When the coronavirus pandemic swept the nation, I noticed a common position among many of my contractor friends about how this will affect their approach to future claims. “My mentality is changing,” one said. “When I’m busy, it isn’t always worth following up a small claim. I’ll take my losses and focus on the next job. But if I don’t know where and when the next project will come, I have to squeeze what I can out of current projects.”
That conversation reflects a lot of what I have heard and read lately: A wave of contractor claims for cost impacts due to COVID-19 is coming. With contractors facing so many new challenges, the cost of projects under construction during the pandemic has undoubtedly increased. Whether it’s a small-town developer building one project at a time or a mega public agency managing billions of dollars’ worth of construction, project owners need to be prepared to handle the resulting claims.
COVID-19 is already forcing construction to change. Former nay-sayers of technology have embraced video conferencing, remote inspections and digital technologies to great success. Here are three ways your organization can make use of digital tools to prepare to proactively manage the dispute resolution process, before the wave of COVID-19-related claims comes crashing down.
- Get a look at claim risks and liabilities across the entire organization
Many organizations are facing common issues across their portfolio of projects, such as new health and safety requirements, productivity loss, material escalation and delays, to name a few. Now more than ever, it will be important to establish a programmatic dispute resolution strategy that addresses common issues equitably, consistently and in a timely manner. Your electronic project management information system (PMIS) tools can serve as an excellent place for tracking, monitoring and responding to potential claims.
The real power in the application of digital tools and data analytics in claims management is in leveraging data across an organization to gain insights that transform hindsight into foresight. With important data coming from many different sources such as PMIS, custom reports and spreadsheets of all shapes and sizes, we can take advantage of tools like cloud-based databases and Power BI dashboards to enhance the way we flag potential issues, determine exposures and provide other insights for data-driven decisions. Investigating a claim and monitoring the project data will help determine the root causes of key issues, leading to process improvements that enhance project outcomes and avoid future claims.
Spend less time and money on fact-finding
Having worked more than a decade as a claims professional means I have spent plenty of time scouring boxes and storage rooms for key documents related to a client’s case. Even with a limited scope, these manual inspections can take hundreds of work hours.
Now, most project documents are kept electronically as PDF or native document files. This advancement paired with highly effective image-to-text converters has brought us a long way toward automation of the document review process. We have even better tools that allow us to take advantage of artificial intelligence to search, organize and compile project documents more efficiently than any human ever could. They can reduce some of the more painful steps to resolution and allows claims experts to focus on proving your case rather than combing through documents.
- Create compelling demonstrative evidence
They always say that a picture is worth a thousand words. This is especially true in developing effective demonstrative evidence to prove your position in a dispute. Crude sketches, low-quality images and handwritten notes cannot compare to 3D models, drone footage and real-time data. With effective communication being one of the greatest contributors to dispute resolution, the details provided by the latter group of digital tools could be the difference between a swift, painless resolution and costly litigation.
Start small and keep it simple
Some clients I have talked to about incorporating digital tools into the claims process have viewed it as an overwhelming overhaul to their business. The move does not need to be made all at once, nor does it need to be overly complicated. Something as simple as a claims database and dashboard could provide ample return on investment.
Begin by recognizing what solutions are available, and which capabilities will help you most. With owners staring down a potential glut of COVID-19-related claims, a tracking tool for claims intake might be a sensible place to start.
For other insights on COVID-19-related contract disputes, download the COVID-19 Response Strategy Series. These guides will help you navigate contract considerations around continuing projects, stopped projects and projects restarting after a shutdown.