The cost, quality and prospects of engineering and construction claims often hinge on the ability to efficiently repurpose project records for use in evidence.
In addition to providing recommendations, Charlie Woodley considers some of the underlying information challenges in the industry, their potential impact on claims and how the status quo in dispute resolution professional services leads to cost escalation and uncertainty. He makes the case for harnessing technology early in the process to drive efficiency, cost savings and to derive operational value from claim or dispute expenditure.
Building or retaining information expertise protects against lost opportunity or opportunism on the part of external providers.
Underlying challenges
Many of the sectors biggest challenges can be traced back to the industry’s habitual procurement and contracting method. Prevalence of subcontracting, supply chain variability and introspective commercial practices are not conducive to supply chain management or informed decision making.
Main contractors find themselves in a perfect storm charged with delivering projects on time and budget to protect razor-thin margins. This, whilst decisions are almost entirely dependent on third party records from a highly variable and introspective supply chain.
I have observed as the increasing volume of digital records has outstripped stakeholder ability to process them. The growing body of unprocessed records is both a risk and lost opportunity given it represents untapped knowledge (unknown knowns). Contactors must ask what is more realistic, to apply technology to the problem or embark on wholesale transformation of their supply chain.
The increasing volume of digital records has outstripped stakeholder ability to process them.
In contemplation of claims
Too often claimants take the path of least resistance and rush to prepare and submit claims based on the sliver of information that contemporaneously informed their decisions, opposed to taking stock of the totality of contemporaneous information available. In doing so, claims inherit any shortcomings in information governance including any lack of awareness of potentially relevant content or the inability to timeously process project records.
To advance a claim without first being able to interrogate the totality of contemporaneous information is, in my view, akin to Russian Roulette. Claim cost, quality and outcome are at stake. If the project team narrative is biased by incomplete records, the justification of a claim may transpire to be unfounded with abortive costs and associated margin erosion. If the quantum of a claim is similarly biased and executives misinformed, then claim strategy is compromised and opportunity for commercial settlement at risk.
Claimants should recognise that when relying on external advisors the cost of assimilating unprocessed project records will snowball. Investment in the time and effort to incorporate all records at the outset pays dividends, not just in terms of cost but in controlling the benefits that arise. It should come as no surprise that should this process be delegated to external consultants that costs quickly escalate.
To make the case for investment in front end preparation of project records, it is important to articulate how project records and archaic working practices drive cost inflation.
Claims inherit any shortcomings in information governance including any lack of awareness of potentially relevant content or the inability to timeously process project records.
Understanding cost escalation
Recognise the iterative nature of claim preparation or disputes and that records are repeatedly handled, reviewed, and processed by a sequence of ever more costly resource.
Above and beyond typically underestimated internal resource costs, the overall cost of claim preparation and dispute resolution is dominated by professional service fees. When the value chain includes legal advisors, claim consultants, expert advisors and expert witness teams all charging premium rates, the obvious cost-saving measure is to reduce the manhours needed to achieve the required outputs. This is the very essence of information technology.
The judiciary recognised that costs were a barrier to justice and has been diligent in its efforts to drive down the cost of dispute resolution. The legal community responded with investment in and embedding of technology, recognising that it not only appeased the judiciary but materially benefitted their business by driving client value and competitiveness. This is evident in a burgeoning LegalTech sector and process reform through the rise of legal project management.
The same cannot be said of claim consultancy and expert services where productivity has stagnated for decades, even declining as practitioners fail to keep pace with and adapt to digitalisation in the industry. Alarmingly, to find, review, collate, extract and structure relevant data for analysis consumes more than half of consultant hours.
The same cannot be said of claim consultancy and expert services where productivity has stagnated for decades, even declining as practitioners fail to keep pace with and adapt to digitalisation in the industry.
Why take back control
Claimants ought not to accept the inefficiency and cost of advisor technology complacency. This is especially true when specialist providers can augment a commercial team with the forensic capability to bring pre-analysis processing inhouse, drive ongoing advisor efficiency and enabling claimants to better control claim or dispute costs.
In my experience collaboration between claimant and consultant achieves the best outcomes. I am not advocating that claimants do not use external advisors but caution them to ensure that premium rates are only paid for services in the advisor’s field of expertise.
It is unrealistic to expect seasoned practitioners in technical, quantum delay fields to be experts in enabling forensic techniques or technology. Practitioners should know service quality and client value depend on these pre-analysis processes. Logic would dictate these processes be delegated to suitably skilled and experienced team members who harness technology, but this does not reconcile with the flatlined productivity.
Productivity stagnation and underutilisation of technology go hand in hand. Senior practitioners denigrate what they perceive as mundane labour-intensive activities and delegate them to junior personnel. Without the forensic tools, data skills, experience or guidance from seniors, budgeted resources are quickly consumed leading to cost inflation and degraded client value. Poor information governance and the underutilisation of technology perpetuate reliance on costly manual processes, the natural consequence of which is degraded client value and legitimate challenges to fees.
After all, why pay 10 times the market rate for data entry especially when advances in technology could largely automate data extraction and minimise or avoid the cost entirely?
Productivity stagnation and underutilisation of technology go hand in hand. Senior practitioners denigrate what they perceive as mundane labour-intensive activities and delegate them to junior personnel.
Recommendations
Be wary of hyperbole and undertake due diligence of claim and expert providers and proposed consultants to establish how they would apply technology specific to your claim
Recognise that efficiency creates opportunity. Control the pre-analysis processing of records and determine how best to capitalise on the time, cost and quality benefit
Use a specialist provider to augment your capability with the analytical firepower to duly process project records and otherwise prime them for use by the commercial team and professionals. Create grass-root efficiency which aggregates over time
Collaborate with claim or expert providers but armed with augmented analytical capability stipulate a right to first refusal of any labour intensive pre-analysis processing or data extraction
Before committing to a global claim use a specialist provider to test the assertion that it would be otherwise cost-prohibitive to particularise. Advances in technology allow for the cost-effective collation of even highly fragmented evidence
Given the status quo heavily relies on labour-intensive practices, stipulate that before an advisor rules out a preferred course of evidencing a claim as cost-prohibitive that it should be assessed by a specialist provider
The use of sampling and extrapolation is fraught with risk if not conducted meticulously. Where it is proposed as the method of choice consult a specialist provider to assess if the relevant data could be automated to enable a definitive analysis
The time constraint of adjudication can be improperly used to justify the use of unnecessarily manual processes under the guise of maximising the time available to analyse and respond. Specialists can digitise referrals and identify opportunities for expedited extraction and analysis at a fraction of the time and cost
Think laterally. Techniques applied to resolve analytical challenges in claims or disputes have operational applications, a route to achieve a return on claim expenditure. For example, AI document capture techniques used to expedite claim preparation can be repurposed to automate invoice or timesheet capture
Closing remarks
Building or retaining information expertise protects against lost opportunity or opportunism on the part of external providers.
With professionals struggling to keep pace with digitalisation in industry, claimants should be wary of hyperbole and claims to technological proficiency and take care to do their due diligence.
Those that lament the ability to control the cost of claims or disputes should take back control by applying technology to drive grass root efficiency improvements that benefit not just a claim but provide a mechanism to improve operational efficiency.
About the author
Charlie Woodley, Managing Director, has provided analytical firepower to the claims and disputes sector for over 12 years. He combines established legal forensics with emerging technologies and provides solutions that unlock efficiency gains in claim preparation and everyday business operation. Charlie’s experience incorporates contracting, claim and expert advisory and expert witness practice. He has supported technical, quantum and delays teams and been instructed as data expert in international arbitration. Convinced of the potential of technology to disrupt dispute resolution, Charlie writes from a digital perspective incorporating his commercial experience and research in the fields of dispute causation and behavioural economics. cw@disputedata.io
About Dispute Data
Dispute Data is a specialist data wrangling consultancy servicing the global engineering and construction sector. They harness technology to find, collate, clean and unify messy and complex data sets for easy access and analysis. Spanning commercial operation, claims, dispute resolution and expert services they provide analytical firepower and information expertise when it is needed most. For further information please visit www.disputedata.io