The challenges of AEC risk management

Each AEC project inherently carries the risk of litigation. In the wake of recent substantial changes in the legislative landscape, practices must prioritize effective information management to navigate emerging challenges. This blog explores the challenges of AEC risk management and potential solutions for disputes in the built environment.

Litigation is always a risk

Litigation, although not always a consequence of wrongdoing, poses a potential challenge for any AEC firm, especially those fortified with insurance. The very fact that your firm is insured can make it a target for legal disputes. Unfortunately, paying financial claims may appear more hassle-free than defending such disputes.

Changes in the legal landscape

In recent years, the AEC legislative landscape have has experienced significant changes. In 2022, the Building Safety Act was introduced, primarily focused on collecting information that was compiled and discussed in during the design of a building. Currently, this legislation mainly pertains to taller residential buildings, but it’s foreseen to become applicable to all projects built within the UK.

The Defective Premises Act, which addresses the potential risks of litigation following the completion of a project, now acknowledges that legal disputes can arise within an expanded timeframe of up to 15 years post-completion, as opposed to the original duration of 6 years.

Nevertheless, when legal claims relate to construction rather than refurbishment, there’s now a 30-year retrospective liability. This means in three decades down the line, your practice firm may find yourself itself needing to gather comprehensive documentation showcasing your project information and design decisions. This documentation becomes crucial evidence that maybe presented in court if the need arises.

Maintaining the Golden Thread

With a shifting backdrop of legal changes and litigation risks, information management has become more crucial than ever in the built environment. Many practices are implementing the concept of the Golden Thread, which aims to maintain a clear, consistent, and accessible thread of project information throughout the entire life cycle of a built asset. From design decisions to selection of materials, all project information will be gathered in one place for efficient retrieval in the event of legislative challenges in the future.

However, the question remains: will your current project information management system still exist in decades’ time? It’s remarkable to reflect on how computers look like now compared to 30 years ago. Therefore, will we be able to retrieve project data 30 years into the future when it’s still difficult to envision the technological landscape at that distant point in time?

Is Common Data Environment (CDE) a solution?

A Common Data Environment (CDE) is usually provided by the lead contractor as a secure place to upload, store, and share information related to a project. Indeed, this might appear to be an optimal solution catering to both efficient management and the enduring storage of project data.

Nevertheless, the true challenge doesn’t lie in the CDE, but rather the contractual arrangement. One of the greatest risks that AEC firms may face is when their CDE access is withdrawn by contractors. From a litigation perspective, this appears as a sensible tactic. If all the necessary information to challenge a claim against someone resides in their system, it is reasonable for them to restrict your access, preventing from retrieving that crucial information. Therefore, a CDE is ideal when a project is running, but it's important AEC firms owns a copy of all information independent of what the lead contractor provides to them.

Conclusion

To summarize, with the dynamic shifts in the AEC legal landscape, companies must ensure effective information management for seamless accessibility. It is also recommended that AEC firms retain ownership of their project data and implement a system with guaranteed longevity for efficient information retrieval in the future.

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