Construction disputes continue to be catastrophically expensive, with costs rising steadily. This upward trend is expected to persist into 2025, with a significant amount in the total number of disputes rising in recent years.
For general contractors working alongside engineers and architects, comprehensive project and information management is a critical yet often overlooked aspect of risk mitigation. Here’s how integrating all forms of project communication into your recordkeeping can transform your risk-management strategy.
THE POWER OF COMPLETE PROJECT RECORDS
A comprehensive project record that includes all forms of communication is your best defense against disputes and your strongest tool for building client trust. Here’s why:
- Dispute Resolution: From 2021 to 2022 the average value of disputes in North America increased by 42%, and remains at historically high levels compared to 2021 and earlier according to the Arcadis Construction Disputes Report 2023. A complete project record can often prevent potential disputes from escalating.
- Client Relationship Management: Quick access to historical project data allows you to respond promptly and accurately to client inquiries, even years after project completion.
- Performance Improvement: Analyzing past project communications can reveal patterns and best practices, helping you refine your processes for future projects.
BEYOND EMAIL: CAPTURING ALL PROJECT COMMUNICATIONS
While most contractors diligently archive formal contractual documents, many overlook the wealth of information contained in informal communications, including in email threads and Microsoft Teams messages.
“Our customers found that people were managing projects from their individual email inboxes,” Newforma Chief Product Officer Carl Veillette said. “Using proper project and information management software allowed them to keep using email, but provided ways to file it with other project documents or associate it with an action item, RFI, issued drawing revision or BIM model, and find it again.”
IMPLEMENTING ROBUST COMMUNICATION MANAGEMENT
To harness the full power of your project communications for risk management:
- Establish Clear Policies: Develop guidelines for what types of communications should be archived and how.
- Leverage Technology: Implement a project information management system that can handle both structured and unstructured data.
- Train Your Team: Ensure everyone understands the importance of proper communication archiving and how to do it effectively.
- Regular Audits: Periodically review your archived communications to ensure completeness and identify any gaps in your record-keeping.
CENTRALIZED DOCUMENT MANAGEMENT
One of the biggest pain points in construction risk management is the vast number of documents. Without a proper project and information management system, important information can easily get lost or become disorganized.
By centralizing the access to your document management, you ensure that all project documents—contracts, drawings, specifications and more—are available and accessible from one location or one project record. This reduces the risk of errors and ensures that everyone has access to the same information.
A recent study from Newforma and Dodge Data & Analytics revealed that 53% of respondents reported difficulty finding information needed to make informed decisions because that data was scattered across a variety of systems and applications. Centralized document management addresses this issue head-on, saving valuable time and reducing the risk of errors due to outdated or conflicting information.
EFFICIENT EMAIL MANAGEMENT AND INTEGRATION
Emails are a vital part of project communication, but managing and organizing them can be a challenge.
When important emails are lost in the shuffle, critical information can be overlooked, leading to disputes and delays. Efficiently managing and integrating emails into your project record helps you keep track of important communications. By having a simple way to file emails directly from Outlook as issues, RFIs or submittals, you ensure that all correspondence is categorized and recorded appropriately.
This not only helps in maintaining a complete project record but also significantly reduces the time spent searching for critical details buried in lengthy email threads or in attachments within the mountains of emails in your inbox. Having information in employees’ inboxes that is not officially made part of the project record also significantly increases the risks associated with legal disputes.
UNIFIED CHANGE MANAGEMENT
Changes are inevitable in construction projects, but without an effective change-management system, they also can become a source of confusion and disputes.
A centralized change-management system allows you to document and track all modifications to the project. By recording change orders and scope adjustments in one place, you ensure that all updates are communicated and managed effectively.
This approach helps prevent scope creep, where project requirements grow beyond the original plan, causing delays and extra costs. It also provides a clear audit trail of all changes, which can be invaluable in resolving disputes or defending against claims.
THE ROI OF EFFECTIVE COMMUNICATION MANAGEMENT
Investing in comprehensive communication management pays off.
“Time savings alone generated an annual return on investment of four times over for this customer, meaning the software earned back its cost in the first 12 weeks of use each year,” Veillette says. “But the real value goes beyond mere time savings. Our customer felt that whatever the productivity savings, the most important benefit came in risk reduction.”
LEVERAGING BIM COORDINATION FOR RISK MITIGATION
Building information modeling has also become an integral part of modern construction projects.
Integrating BIM coordination into your risk management strategy can significantly reduce errors and conflicts before they become costly issues on the jobsite. Choosing simple-to-use BIM coordination platforms allows architects, engineers and contractors to track issues, act on clashes in the model and make immediate design reviews.
This ensures your project goes smoothly all the way to completion. Using a shareable 2D/3D model enhances collaboration by providing stakeholders with real-time access to designs, reducing ambiguities that often result in multiple RFIs and unnecessary communication cycles.
ENHANCING DECISION MAKING WITH ACCESS TO INFO
In recent years, the amount of data stored by architecture, engineering and construction companies has almost quadrupled, and the spread of data across many files and systems adds to this challenge. This makes it harder to find and use data, which prevents companies from finding and leveraging valuable insights.
Did you know that only 39% of architects, engineers and contractors have unconstrained access to necessary documents at least 90% of the time? This deficit indicates that a majority of professionals struggle with timely access to critical data. The volume of data managed by AEC professionals has grown significantly, from 6.6TB in 2018 to 29.8TB in 2023. This increase in data volume presents challenges in maintaining data integrity and managing data efficiently. While securing data is crucial, it’s only part of the story.
The lack of proper recordkeeping has also escalated into potential legal issues and significant project delays. This scenario, unfortunately, is not uncommon in the construction industry. A survey of business leaders from AEC firms in the U.S. and U.K. revealed that 78% of respondents experienced some kind of legal dispute in their business, compared to 63% in 2021. Poor information management and accessibility were identified as major root causes.
Advanced project information management systems offer powerful analytics capabilities that can significantly enhance your risk-management efforts.
By analyzing historical project data, you can:
- Identify patterns and trends that may indicate potential risks
- Use predictive analytics to anticipate future challenges
- Make data-driven decisions to mitigate risks more effectively
These insights enable you to take a more proactive approach to risk management, addressing potential issues before they escalate into major problems.
STREAMLINING RFI AND SUBMITTAL MANAGEMENT
Efficient handling of requests for information and submittals is crucial for maintaining project momentum and avoiding delays. A robust project information management system can streamline these processes by:
- Automating the routing and tracking of RFIs and submittals
- Providing real-time status updates to all stakeholders
- Maintaining a clear audit trail of all communications and decisions
This level of organization and transparency can significantly reduce the risk of miscommunication and ensure that all project queries are addressed promptly and thoroughly.
EMBRACING A HOLISTIC APPROACH TO RISK MANAGEMENT
By embracing a holistic approach to project communication management, you’re not just protecting your bottom line; you’re setting the stage for smoother projects, stronger client relationships and a more resilient business.
The construction industry is evolving rapidly, and those who can effectively manage and leverage their project information will have a significant competitive advantage. Implementing these strategies will help you navigate the complexities of construction projects, mitigate risks effectively and ensure successful outcomes. As you move forward, consider how you can integrate these practices into your workflows, leveraging technology to create a more connected, efficient and risk-aware project environment.
Remember, effective risk management is not just about avoiding problems—it’s about creating opportunities for success. By mastering project communication and information management, you’re positioning your business to thrive in an increasingly complex and competitive industry landscape.
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