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Getting The Deal Through

Introduction

Robert S Peckar and Michael S Zicherman

Peckar & Abramson PC

Wednesday 24 July 2019


Once again we are pleased to present Getting the Deal Through – Construction, an international survey of legal issues faced by the construction and development industries. Leading construction law firms from around the globe have answered a common set of questions and, through their answers, offer guidance to contractors, developers, governments and financiers specific to their country expertise. We thank them all for their participation and contributions.

As editors of this publication, we are challenged each year to consider the most pressing legal issues facing the industry and to identify new issues that must be addressed. In that regard, a few years ago we introduced questions related to the growth of anti-corruption laws in many jurisdictions and the application of those laws and regulations to the construction industry. Unfortunately, reported cases of prosecution of industry members and government officials for participation in serious bribery has proved our focus on this issue to be appropriate. Major contractors have been the subject of huge financial penalties, World Bank debarment and imprisonment of executives. Government officials at the highest levels of elected office and administrative leadership have been forced to resign in disgrace and some have also been imprisoned for their roles in this dark side of the industry. Although these cases paint a bleak picture of the construction industry, they also offer a ray of light, as hopefully the industry will react to the severity of the consequences of corruption with regard to its business and adopt strong positions, policies and procedures to eliminate corruption as an accepted or acceptable way to conduct business.

This year, we turn to a development in the industry that is so nascent that it is too early to offer legal guidance in regard to it (perhaps next year!): the emerging role of artificial intelligence in the construction sector.

In its 2018 report ‘Capital Projects and Infrastructure’, McKinsey & Company, a leading international consulting company, reports that it conducted a comprehensive study of:

current and potential use cases in every stage of E&C, from design to preconstruction to construction to operations and asset management. Our research revealed a growing focus on technological solutions that incorporate artificial intelligence (AI)-powered algorithms. These emerging technologies focus on helping players overcome some of the E&C industry’s greatest challenges, including cost and schedule overruns and safety concerns.

The study goes on to identify several specific areas of focus in the construction sector for emerging technology companies:

Project schedule optimizers can consider millions of alternatives for project delivery and continuously enhance overall project planning.

Image recognition and classification can assess video data collected on work sites to identify unsafe worker behavior and aggregate this data to inform future training and education priorities.

Enhanced analytics platforms can collect and analyze data from sensors to understand signals and patterns to deploy real-time solutions, cut costs, prioritize preventative maintenance, and prevent unplanned downtime.

However, the report also states that the construction industry was slower than many other industries to embrace the potential benefits of AI. For all of us in and serving the construction industry, this observation comes as little surprise. Although it is true that the industry has embraced some technological developments, including building information modelling and shared cloud-based project record management systems, to enhance efficiency, most would agree that, with the exception of the most sophisticated industry members, there is an unbroken dependence on paper and pencils. We believe that the momentum of the multitude of start-ups and mid-development hi-tech companies focusing on construction (especially in the areas identified in the McKinsey report), fuelled by investors eager to ‘get in early’, is unstoppable, and industry members will find themselves adopting and relying on platforms and applications that will change the way they do business, as has occurred in so many other industries. As with other changes in the way the industry does business, legal issues will arise in regard to those changes.

We will be watching for these changes and hopefully next year the GTDT network of legal experts will provide guidance on the impact of some of these emerging developments.


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