Legal Implications of Digitization in the Construction Industry

Abstract

In the current age of Construction 4.0 (construction and engineering’s part of Industry 4.0), the construction industry is moving towards greater digitization and digitalization, i.e. leveraging the process and benefits of digitization. At present, the change is happening incrementally and has brought with it conflicting expectations and understanding of the processes, obligations, and possible consequences of moving into the digital space. Furthermore, this uncertainty is compounded by a dearth of standard contract documents, relevant standards and a general lack of understanding in the legal community of the issues, risks and processes involved. As a result, the legal and contractual impact of implementing digitization is often ignored, or kicked down the road, with vague contractual obligations becoming the norm. This attitude is to lay a risk “time-bomb” that can eventually reduce—or even eliminate completely—the time, cost and many other benefits of working in a more digital environment, whilst making clients and the industry as-a-whole more hesitant in their digital journey. We are already starting to see expensive and time-consuming disagreements and disputes resulting from this lack of clarity. This paper will consider the legal challenges of implementing digitization worldwide, and how these can be overcome to facilitate and support the continued move by the construction industry towards an increasingly digitized environment.