brings rigor and confidence to stakeholders, protecting them against the risks of lengthy and costly disputes to resolve. This contributes more generally to improving the image of the entire construction industry, and to relieving congestion in the courts, in favor of amicable and rapid resolutions, without legal risk for professionals in the sector.

Tribune by Álvaro Vega, Regional Manager France, Spain, Italy and Latin America, PlanRadar (LinkedIn).