The Rise of Technology in the Construction Industry
The rise of technology has affected our lives in so many positive ways, from the use of wearable technology to track heart rate and activity, to smart technology in homes that allows us to control temperature, appliances, and security with our phones. The use of technology is not solely for the benefit or convenience of the consumer; it has also transformed the construction industry and how we build, employ workers, and subsequently litigate in this field.
When you think of an industry that is at the forefront of emerging technological advances, construction is not one that initially comes to mind. Physical construction is still widely performed by traditional means, but there is a growing trend of using new technologies as they provide greater efficiency in building, establish safer working conditions, and better allow for a mitigation of risk. This trend has the ability to affect all areas of insurance and law related to construction, including but not limited to contractual claims, risk management, and workers compensation.
The Technologies
- Offsite Construction
Offsite construction (also known as prefabrication) is not so much a technology but a method used by developers as a way to increase efficiency, lower costs, and most importantly (in my opinion) lower risk. As an indicator of its success, in 2018, at least $1.24 billion was invested in prefabrication start-ups. This type of construction is typically used for projects with repeating layouts, like apartments or condominium buildings. The construction of the project is performed in a controlled environment, which allows the developer to mitigate external conditions that would normally pose a threat to construction projects, such as weather-induced scheduling delays. This method, similar to that of a manufacturing plant, reduces waste, allows for increased worker productivity, lowers the risk of workplace injuries, and ensures contractors will meet their contractual deadlines. With prefabrication, there is less of a need for skilled laborers, since the production occurs in a controlled environment. This in turn will open up the construction industry to a larger part of the workforce.
Offsite construction often decreases the incidences of workplace injury, as workers are no longer subject to climbing scaffolding and maneuvering through difficult projects to build in the conditions provided onsite. It also allows for consistency throughout a project and minimizes construction defects, as the project can be completed with more precision. The uniformity in the process allows for designs and plans to be accurately followed, and sustainability goals can be more easily met.
- Data Sharing/Collection and Wearable Safety
Building Information Modeling (BIM), Radio Frequency Identification Technology (RFID), and machine learning systems have also been invaluable in increasing productivity and improving job safety.
BIM is a digital representation of physical and functional characteristics of a proposed project (imagine a multi-dimensional digital rendering) that reduces information loss among the multitude of parties involved in a singular project. Any changes to the proposed building plans would occur in real time, and any changes that affect other parts of the project would be reflected instantly. Each party would be working with the most up-to-date information. With respect to green technologies and the fight for sustainability, BIM can be used to assist developers, architects, and engineers to analyze, then integrate sustainable designs into the development of a project. Note that in California, this technology could be particularly helpful in assisting developers in complying with the 2019 Building Energy Efficiency Standards, which mandate solar photovoltaic systems for new homes beginning in January 2020.
RFID technology, although not new technology by any means, has the potential to be integrated into construction projects in various ways. RFID transmitters are small and can be useful in a variety of site security and safety circumstances. RFID technology can collect and transmit data to track and control personnel and equipment, automating various processes and increasing safety at job sites. Because of its size, workers can be tracked using their phones or wearable technology and sensors can be installed on machinery, equipment, and materials to track how everything is moving throughout the site. With RFID and similar technologies, developers can now utilize the collected data during construction to increase safety and productivity, and reduce the risks commonly associated with construction.
Currently, wearable technology is already being integrated into Personal Protective Equipment (PPE) already commonly used by workers on site (hard hats, gloves, etc.). This equipment allows for closer supervision and monitoring of worksites, including geofencing, location trackers, and safety sensors. Cloud-based technology enables onsite employees to submit timecards, expense reports, and requests for information instantly, cutting down on misinformation between managers and workers, and lowering the risk of mistakes in construction. This technology could also be used to monitor vital signs like respiration, temperature, heart rate, and intoxication in a worker, which is vital in the prevention of workplace injuries.
Effects of These Methods and Technologies
- Worker Safety and the Reduction of Injuries
One of the largest benefits derived from the advancements in technology is an increase in worker safety. In 2016, there were an estimated 4,963 worker deaths, 991 of which were in construction. With the ability to now track, predict, and prevent injuries through wearable technology and RFID, worker safety is increasing tenfold. Injuries lead to worker shortages, which oftentimes can delay a project and subsequently drive up the costs associated with building. A reduction in workplace injuries also leads to reduced insurance premiums, and the data collected aids risk managers in implementing policies to ensure a safer workplace. Ideally, these technologies will aid in streamlining litigation surrounding workers compensation and personal injury claims.
- Defects in Construction
The use of prefabrication and BIM technology will be crucial in mitigating defects that may arise during the construction process. As previously discussed, prefabrication and BIM technology allow for designers and workers to pay more attention to detail and prevent a construction project from being subject to uncontrollable external factors, such as weather-related delays. In the event a defect is found or alleged, BIM is especially effective and can be used to pinpoint the liable party for the defect, simplifying insurance litigation in this arena and allowing for proper risk allocation. This is crucial in ensuring the proper parties and insurance companies are included in the litigation.
New technologies like BIM are vital in avoiding crucial construction and architecture errors, like the one that lead to the Hyatt Regency walkway collapse in 1981. As you may recall, this accident involved the collapse of second- and fourth- story walkways onto a tea party being held in the lobby. The collapse was partially caused by a change in the design that involved the fourth-floor walkway supporting the second-floor walkway. The original design had each floor individually supported by the ceiling. This revised design was not properly communicated to the various parties during construction, so no appropriate changes to support the increased load were made, ultimately leading to the collapse that killed 114 and injured 216. Had BIM technology been utilized in this project, this incident could have been easily avoided. The design change would be reflected in one plan that all parties could access, and the fatal flaw would have been discovered. The litigation surrounding this incident was extensive and at least $140 million (equivalent to $386 million today) was awarded to the victims of this disaster.
- Effect on Employment and Risk
One of the biggest concerns about the rise of these technologies, as in all industries, is the loss of employment opportunities. Construction is known to be one of the least digitized sectors, in which there is often a duplication of activities and lots of downtime among workers. By creating a more efficient process through the use of technology, less skilled labor and a smaller workforce will be required. However, it can also be argued that these technologies will create employment opportunities for a different skillset, as has already been seen in the use of BIM technology. Likewise, offsite construction will allow for the involvement of less skilled workers in construction, opening up the job market to a larger part of the population.
Another concern is that BIM, although perhaps lowering risk in some ways, can actually increase risks amongst construction professionals, as a small design error would have farther reaching consequences, since all parties are relying on one rendering rather than producing independent calculations. It also allows for more efficient building, but tends to lead to less communication among the parties. It is reassuring, however, that in the past decade, there has been very little litigation directly attributable to the use of BIM.
A final thought to consider with the use of BIM and other technologies is intellectual property. The use of one rendering or drawing brings about the issue of ownership — whether it is a sole or joint authorship, and whether the drawings can be subsequently used in other projects. This will likely cause some challenges in the drafting and creation of contracts for various projects, as the parties will need to discuss the intellectual property rights pertaining to the use of renderings or drawings. It is also to be noted that new technological systems, such as the use of RFID technologies in worker safety, will need to be protected, like any other consumer information system, from cyberattacks, viruses, and user errors such as deletions.
Construction is slowly, but surely, coming into the twenty-first century and allowing itself to benefit from advancements in technology. These emerging technologies will soon be the standard in the construction industry. Ultimately, it will be interesting to see how these technologies shape the future of construction, and how these changes will affect risk management and insurance litigation in the years to come.
Originally published in Orange County Lawyer, Sept. 2019.