The last decade has seen the emergence of Big Data platforms allowing parties to major construction projects to digitize and integrate more and more of the engineering, design and build phase of their projects. Such digitization has led to the unlocking of vast amounts of data, allowing both owners and contractors greater insight into their processes. Given the razor thin margins and the fact that most large projects across mining, infrastructure and oil & gas asset classes are delayed by 20% and up to 80% over budget,[1] any technology that can improve efficiencies is welcome. However, from a disputes perspective, greater visibility and collaboration may lead to even larger or more frequent disputes.

Big Data software platforms that allow Building Information Modeling (“BIM”) applications are the most innovative and standard tech platforms available to construction projects. In simplest terms, BIM is an intelligent 3D model of a project that contains all of the data necessary for its life cycle. This includes materials, labor, costs, and the project’s physical footprint.

Generally, material, labor and engineering/design management are siloed processes, spread across a network of Contractors and Subcontractors and their respective IT platforms. BIM integrates all of these processes and overlays them into a single digital space. Together, this data works together to allow for predictive simulation and alerting capabilities. Thus, this digital representation of the project can enable stakeholders to:

• Identify critical materials or labor bottlenecks and predict downstream effects.
• Model decisions to optimize efficient outcomes.
• Communicate with Contractors and Subcontractors to proactively mitigate upcoming issues.
• Generate a complete project record shared between all stakeholders, creating an important evidentiary record for audits, insurance claims, and dispute resolution.

Accordingly, BIM creates the potential to reduce information asymmetries on projects by providing owners, lenders and other participants with real-time access to data regarding the status of project execution and performance against metrics.

We observe that increased transparency into project execution may have significant implications for the timing and frequency of disputes, as well as the forms of evidence relied upon in disputes. Under a traditional EPC contracting structure, the owner has relatively few touchpoints while a project is underway, and the contractor has significant discretion as to the means and methods by which it progresses the work, subject to its information tracking and reporting obligations to the owner in weekly and monthly reports, contemporaneous schedule updates, and other project documents. In turn, financing parties rely upon the owner’s periodic updates and provision of information to track the status and risk level of their investments.

BIM creates the possibility of establishing a more level playing field among project participants, in which owners, lenders, and contractors all have nearly equivalent levels of access to project information in real-time. This increased transparency may shift forward the timing and frequency of disputes, by enabling owners and lenders to identify problems early in the course of projects and to attempt course correction, before delays and cost overruns accumulate to a significant degree. From a contractor’s perspective, increased early interventions by owners may limit the ability of contractors to control their means and methods and to exercise their judgment in keeping projects on track. BIM may obviate traditional forms of project reporting, while significantly increasing the body of documentation available to owners and contractors in evaluating requests for cost and schedule relief. The accuracy of BIM data and the conclusions to be drawn from it may itself be the subject of significant disagreement between the parties. It is thus foreseeable that BIM may change the pacing of disputes on projects and enable owners and contractors to raise disputes on a real-time basis in response to trends in project data. Lenders may also demand greater rights of participation in projects, to the extent that they are in a position to assess performance issues on a real-time basis.

Notwithstanding the potential of BIM to aggravate tensions between and among project participants, enhanced access to timely project information may also enable early amicable resolution of disputes, whether through direct negotiations or dispute review board mechanisms, rather than allowing disputes to fester and become intractable. Greater access to data on all sides may also reduce the need for project participants to resort to letter-writing campaigns and heated allegations, since project participants and their advisors can assess the data and reach robust conclusions as to the causes and consequences of issues on the project. We do not suggest that BIM will avoid high-stakes disputes on all projects; however, BIM may help project participants identify and resolve many disputed issues at an incipient stage and without resort to formal proceedings.

Finally, BIM platforms have the ability to enhance the dispute resolution process and optimize learnings after construction completion. The BIM data accumulated throughout the lifespan of a project will be an important source of evidence for all parties in a dispute arising from the project. The existence of a common evidentiary foundation may limit the need for costly and burdensome document production and may enable the parties’ experts to establish agreement from the outset as to the principles and data on which their respective analyses will be based. At the same time, disputes over the accuracy, integrity and completeness of BIM data may become a significant facet of post-construction disputes. Beyond the dispute resolution context, BIM data may allow owners, lenders and contractors alike to extract detailed insights from past projects and to refine their assumptions, contracting and execution strategies for further projects.

In summary, BIM offers both opportunities and risks for the construction industry and mega-project participants. Increased access to project data on a real-time basis may result in significant efficiencies, enable proactive resolution of project issues, and limit the extent to which disputes magnify beyond the limits of amicable resolution, even as BIM creates the possibility that disputes may occur earlier and more frequently on projects.

[1] “Imagining construction’s digital future” Mckinsey & Company, dated June 24, 2016 < https://www.mckinsey.com/capabilities/operations/our-insights/imagining-constructions-digital-future>.