Disputes Resolution: Can Bim Help Overcome Barriers?

Disputes Resolution: Can Bim Help Overcome Barriers? Serdar KOC School of Built Environment, Heriot Watt University, Dubai Campus, United Kingdom. email: [email protected] Samer SKAIK School of Built Environment, Heriot Watt University, Dubai Campus; United Kingdom. email: [email protected] Abstract Many researchers consider disputes as part of the project lifecycle. Although preventative actions exist, it is not utterly possible to avoid them. Once the disputes arise, an appropriate resolution technique should be adopted. Common perception is referring to a resolution method either internally or via a third party; which may also be binding by law. The resolution process requires attention to the disputed claims. Hence, deep investigation of the claims and choosing the appropriate method is crucial for the successful project delivery and reputation of the industry. Preparation of disputed claims and resolution process also faces many debates. Conducting To effective dispute resolution requires attention to proper preparation and presentation of the incurred events. All the required information should be acquired to estimate and present the claim, for a smooth settlement. As an integrated digital model of the project, BIM, stores all the information of the projects in detail. Retrieval of the required information for the disputed issues can easily be obtained from the model. It is also possible to embed the construction schedule, change orders and variations, specifications and financial data such as cash flow along with the multidisciplinary drawings. As this model stores all the information at every particular time and phase, disputes can be concluded quick and accurate. In this research, using a case study and literature review, disputes and resolution processes are deeply studied. A BIM model is created to investigate benefits on overcoming the challenges; during claiming, and resolution of the disputes. It is seen that the claims are prepared faster and more accurate in a visualized environment provided by BIM. Furthermore, substantiating and presenting the disputes for the resolution purpose was incomparable to the traditional methods. The conclusions recommend that; even the project did not adopt a BIM model earlier; it can be created for a smooth process, during claiming and resolution of disputes. Keywords: Claims, Disputes, Dispute Resolution, BIM, Construction Industry 1. Introduction The disruptive effects of claims and disputes on the project lifecycle is an invariably fact. Moreover, the methods used to resolve the issues, whether during the execution, or after the completion, are long and exhausting. The methods are judged as they are old and not capable to fulfil current industry needs. Although it is still not part of the traditional construction methodology, BIM can provide positive impact on the methods’ success. The paper aims to highlight frequent occurrence of the disputes and the possible undesired consequences encountered on project lifecycle. Finally contribution of BIM for easy claiming and dispute resolution purpose is presented in order to understand how BIM can change the traditions in the construction industry by creating easy solutions. 2. Research Methodology A Literature review will be conducted to obtain enhanced information on disputes, and resolution techniques. Dispute triggering reasons will be deeply investigated in order to avoid project disruption. Furthermore, the new trend in the construction market, BIM, will be studied through available publications to understand possible contribution on disputes and resolution processes. All the findings will be filtered through the aim. To provide a sound diagnosis, a case study is also presented which was recently performed within the construction industry. With in-depth analysis of the incurred events, the studied case study will point out the common issues that are transform into disputes and resolved via a popular resolution method; arbitration. The results of integrating BIM in the process will be observed and evaluated. Outlined results will be critically analysed, and discussions will be held to improve the dispute lifecycle using BIM models. 3. Literature Review 3.1 Drivers of Disputes in Construction Industry In the event of a time or cost overrun or quality dissatisfaction, a claim arises to mitigate the undesired effects. The disturbance caused by disputes to projects is invariably significant. The stakeholders require their projects running smoothly with no risk of investment failure (AAA, 2007). Jahren and Dammeier (1990) conducted a research to identify the major dispute reasons. The risky nature of the construction industry, low bidding system and economic reasons were stated as important drivers. They also mentioned that the sources of these reasons are; different site conditions, payment delays, time delays, errors in tendering and ineffective communication. The deficiency of contract documents, risks and uncertainties and human factors are also major dispute causes within the construction industry. In capability of contract documentation generates many conflicts and claims that led disputes. Contracts are often ambiguous to parties; scope is not properly defined, specifications are unclear or cost rate evaluations are not provided i.e. in evaluation of prime costs (Chenung and Pang, 2013). If either party assumes that the obligations are not fulfilled, they submit a claim as they believe they are entitled for a time or money compensation (Semple et al., 1994, p.785). There might also be collaborative conflicts transforming into disputes. The client’s unreasonable requests, nominated parties’ delays, AEC design and supervision delay and consultant’s default in providing information on time are commonly encountered reasons. Moreover, the documentation often comes deficient in defining the process for substantial changes in quantities; as well as providing in adequate number of detailed drawings. In addition to the above, inconsistency between contract bill and actual quantities, drawings and specifications and in complete BOQ’s may create disputes. In certain conditions, drawings and BOQ’s do not match and drawing details are not consistent. Finally, but maybe the most important, is the people factor. There are many cases available where contractor deliberately keeps omissible items in the bills of quantities. The specifications are hidden, or not met on purpose, and the gap between the actual work and BOQ are hidden by the contractor. Acceleration costs of contractors may also be very unrealistic. Not only the contractors are opportunist, but also the clients show strict standing by rejecting the extension of time claims, or financial claims instantly. They tend to avid reimbursement or extension borne from the extra work requests. Furthermore, the project members’ psychological conditions should also be good. Being nervous, impatient or overactive may result in some issues, escalated to claims (Chenung and Pang, 2013). 3.2 Commonly encountered dispute types and Reasons Abi - Karam (2001) stated that, disputes related to the time and/ or cost overruns, scope of the project, budget and schedule are common in the construction industry. The claims are the core of the disputes. Hence Tezalaar and Snijders (2010) stated that, as per Sarat (1984), a dispute arises only when a claim is made from someone. Investigating the UAE market, Zeneldin (2006) stated, the most important claim types that require dispute resolution are; changes, extra works, delays, different site conditions, acceleration and contract ambiguity respectively. However, he also mentioned that the frequency order of the stated claims are ; Contract ambiguity claims, Delay claims, Acceleration claims, Changes claims, Extra work claims and different site condition claims respectively. Table 1: Common dispute reasons classified    Allow the design team to take their time. Enable effective quality control on design procedures. Maintain build ability within the project phases DESIGN RELATED     Clear out the contract ambiguity. Fully understand the contract before signing and get CONTRACT RELATED opinion from a third party. Make the necessary input in to the contract as per previous experience. Maintain a environment. cooperation and problem solving APPROACH RELATED  Plan for possible schedule bottle necks. PLANNING RELATED  Get variation orders signed before proceeding. CHANGE ORDERS RELATED  Use proper recording system at all stages. INFORMATION RELATED RECORDING Source: Zaneldin, 2006 3.3 Avoiding Disputes The disturbance caused by disputes to projects is invariably significant. The stakeholders require their projects running smoothly with no risk of investment failure (AAA, 2007). When an issue rises, the event becomes a conflict where the parties have different opinions. At this very early stage, when the involved parties conflict on certain issues, it should be managed in a convenient manner in order to avoid the disputes. Cheung (1998) mentioned that there are techniques to avoid disputes from arising. The objective of these techniques is to create a coordination platform where team work is efficient. Grisham (2013) also mentioned that the disputed issues can be approached with three strategies, which are, managing, resolving or delaying settlement as per the situation. He also underlined that, due to previous experiences, taking an early action is the best approach. Appropriate procurement systems are known as helpful in avoiding disputes. Yusof et al. (2011) stated that as per Leong (2003), usage of procurement systems has also great advantages, rather than the conflict management and dispute resolution methods, as they prevent the disputes to arise during the project delivery. AAA (2007) also suggested that selection of the procurement method is essential in dispute avoidance. Design and built option was adopted in US by private sector which was followed by the government projects, resulted in less number of cases. Lately partnering also became popular in handling conflicts and avoiding disputes. Stipanowich and Matthews (1997) stated that, approaches like partnering increase cooperation and discussions, puts mutual objectives and avoid adversarial situations. Moreover, Cheung (1999) illustrated a step by step approach to disputes as seen in figure 2. The lower step recommends preventing disputes via methods such as partnering, cooperation incentives and proper risk allocation. 4. SETTLING DISPUTES Brooker and Lavers (1997) stated that disputes occupy important place within the construction industry. They continued that disputes significantly affect disputants, developers, contractors, sub contractors, suppliers, consultants, owners and future occupiers. Hence, they should be settled with least harm to each stake holder .As per Galloway (2013), the disputes in the construction industry can be settled through different methodologies such as; litigation, arbitration, mediation or negotiation. Cheung (1998) stated that, arbitration and litigation are effective formal dispute resolution systems for construction industry. However, he also stated that, these methods are long lasting and costly; hence Alternative Dispute Resolution (ADR) mechanisms are developed. Figure 2 illustrates the common dispute resolution methods. They start with negotiation, and escalate up to litigation as a final remedy. Once the steps escalatee, the method tends to be costlier and more adversarial. Figure 1: Dispute resolution steps in CI (Source: Cheung, 1999) 4.1 Barriers of dispute resolution Galloway (2013) stated that, each party in the construction takes a standing due to their own understanding on the signed contract. Hence most of the construction disputes are difficult to resolve. The resolution process is wide open to manipulation from either party. Submitting vast amount of paperwork confuses the tribunal and blurs the image. Retrieval of information is very difficult in a project. Vast amount of information is stored in a project and it is usually not straight forward to substantiate a claim. Moreover, visualization of the causes and effects are the only way to present the claimant’s narration (Gibbs et al., 2011) Haidar (2011) stated that, proving the entitled claim is a heavy weight on the claimants’ shoulders. He continued that, as the evidence and presentation is strong, the chance of winning is higher. The importance of the contemporary records during the resolution process is crucial. However, this side is being abused by the weak participant; generally by the defendant. Submission of much unnecessary paperwork to delay resolution process is a common applied strategy. During the construction of projects, the collaboration of disciplines is not enough and the work programs are not effectively implemented through the process. Although important governmental projects or land mark private sector projects adopt the updated techniques, majority of the construction sector is not using the new tools. Depending on the location and the type of resolution method, language and translations can also be a problem during claiming. The translation mistakes and difficulties may cause interpretation dilemmas. Due to the diverse nature of different parties involved in the constructions, avoiding conflicts and disputes are not possible. However, it is possible to systematically manage potential issues in better manner, to reduce or avoid dispute occurrence probability at the earliest stages (Yusof et al., 2011). 5. BIMing Disputes ‘BIM facilitates the communication of design and the coordination of a working system, cost estimation, and the automated generation of bills. During the construction phase of a project, these models can be helpful in analyzing construction operations by allowing project managers to determine site-management strategies, facilitate contractor coordination, plan site logistics, access routing, and study the integrity of a schedule and construction sequences’ (GolparvarFard et al., 2011). Using BIM models, construction process is faster and more effective. Sharing information is very easy. The design proposals can be simulated, analyzed resulting better solutions. The whole life costing is also under control from the beginning. The quality of production is in higher standards since it provides high flexibility. In case of fabrication, the digitally prepared model can be used for manufacturing process of structural elements and assembly. All the information stored can also be easily retrieved and used during facilities management (Azhar, 2011, p.243) The structure of a regularly updated BIM model of the project presents all the details of the project in the particular time frame. The process becomes easier to control. BIM minimizes the human participation as it automates the major part of the process. Hence, the perception is that, with BIM usage; projects are better monitored, controlled and updated during the lifecycle (Shourangiz et al., 2011, p.79). Hartmann et al. (2012) stated that, quantity surveyors can obtain the estimation data instantly from the BIM model and exert them to cost estimation software. Goedert and Meadati (2008) mentioned BIM as a useful tool to manage and retrieve information for the contractors or clients. They also stated that, apart from visual details, the information such as schedule, cost estimations can be added to BIM model and retrieved when necessary. The model goes beyond the traditional 3D perception. The complete project is structured on a digital platform. All of the elements forming a project are embedded in a model inside out. This is done by combining architectural, structural, mechanical, electrical, plumbing, and HVAC designs under a single model via particular software, and under a proper platform. Moreover, the entire information, cost, schedule, resources, progress and more can be added to the model. The model gets the information tag by doing it so. Gibbs et.al (2011) stated that, as per NBS 2011 report, BIM was defined as rich information model. The information can involve contracts, specifications, staff, schedule, quantities, cost, and design data. Integrating all the parties within the project is an important approach for dispute avoidance. As per Azhar (2011), all stakeholders are encouraged to do so via BIM. This potential of BIM achieves cooperative platform between the parties who were acting adversarial on encountered incidents before. In the construction projects, usual variation changes result detour from the objectives. Time and cost overrun, quality defects may come out and other unwanted incidents are encountered. Academic studies analyze the sources and impacts of the changes, and it is concluded that; major changes are due to client requests on various reasons such as new ideas, reducing cost or lack of visual perception of the project at initial stages. 2D drawings have limitations, and BIM was able to solve vast numbers of design related incidents. A major advantage of BIM is that new information flows in the work can be integrated to the existing model very efficiently. (Shourangiz et al., 2011, p.79). As per Greenwald (2013), BIM not only enables cost saving and effective time management, but also reduces disputes significantly. This is done through solution of incidents, clash analysis and early detection of issues. Khoshnava et al. (n.d) also stated that BIM models significantly reduce the number of events that might become conflicts, as it involves all core elements of data. As listed in our previous section on disputes, time and cost over runs and design related issues are the major dispute sources in the construction industry. Along with BIM model, the controlled deliverables will result less risk in dispute occurrence. Azhar (2011) mentioned that, as per Azhar and Nadeem et al. (2008), using BIM, project cost, productivity, quality, project duration can be controlled within the objectives. The project can even be completed or many months waited, hoping for the settlement of the disputes in a kind manner. BIMing disputes are not very different than BIMing a project. Shen and Issa (2010) stated that, during detailed estimation in a project, huge amount of time is dedicated on visualizing the drawings for understanding and clarifying the related work. They continued, BIM software has built-in cost estimating features. Material quantities are automatically extracted and updated when any changes are made in the model. Determination and evaluation of the claimed events within the resolution process will be possible through the BIM model. As stated by Azhar (2011), BIM programs include cost estimation options. The quantification of changed items in a project can be easily retrieved. During the evaluation of disputed claims, it can be used efficiently. Greenwald (2013) stated that, the construction industry pays a heavy price for the fragmentation of dispute resolution processes. The solution requires a dynamic approach to the complexity. BIM projects provide new opportunities for significant advances in dispute resolution procedures. As per NBS (2013) research, the BIM also helps breaking the language barriers by the help of combined structured data, and visualization. As a barrier of dispute resolution, the effect of different languages will be minor. 5.1 Case Study 5.1.1 Outline Details of the Project The studied case involves a residential and commercial building project constructed in Dubai / UAE. The contractor was selected as per the traditional procurement route and via the lowest bid. The duration granted was 13.5 months. Unfortunately, the project incurred many incidents that transformed in to disputes. The duration to complete the project prolonged 2 more years than the contractual time frame. The resolution was made via arbitration causing the client and the contractor to spend effort on the project even after completion. 5.1.2 Data Collection The reviewed documentation included work schedules, site reports, payment certificates, project NOC’s (no objection certificates) and authority permits, correspondences between client and contractor, correspondences between consultant and contractor, 2D drawings and contract documents. The disputed events are investigated in depth, to understand the effects on the project’s delivery. The major disputed incidents were as follows:     Unforeseen site conditions: Exposed cables during shoring and excavation works. The contractor suspends the works until the local electricity provider changes the routes. Change orders from the client: Revised floors and conversion of units from residential to commercial. The works, suspends partially, and faces disruption on linked activities. Extra work request from the client: An extra floor added to the building. Project went under revision, and new authority approvals obtained. Payments delays: Client suspended interim payments. The issue caused cash flow problems, and the contractor suspended the activity on site. Table 2: Disputed incidents and delays Activity Start Finish Days Total Days Days Days Works Worked with Works Disruption Delayed Suspended Date of Contract 22-Jan-06 22-Jan-06 1 Final Demarcation 14-Feb-06 14-Feb-06 1 Commencement Date 15-Feb-06 15-Feb-06 1 Mobilization Period 15-Feb-06 02-Mar-06 15 Excavation Works 02-Mar-06 10-Mar-06 8 Delays due to Exposed 10-Mar-06 10-May- 61 Electricity Cables 10-May- Electricity works 06 Disruption of Works due to Floor 61 61 06 Works Commenced after Additional 24 14-Jan-07 249 14-Jan-07 31-Dec-07 323 323 01-Jan-08 01-Feb-09 750 750 10-Mar-10 10-Mar-10 1 15-Mar-06 10-Mar-10 725 214 and Supermarket Revisions (% 66 Efficiency Loss Assumed) Client Stopped Paying to Contractor , Project Delay due to revisions continued Completion Certificate TOTAL The contractor raised claims which were not incorporated by the client. The engineer’s recommendation did not satisfy both parties, and the arbitration method was used as the resolution, as stated in the contract. From the existing 2D CAD drawings a BIM model was created. The studied documentations and created model provided both qualitative and quantitative measures. This data is used to evaluate the comparative benefit of the BIM model in claiming and dispute resolution. To investigate the advantages of having a BIM model during the claiming and dispute resolution process, a comparative analysis approach was conducted with BIM and no BIM. Also, two BIM models were created to spark the differences of the original and as built situations. The figure 2 is the framework prepared for the comparative study. Coyne (2008) suggested that as to analyze delays in constructions, as-built versus as-built analysis can be performed during or after the construction of the project. This analysis method enables quantification of the issues through the planned versus actual situation. Figure 2: Framework for the proposed approach with BIM The original and as-built drawings were obtained and modelled. All the information required was then extracted from the models. The combined as built versus original models were used to make the issues explicit during claiming. The obtained BIM models and colour coded drawings were evaluated both qualitatively and quantitatively. Change claims, variations, impacts of events made clearly visible in the comparative analysis. Events were visualized resulting easy to understand, estimate, comment and decide on the incidents. As mentioned earlier, the claims and resolution process counts on documentation heavily, in order to fully understand the real impacts. The models overcome this sophisticated phase. The comparative benefit was also shown in following pie charts. Figures 3 show the steps and durations taken. The comparison is made between BIM-led and traditional approaches, for claim preparation. The steps are taken in order to submit claims to the arbitrational tribunal. The steps and durations are shown in the pie chart. Total duration taken for the preparations was 27 days, which included site visit, document study and estimations. Same process was gone through further to the creation of the BIM model. The BIM model created as shown in the figure 2 is used during the claim preparation for the dispute resolution. The saved duration was 13 days, being 48% of the traditional method. The major time saving was from the information collection steps, which included site visits and correspondence analysis. The estimations were also found more accurate and made on a faster platform. Figure 3: Claim preparation steps and duration in traditional method 5.2 Case Study Outcome Further to the study, it is seen that; the major causes of the disputes are due to reasons that could be avoided through a properly stored, retrieved and presented information platform. Moreover, substantiation of the claim is actually visualizing the incidents to evaluate the liable and compensate able party. The biggest challenge of the tribunal during the resolution was fully understanding the effects and causes of the incidents. During the arbitration proceedings; we have noted that the process is also quite old and did not acquire new age techniques. The plaintiff and the defendant were trying to claim certain issues that they do not have the right to claim for. Both parties submitted documentation of almost everything; 3 to 4 binders, consisting of hundreds of pages. Considering the number of documents used in a project, it was causing serious disturbance for resolution authority. The discussion between the claimant and the defended usually stuck in certain activities or chronology and the events are being criticized in a tendentious manner. The presentation of the actual situations in a particular time was also great hassle. Although computer aided schedules were being used during the project’s procurement, comparing to a BIM model, the detail was less, and reflection on the arbitration process was low. A BIM model created in the project, even during the dispute settlement process, helped to identify the actual incidents and impacts of the incurred events. The prepared claims were more accurate, easy to present and clearly visible to the resolution authority. 6. Conclusion Claims, disputes and resolution challenges were studied within the construction industry. Although preventing efforts are there such as collaborating platforms, partnering, usually disputes are not possible to avoid. BIM was evaluated to understand whether it can prevent or ease claiming and resolving the disputes. When there are claims, prepared on disputed incidents, visualization of the incurred events and their consequences can be obtained from the BIM model. This will give correct and clean perception of events. Moreover, the data required for the preparation of the claims will also be accurate as well as easy to obtain. Moreover, as an important time consuming procedure, acquiring the image of the events within a particular period is with less effort if BIM model is used. The literature and the case study explicitly conclude in the same result. Hence, it is obviously concluded that; BIM eases claiming and dispute resolution procedure, since it stores and visualizes the changes, planned and actual sequences, periods and activities. The adoption of BIM in the fore coming projects will be increased as the industry will recognize the model as a problem solving platform beyond commonly known benefits. Even no BIM model exists, as the common practice in the market, it can be created just for dispute resolution process for easy claim preparation, avoiding complexity in claim’s substantiation and a visual presentation. The issues can be witnessed, and the documentation is still warm. The party resolving the claim i.e. arbitrator(s), will also benefit in understanding the disputed issues and effects through the model. The model can also be converted into multi dimensional by adding time (4 D) and cost (5 D) to present more details. Creating wider and new ways of work, BIM can make the dispute reasons explicit and will impartially show the liable party. Hence the solutions will be supported by the other stakeholders. 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