?? AI CAN PREDICT YOUR DEATH

And you can predict the death of a Construction Company.

Did you know that now there’s an AI model that can predict the age you will die? And why wouldn't there be - actuaries have been using statistical methods to do the same thing for years (and adjusting your medical and life-insurance premiums accordingly).

The AI model is called Life2vec and it was developed by Danish scientists.

Is it accurate?

That’s the million-dollar question right? Well apparently, the model which contains the health data of about 6 million Danes, has been found to be 78% accurate in some studies (which seems eerily accurate if you're a Dane). That’s not all - the model can supposedly predict how wealthy you will be when you die as well. I'm beginning to smell the faint aroma of snake oil. How about you?

Can I try it?

That’s what you really wanted to know, isn’t it? Well, the model is not yet public… but there are bots claiming to use it. I tried one claiming to use the Life2vec model and after answering a handful of questions, it said I’d reach 85…(and then be shot by a jealous husband. Just kidding.).

You can try the model here (note, you’ll have to sign up for free).

Take the outcome with a pinch of salt of course, this probably isn’t the proper model.

But you CAN predict the death of a Construction Company.

I recently published an article entitled "How to Kill a Construction Company". In it I pointed out how the modern contractual environment is extremely disadvantageous to the Contractor. BUT, that many contractors blithely accept these contractual risks even though by doing so they are inevitably condemning their companies to death - it's just a question of time.

I pointed out that most tenders require bidders to simultaneously:

1. Waive the Contractor’s Lien (i.e. waive their collateral against non-payment by the Employer), and
2. Provide an On-Demand Performance Bond (i.e. agree that the Employer can dip into their bank account for any breach alleged by the Employer without requiring the Employer to prove that allegation in a dispute process), and
3. Provide an Unlimited Product Warranty (i.e. agree that the Employer is entitled to consequential damages in the event that there is a defect in the installed product. This means that the Contractor may be liable not only to rectify his own work but to also pay for any and all consequential losses that the Employer may suffer including, for example, loss of profits due to delayed occupation), and
4. Agree to Delay Damages (in the form of a financial penalty which the Contractor is liable to pay for each day that the project is late), and
5. Accept a Payment Retention (which the Employer later often tries to seize by refusing to sign a Completion Certificate and/or by demanding a Final Settlement Discount), and
6. The Employer typically refuses to provide a Payment Guarantee. This notwithstanding clauses in certain standardized Conditions of Contracts (such as 2.4 in the FIDIC Red Book) which require the Employer to be able to demonstrate that he has sufficient funds available to complete the Works.

The Contractor must swallow all of this on the back of paper-thin margins as well as all the normal contracting risks like fuel and materials prices, industrial action, the weather, local content requirements, and so on and so on.

Taken together, these circumstances effectively mean that Contractors are required to provide unsecured credit to the Employer who can then pull the Performance Bond (seize the Contractor’s money) at any time without following a dispute process, and hold the Contractor liable for unlimited costs, now and in the future, for any default that can be ascribed to the Contractor.

It’s a crazy set of risks which no Contractor who wishes to stay in business should blindly agree to. I call it SATAN’S TRIANGLE OF CONTRACTING because so many of them, big and small, have been swallowed up by it, never to be seen again:

I've sat in countless "Tender Review Meetings" where "risks" are discussed and debated, and contingency allowances are added to the bid price to mitigate the risk of their occurrence. Mostly these are operational risks - unknown ground conditions, fluctuations in the cost of diesel, regulatory changes etc etc. All good, but it's amazing how very few (savvy) contractors ever take a hard and holistic view of the full ambit of the Contractual Risks they are signing up to - Satan's Triangle. And even if they do, they often shrug their shoulders resignedly and say, "ah well, if we don't accept those conditions we'll be disqualified".

If that's the attitude in your RiskComm, then you can be assured that, at some point, a contract WILL kill your company - it's merely a question of time.

But you CAN cheat death...

Fortunately you CAN mitigate contractual risks, but you've got to be serious about it. I suggest several mitigation measures in the above-referenced article. At the very least you MUST:

1. LIMIT YOUR LIABILITY

• Total liability (howsoever arising) should be limited to an amount that should never exceed your contract value, less if it's a big contract that could put your existence in jeopardy.
• NEVER accept unlimited liability or undefined consequential damages. Never ever, ever.

2.?QUALIFY PERFORMANCE BONDS

• Never provide an On-demand Performance Bond without a Payment Guarantee being provided by the Employer. This is a simple and equitable quid pro quo that you should insist upon. If you don't ask, you certainly won't get.
• Make the pulling of a Performance Bond subject to a dispute process. Why should that be so unreasonable? And if you can't, get your CEO to sign-off on this one - it's that serious.

Finally, if you can't mitigate your contractual as well as operational risks to an acceptable level, walk away....

REMEMBER: The first rule of business is to stay in business.

You’ll never regret gifting bad contractual conditions to your competition.