Construction is one of the world’s most robust and resilient industries, worth an estimated $1.98 trillion in the United States alone by 2023, according to statesman. This critical sector provides economic growth and supports businesses, communities and people around the world. However, this vital contributor to the economy is not without risks and challenges.
According to one Arcadis Global Construction Disputes Report 2022in 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 duration of 16.7 months. The highest value dispute reported by respondents was $2 billion. Globally, the sums in dispute tended to be about a third of the project’s 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 such large disputes, any dispute can be incredibly costly. In fact, many disputes will be under $1 million, which will still be huge for the average contractor. For example, on a $20 million project, if you have a built-in 4% profit ($800,000) and you lose a $1 million dispute; you are in the red $200,000!
Disputes are caused by numerous reasons, but the main causes of project distress in the CRUX Insight report and others were rooted in scope changes and incomplete designs. Scope change was the main cause of claims and disputes in 38.8% of projects, while design errors, closely related to scope change, affected a fifth of projects. Three design-focused factors (incorrect, late, or incomplete design information) are grouped into the top five causes of the overall ranking. Further analysis revealed that this triple design blow affected 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 advances in technology, specifically in AI, are having an equally remarkable impact in mitigating this and other dilemmas.
The one thing that all analysts can agree on is that more time invested upfront in planning, design, and coordination will result in more successful outcomes. Unfortunately, today’s fast-build culture makes the prospect of slowing down unfathomable. As owners push to go live, the design phase gets stretched thin, resulting in immature designs, inaccurate procurement, design conflicts, and scope gaps.
We all recognize that project teams may have to accept unfinished designs deemed “fit to build” just so that construction can begin on time with the understanding that they will try to manage the accepted risk as the design continues to evolve during construction. Precisely in this scenario, AI is proving to be the early risk mitigation tool needed to achieve more successful outcomes.
Leveraging AI technology as it is now firm Automated design analysis software during the preconstruction phase can significantly reduce design-induced risks, errors, and disputes associated with early design assemblies. Let’s look at 3 ways AI is enabling owners, builders and design teams to mitigate major risks early.
Identification of design problems
Today’s complex projects such as hospitals and high-rise residential contracts involve multiple design trades and disciplines in buildings and systems. These projects require hundreds, if not thousands, of documents, which can be a real challenge for those in charge of design coordination and manual design review processes.
Even the most proactive preconstruction teams can be stymied by the sheer volume of multidisciplinary documentation that requires review under increasingly truncated timelines. Using AI to support and complement these teams is a no-brainer. For example, AI-REVIEW’s automated analysis of construction documents can be completed in as little as 48 hours. AI scans and detects issues in construction documents, such as incomplete design, scope gaps, and discrepancies. The resulting reports provide accurate and comprehensive problem identification and flagging, optimizing workforce efficiency and ensuring nothing falls through the cracks.
Analyzes include architectural, MEP and general document health checks, enabling project teams to quickly assess and respond to design risks. before affect the budget, quality or schedule of your project.
Assessment of the impact of the identified problems
Risk management practices such as risk assessments, contingency planning and effective project supervision can help mitigate the impact of construction risks. Using AI technology that can identify design-related issues i assess their level of risk impact[1] can be of great help. Project teams can quickly and easily review identified issues and flags 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, problem severity, frequency of occurrence, etc.
