Project management

Diffuse disputes through better project management

The average value of litigation worldwide increased from $30.7 million in 2019 to $54.26 million in 2020, while the duration of litigation fell from 15 months in 2019 to 13.4 months, according to a recent study. Arcadis report. The data, presented in Arcadis’ 11th annual report, illustrates the ripple effects of the COVID-19 pandemic industry-wide, although it is worth noting that the overall volume of disputes is stayed relatively the same in 2020 as it did in 2019, contrary to what most observers would have anticipated as projects stalled and costs soared during the pandemic.

While trends in the value and duration of disputes varied by region, all interviewees noted an increase in “mega disputes” related to larger capital programs and private projects. . Notably, over 60% of survey respondents experienced project impacts due to COVID-19.

Owners, contractors or subcontractors who do not understand and/or fail to meet their contractual obligations became the leading cause of construction disputes in 2020 (up from 3rd place in 2019), followed by owner-led changes and third party changes or force majeure as the second and third main causes, respectively.

Highlights of the report include:

  • Good contract administration was a theme around the world for the successful and timely resolution of disputes
  • Most disputes were settled through negotiations between parties, and willingness to compromise played a key role in prompt resolution
  • Among the regions surveyed, the buildings sector (education, healthcare, retail/commercial, government) experienced the most conflict
  • In North America, the value of construction disputes increased from $18.8 million in 2019 to $37.9 million in 2020, while the duration of disputes fell from 17.6 to 14.2 months.

So how can companies prevent conflict from escalating in the first place?

Writing in the foreword to Connected supply: the basis for construction success, Mike Pettinella, Director of EMEA Sales at Autodesk Construction Cloud, says trust between owners, prime contractors and subcontractors remains key.

“The importance of partnership makes the pre-construction phase, when organizations decide who to work with and how, so crucial to the success of every project,” he writes. “From selecting the best people for the job to mitigating risk, preconstruction is where you make your money and lay the foundation for successful construction.”

Solicitation, bidding, and bidding involve interactions between a large number of construction organizations. But currently, there is little consistency across the industry in the technologies used for this crucial process, the report notes.

Construction companies use a diffuse set of software to manage bids. Email is the most popular tool among owners, prime contractors and subcontractors, followed by a combination of Google Drive, Microsoft Excel and DropBox. Notably, a fifth of owners (20%) and contractors (19%) use a bespoke solution created in-house.

A significant proportion of businesses do not use the technology at all. More than a tenth of owners (12%) and subcontractors (13%) say that most of their tenders are still on paper, although this trend is less marked among contractors. order.

Mistakes can happen and jeopardize the project later – and that’s not uncommon. The majority of prime contractors (86%) and subcontractors (78%) admit that mistakes are made during the tender submission process that impact the project downstream. In fact, a quarter of contractors say this happens on the majority of projects (24%).

InEight and Microsoft Dynamics 365 connect all business processes with Construction 365

InEight Inc. announced a strategic integration with Microsoft Dynamics 365 to deliver Worksite 365 – a unified enterprise platform integrating over 30 different integrations to help companies improve and standardize information and the flow of information between the office and the field for capital construction projects.

The integration unifies the data experience (including CRM, estimating, project controls, BIM, risk management, document management, planning, accounting and procurement, via functionalities desktop and mobile) to provide enterprises with improved transparency and alignment, providing a single source of truth to improve user ease of access, collaboration, and security in Microsoft and InEight applications. With the customizable end-to-end platform, customers can now seamlessly and intuitively connect data and processes between systems to reduce errors, omissions, and redundancy while improving results on complex projects at long term.

Pål Christian Hustoft, CFO of Veidekke Entreprenør AS, a joint Microsoft and InEight customer and one of Scandinavia’s largest construction companies, said he believes the Construction 365 solution will meet his business needs as a fully integrated digital transformation platform, providing transparency and control throughout the business. “We expect the ongoing implementation to confirm our beliefs, which will allow us to create great projects for our customers with the desired profitability and on time.”

Petter Merok, Head of Industry, Architecture, Engineering and Construction, Microsoft Norway, Saic’s complex construction projects involve huge amounts of variables and many interdisciplinary and corporate personnel.

“This powerful integration of Microsoft Dynamics 365 with InEight empowers teams with real-time, unified data across all processes to make smarter decisions that drive business progress. We are proud to play a role in supporting improved productivity and performance in the construction industry, at a time when it has perhaps never been more important.

Mike Paul, Managing Director for EMEA at InEight, said that while the physical world still has borders and restrictions on freedom of movement, the trend in the data world is the opposite. “Connectivity is key. Through this integration with Microsoft Dynamics, InEight creates interconnected workplaces to improve collaboration and project results in capital construction. This is an important and timely step towards our goal of digitizing construction project management. »

Pursue quality partnerships, embrace on-premises technology and embrace agility

The construction professionals interviewed in the Arcadis report have clear ideas about the qualities that would make them want to work with a company again in the future – and communication, as well as reliability, is an important factor.

For contractors, regular communication and project updates (31%) and timely completion of work (29%) are the attributes that would make them most likely to work with an owner again. the future.

For prime contractors, the quality of delivery made by subcontractors (46%) is the most influential attribute, followed by whether they are on budget (41%) and on time. (40%). In particular, the use of digital technology on site is also an attractive feature for both principals (31%) and subcontractors (25%).

In an article for North America CEO, Chris DeBrusk, Partner, Digital Practice, Oliver Wyman, discusses the future role of the project manager. He believes that as organizations embrace agility and drive their transformation efforts using a more iterative approach with increased alignment between business and technology stakeholders, the role of the project manager is sure to change.

“That being said, it will be a rare organization that will be able to eliminate the role entirely,” he says. “The role is more likely to become one of business coordination, organizational change management and risk management and less of an SDLC process manager.”

Arcadis Report Highlights

  • Good contract administration was a theme around the world for the successful and timely resolution of disputes
  • Most disputes were settled through negotiations between parties, and willingness to compromise played a key role in prompt resolution
  • Among the regions surveyed, the buildings sector (education, healthcare, retail/commercial, government) experienced the most conflict
  • In North America, the value of construction disputes increased from $18.8 million in 2019 to $37.9 million in 2020, while the duration of disputes fell from 17.6 to 14.2 months.

Business Banking Resolution Service tackles recent and longstanding disputes in the UK

A free and independent UK dispute resolution service, the Business Banking Resolution Service (BBRS), works directly with property and construction companies to see if their banking disputes, recent and old, can be resolved.

It is estimated that over the past 20 years, some 600,000 businesses may have developed a dispute with their business banking service provider that remains unresolved. More than 179,000 medium-sized businesses, including construction companies, property developers, architects, estate agents and residential and commercial landlords dating back to 2001, could benefit from the service according to ONS data.

This number includes businesses that have since closed. The BBRS and Propertymark are urging businesses to see if they can apply, especially those with older unresolved complaints, as the deadline for historical complaint inquiries is February 14, 2023.

Businesses using the service will be assigned a highly trained dispute resolution specialist to act as a single point of contact and provide hands-on support. The BBRS is completely independent and free to use. Businesses can find full details, including whether it’s right for them, at: www.thebbrs.org/register


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