Modernising Construction Contracts for Emerging Technologies

Digitisation – including tools such as BIM, shared project document repositories and workflow – is becoming an increasingly relevant component of contract management and administration. As a result, the need for incorporation into the contract is becoming increasingly relevant. Detailed specifications regarding digitisation that are incorporated into the contract can help to manage the risk associated with the implementation of these systems, in addition to improving the likelihood of project success.
One example of increased contract definition is in the area of project schedules. Since the digitisation of project schedules and the expanded use of personal computers, contract specifications have included statements such as “Project schedules should be developed and maintained in software that is compatible with [insert software here].” As scheduling software has advanced in complexity, the contractual definitions regarding what comprises the schedules have also been rewritten in an attempt to account for expanded technological capabilities. For example, scheduling specifications now define the types of logic that can be used; the longest duration for an activity; whether retained logic or progress override is to be used when scheduling; how activities can be added and removed from the schedule; the use of milestones and constraints; and various issues that are simple “toggle settings” within the project schedule, but can have a significant impact on the output. For this reason, engineering and construction contracts have expanded to include increased details around scheduling specifications.
As new technologies are developed, similar steps should be taken to strengthen the understanding between the project stakeholders to facilitate the successful implementation of these technologies. New technologies that are quickly becoming standards in engineering and construction include 3D/virtual reality; building information modelling (BIM); plan sharing; centralised project-based documentation; digitalisation of as-built documentation; Radio Frequency Identification (RFID); drones; and workflows, among others. Each of these tools can improve situational awareness and informational liquidity, and carries the potential, over time, to improve the overall working environment if properly implemented.

Technology Compatibility

Ensuring compatibility of digital systems is essential. For example, a general contractor may have a document management system that it wants to use on a distinct project, and an owner may have a document management system that it has implemented across an entire programme of projects. How is this conflict resolved? How does the owner ensure that its system is respected and fully utilised by a general contractor?
As with schedule implementation, prudent owners must disclose this information early, and ensure that it is incorporated into contracts and acknowledged by bidding contractors. It is often proposed that owners and contractors maintain two separate systems, which can lead to incomplete data collection and maintenance, as well as disrupted workflow. Using one system mitigates this risk. Once contractual agreement has been reached regarding which system is to be used, the owner and contractor can move on to defining the particulars that will ensure compatibility.
These particulars of compatibility include pre-agreed workflows for reviewing and responding to documents; naming conventions for stored documents; scanning resolution for hard-copy documents that are converted to digital; approval processes for making changes; establishing responsibility for maintaining the system and ensuring system security, and determining who owns the collateral. These are just a few of the considerations that should be addressed before work starts to improve both information liquidity and usefulness.
Failure to consider technology compatibility can result in inefficiencies and delays as a result of untimely sharing of project information. Well-maintained document repositories have the ability to manage these and other risks by keeping stakeholders on a level playing field with regards to project data. Should a dispute become unavoidable, a centralised document repository can provide a valuable resource for evaluating disputes and working towards a resolution.

Implementation of BIM

Increased implementation of document repositories and digital management systems are being closely paced – and, in some cases, exceeded – by the implementation of BIM.
Contracts typically specify which party is responsible for the design and which party is responsible for the construction of a given project. However, BIM has the potential to blur the line between designer and contractor responsibility by incorporating design and construction information into a singular project model. This minimises unplanned conflicts during the physical construction.
To define the BIM process, public agencies have begun to incorporate BIM manuals into the contract documents.

These documents define specifically how BIM is to be used and what information is to be included in the BIM model. Much like scheduling specifications have evolved, the BIM manuals also can define requirements of the model including line types and colours; how often collision checks are to be run; what shop drawings can be developed from the BIM model; coordination requirements; and what trades should be incorporated in a BIM model.
Even with these seemingly detailed BIM manuals, conflicts still arise because the manuals do not address the responsibility between designer or conceptual BIM models, and contractor construction BIM models. A BIM manual should attempt to clearly define the difference between designer BIM responsibility and contractor responsibility.
A BIM model developed by a designer and included in the contract documents should not be considered “complete” by the contractor. Rather, the contractor is typically responsible for completing the BIM model through the development and incorporation of shop drawings and coordination among the various trades. This is most evident in the mechanical, electrical, plumbing and sprinkler coordination process. This involves determining the final design and layout of these trades with respect to other structural components and is often a significant cause of dispute, leading to questions of what is a design error and omission versus what is a coordination shortcoming.
The interface between the designer BIM model and the contractor BIM model should be well defined in the contract and incorporated into a BIM manual to facilitate the clear and concise assignment of responsibilities, to both the designer and contractor, and to establish expectations for what information will be provided to the contractor at the time of bid.
It is important to consider incorporating a BIM manual into the contract, as it will define both the technical characteristics of the BIM model and the interface required between the designer model and the contractor model. Ultimately, this clear definition will help to better manage expectations and minimise the risk associated with alleged incomplete design and poorly drafted contract documents.

Storing of historical files

Once the particulars regarding technology use have been agreed upon and incorporated into the contract and the project is ready to start, data begins to flow into the various systems for utilisation by the shareholders. But, what happens with all of this data as the project progresses and ultimately comes to completion? It is important to define, as with paper documentation, both the preferred retention policy and responsibility for maintaining and storing the documentation.
Accurate and complete as-built records, such as those that can be incorporated into a BIM model, are critical to future infrastructure projects well after the completion of a project and during ongoing maintenance and future expansion. In fact, as-built records and other documents can be used to inform future capital projects. As a result, careful definition in the contract of how digital files of all types are owned and stored after project completion is critical to ensuring that the information is available for future endeavours. In fact, there is no better time to agree on and begin implementing data storage and preservation than during the contract phase, which ensures that both parties mutually agree on document retention policies from the start.

Other Technologies

Other digital technologies are rapidly becoming integrated into the design and construction process for infrastructure projects. While 3D/virtual reality, RFID, drones, the impact of blockchain and other technological advancements are not specifically discussed, to the extent that they are a component of a project, their requirement and how they are to be used should be specified as clearly as possible in the contract documents, to ensure agreement between stakeholders before the first work begins. Each of these and other emerging technologies are used with the intent of managing project risks, including unknown or differing conditions, coordination and information flow. Failure to consider these and other technologies during the earliest stages of the project threatens to leave open the opportunity for misapplication and disagreements, diminishing the inherent value of these technologies.

Future Considerations

Technology is advancing at a faster rate than engineering and construction can adapt. Implementation of these technologies has the potential to facilitate stakeholder teamwork and take project coordination to new levels if mutually implemented. If implemented correctly, digital technology has the potential to address many of the largest dispute causation factors associated with infrastructure projects. The best way to ensure mutual implementation is to agree, at the contract level, on what tools will be used, how they will be used, who will be responsible for maintenance, and how the tools will be archived at the completion of a project. Proper contractual documentation and agreement regarding these technologies helps to manage the risks inherent with implementing them. It can also help to identify, manage, and resolve disagreements at the earliest stages of a project, maximising the likelihood of project success.