Construction: technological advancements - the future and the risks

The use of construction technologies, including Building Information Modelling (BIM), is now commonplace in construction projects and is changing the way projects are designed, planned, and delivered.

Technological progress

The potential benefits for those delivering construction projects include greater efficiency and improved quality. By way of example, driverless machinery will not only serve to address the shortfall of construction professionals (which may be exacerbated by Brexit) but will also serve to make projects more efficient by way of standardising processes and continuity of operations throughout the delivery of a given project. Further, the deployment of drones will enable contractors to capture site progress in real-time and, in doing so, capture data which will avoid delays.

In addition to the above, the use of drones to survey sites and create 3D maps is also becoming common, as is the use of AI to provide existing designs and to verify designs. The construction industry is moving towards becoming a paperless environment, not just with the introduction of BIM Level 3, but also on an administrative level with programmes which enable exchange of blueprints (e.g. PlanGrid) and cloud-based control and execution platforms which manage bidding, costing, construction, and project management. Those operating in the design and construction sphere will need to invest heavily in technology to keep up with their competitors. Insurers are likely to see more claims arising from issues such as:

  • Ambiguity regarding responsibility
  • Privacy
  • Copyright
  • Data protection
  • Cyber security
  • Safety
  • Ambiguities between human errors (professional liability) and mechanical error (product liability)

BIM

The construction industry is currently striving to utilise BIM, the process for creating, and using, three-dimensional electronic models to represent the physical characteristics of structures. Indeed, publicly funded construction work must now be undertaken using BIM Level 2 (which requires sharing of design information through a common file format). Accordingly, claims will inevitably arise against BIM managers and consultants who are not up-to-speed with the BIM process, or who use incompatible 3D CAD software.

While Level 3 BIM (using a single project model) is not yet in widespread use, and this progression should remove the final layer of risk for conflicting information, there are difficulties in how liability issues will be addressed.

The construction industry will inevitably face challenges in allocation and coordination of responsibilities. Indeed issues relating to the following are already arising:

  • Is the model itself a contractual document?
  • To what extent can, and should, entities rely on data entered by others being accurate?
  • Who owns the model and any copyrighted material?
  • Can responsibility for professional design really be shared?
  • Anomalies as a result of parties failing to decide (or not making clear) in their contracts which documents are to take precedence and ensuring that that decision is consistent throughout, i.e. whether the requirements of the BIM Protocol take precedence over the main body of the contract itself and whether the BIM Protocol is actually consistent with the obligations contained in the body of the agreement.
  • Despite public authority clients being mandated to use BIM, contractors and consultants operating in that sphere may not be familiar with the technology, practical difficulties, limitations, or cost. They can sometimes demand incredibly detailed levels of modelling because of this unfamiliarity.
  • BIM requirements being relegated to a schedule which may then get overlooked by consultants and insurers in circumstances where it regularly contains absolute obligations regarding quality and coordination which should not be agreed without detailed consideration.

As BIM becomes more widely used, the professional team will need to become more adept at coordinating between themselves and educating their clients as to what can realistically be achieved in terms of quality, time, and cost while maintaining the benefits of working with BIM. That said, we believe that while many of the issues identified above will be resolved through experience and familiarity, instances will arise which require the involvement of a third party decision maker in order for precedents to be established, especially as there is only limited case law defining the BIM relations and addressing scope changes arising from changes in the model.

Insurance

The challenge for insurers is the project insurance which needs to be developed, absent which Level 3 BIM will prove difficult to adopt. Government is currently trialling IPI (Integrated Project Insurance), which insures the whole project team except in specified circumstances (e.g. wilful default). In the next three to five years, the use of IPI is likely to become more commonplace, at least for projects in the £10-25 million range. Insurers will face challenges in pricing IPI products, which generally cover over-spend and latent defects for 12 years from completion. Insurers will also be asked to insure alliances which involve members of which they have no direct knowledge.

The future

All of the above will serve to increase the pressure on the design and construction industry to ensure not only that it is up-to-speed with the latest technological advancements but also that transparency and good housekeeping is maintained throughout the lifecycle of a project. Further, it is incumbent on all of those operating in the construction industry to track the changing risk profile of projects as new technologies are utilised. Those entities which are not able to keep pace with these changes are likely to find themselves increasingly exposed. Policy wordings too will need to be updated if insurers are to avoid nasty surprises.

 

Read other items in Construction Brief - December 2016