Artificial Intelligence in Construction Claims

The construction industry implements new technologies much slower than other industries. According to a recent study by McKinsey & Company, Artificial Intelligence: Construction technology’s next frontier, “the engineering and construction (E&C) sector is worth more than $10 trillion a year. And while its customers are increasingly sophisticated, it remains severely underdigitized.”

It is perceived that management of claims is one of the biggest challenges in current changing international construction industry. Existing studies have identified wide-range causes of claims, which are related to industrial, financial, social, political, organizational, behavior, contractual, environmental, and project related factors. However, if you could have those categorizations and if you could address and quantify the relationship among these factors and their association with claims for large projects with FIDIC or other types of contracts, you could certainly use Artificial intelligence (AI).

In other words, the introduction of AI into the construction industry does not imply the use of robots to do plumbing, lay bricks, asphalt or drive trucks. It implies the use of algorithms that solve the greatest challenges and improve efficiency and productivity.

On the perspective of contractors, the causes of clam could be clearly refined as: external risk (sociopolitical risks, economic risks, and nature hazards), clients’ organizational behavior (untimely payment, change orders, and inefficient processing), and project definition in contract (unclear scope of works and unclear technical specification). Considering those categories, the machine learning should be guided towards: 1) timely collecting information from complex environment to properly prevent and respond to external risks; 2) promote partnering among participants based on equitable risk allocation, trust and open communication; 3) clearly define project scope of works and technical specifications.

The goal is to have a digital system that would enable the companies’ construction claims handlers to action at a single click of a button. Thus, instead of being protective of its services, leading providers of legal services must unite with private or public entities and create this digital system which would increase the success rate of projects because companies that are applying AI to its projects are able to generate 50% more profit. 

In this respect, AI is well suited for handling construction claims. Under the current system, handlers, Contract Managers, Lawyers must examine and identify multiple components of construction claims and necessary data for substantiating those claims. There is much repetitive manual input of data and generation of repetitive responses. With a new digital system, a self-learning AI as part of BIM, the various task could be performed much faster because of its automatic nature and the data could be collected at the push of a button for a lower value of constructing small housing or large infrastructure projects.

The new digital system could update the data for each claim and when the time comes, only with a push of a button a compendium of claim could be generated. This could save hours of work for each handler, Contract Manager, Lawyer.

As well as improving operational efficiency, the data collected by the new digital system would enable companies to drive better insights from various types of claims. The result would give that company the opportunity to improve its strategies as well as having a competitive edge.

There is no such technology yet in the construction industry, but other industries are well ahead in this matter. Therefore, it is much easier in technological perspective to create such system, because it could copy the successes. In this respect, the global insurer ALLIANZ has just recently launched its injury claim automation digital system.

A possible reason why the construction industry continues to lag in technological advances is because it is “worth more than $10 trillion a year” and there are many protective interests. That is why many foresee the rise of a newcomer, a construction company, a contractor that continuously looks for ways to improve its claims propositions and make improvements for its employer which would significantly reduce time and costs. With such efficiency and productivity due to the AI application, the Contractor could easily outbid its competitors in any tender without using any faulty practices.