Nearly one-half of real estate and construction industry executives surveyed recently reported an increase in construction related disputes over the past few years, according to Deloitte & Touche LLP, a national professional service firm. The survey also revealed that Web-based collaboration tools, touted as a better way to help avoid construction disputes, were effective only about 25 percent of the time.
The survey was conducted among 350 senior executives in the real estate and construction industry on the use of Web-based technologies and their impact on disputes and litigation.
“Despite the development of Web-based collaboration tools, industry executives indicate that the traditional gaps between owner, architect and contractor have yet to be narrowed,” said Mark Blumkin, a senior manager in Deloitte’s Construction Advisory Services practice. “Despite the fact that 40 percent of the industry utilizes the tools, they have been slow to penetrate the industry in a meaningful, industry-changing fashion as far as thwarting and resolving disputes are concerned. Most executives apply the tools to the more easily adapted administrative processes.”
The survey also revealed:
• In descending order, the disputes most commonly reported were architect/engineer error (43 percent), excessive change orders (36 percent), owner/contractor interference (35 percent), non-performance of subcontractors (30 percent), differing site conditions (26 percent), and acceleration (24 percent).
• Across firms with projects of all sizes that used Web-based technologies, project management (89 percent), document management (72 percent), and scheduling (66 percent) were the most common uses.
• While firms using Web-based collaboration tools did not enjoy an overall decrease in claims or disputes, 40 percent of the executives said their firm gained other benefits from Web-based technologies, such as faster project turnaround, improved controls, and increased accountability.
Mr. Blumkin noted that since litigation is largely caused by errors and omissions, Web-based collaboration tools need to be more directly applied to the design process, and not utilized only to serve document management or scheduling needs, which occur later in the construction lifecycle.
“This might explain why executives haven’t seen as much of an impact on construction litigation as one might have expected,” he said.
“While Web-based collaboration tools do not yet effectively mitigate construction litigation, project owners should consider adapting their use, both to ensure benefits from access to project data, and so that they can realize the other tangible benefits that survey participants attributed to collaboration tools,” Blumkin added.