Construction is one of the most robust and resilient industries in the world, with an approximate value of $1.98 trillion in the United States alone in 2023, according to Statista. This critical sector provides economic growth and supports businesses, communities, and individuals across the globe. Yet this vital contributor to the economy is not without its risks and challenges.
According to an Arcadis 2022 Global Construction Disputes report, in 2021 the global average value of a dispute was $52.6 million. In North America, the average dispute value was $30.1 million with an average dispute length of 16.7 months. The highest value dispute reported by respondents was US$2 billion. Globally, sums in dispute tended toward a third of project CAPEX (32.3%), while contractors sought to extend schedules by more than half (58.8%) according to a 2023 HKA CRUX Insight report.
While not all contractors will experience disputes that large, any dispute can be incredibly costly. In fact, many disputes will come in under $1 million which will still be huge for the average contractor. For example, on a $20 million project, if it has 4% profit built-in ($800K) and you lose a $1 million dispute; you’re in the red $200K!
Disputes are caused by numerous reasons however, the top causes of project distress in the CRUX Insight report and others, had their roots in changes in scope and incomplete designs. Scope change was the top cause of claims and disputes on 38.8% of projects, while design errors – closely entwined with changing scope – impacted a fifth of projects. Three design-centric factors – incorrect, late or incomplete design information – are clustered within the global ranking’s top five causes. Further analysis revealed that this design triple whammy afflicted a greater proportion of projects overall (44.8%) than scope change alone (38.8%).
The “design triple whammy” is having a prodigious global impact on the industry. The good news is that advancements in technology, specifically in AI, are having an equally remarkable impact on mitigating this dilemma and others.
The one thing that all analysts can agree on is that more time invested up-front in planning, design, and coordination will result in achieving more successful outcomes. Unfortunately, today’s fast-track construction culture makes the prospect of slowing down unfathomable. As owners push to hit the ground running, the design phase is squeezed, leading to immature designs, inaccurate procurement, design conflicts, and scope gaps.
We all recognize that project teams may have to accept unfinished designs deemed “adequate to build” solely so construction can start on time with the idea that they’ll attempt to back-manage the accepted risk when the design continues to develop during construction. It’s in precisely this scenario, that AI is proving to be the early risk-mitigation tool needed to achieve more successful outcomes.
Leveraging AI technology such as Firmus automated design analysis software during the preconstruction phase can significantly reduce the design-induced risks, errors, and disputes associated with early design sets. Let’s look at 3 ways AI enables owners, builders, and design teams to mitigate the top risks early.
Identifying Design Issues
Today’s complex projects like hospitals and high-rise residential contracts include multiple trades and design disciplines across the buildings and systems. These projects require hundreds, if not thousands, of documents, which can be a real challenge for those tasked with design coordination and manual design review processes.
Even the most proactive preconstruction teams can get stymied by the sheer volume of multi-discipline documentation requiring review at evermore truncated timelines. Utilizing AI to support and supplement these teams is a no-brainer. For example, AI-REVIEW’s automated construction document analysis can be completed in as little as 48 hours. The AI scans and detects issues in construction documents, such as incomplete design, scope gaps, and discrepancies. The resulting reporting provides precise and comprehensive issue identification and markups, optimizing workforce efficiency and ensuring nothing falls through the cracks.
Analyses include architectural, MEP, and overall document health checks, allowing project teams to quickly assess and respond to design risks before they impact your project budget, quality, or schedule.
Assessing the Impact of Identified Issues
Risk management practices, such as risk assessments, contingency planning, and effective project oversight, can help mitigate the impact of construction risks. Utilizing AI technology that can both identify design-related issues and assess their risk impact level[1] can be a big help. Project teams can quickly and easily review the identified issues and markups based on critical, medium, and low-priority categories to assess which risks are acceptable and which require immediate resolution.
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[1] Impact levels are based on estimated cost, issue severity, frequency of occurrence, etc
