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We are excited to share the latest edition of the Law Update, beautifully and appropriately titled “Sustainable Horizons: The Saudi Arabian Vision.” Giving special honor to the Kingdom’s 2030 vision, this update focuses on a collection of both informative and inspiring articles.
For those in construction, you can learn about how the tendering environment impacts risk-pricing for contractors, the updates on the legal framework of the construction industry and how contractors can protect themselves against financial difficulties.
There is good news too from the kingdom’s banking sector, from which the practice of “Open Banking” is being pushed for! But what is open banking? We’re answering that too.
Also . . . Are there any women trail blazers in Saudi Arabia you can name? We’ll help you with that. We cover how the Middle East has been making strides in empowering women in the entrepreneurial space,most notably in STEM fields.Read the full edition
Leith Al-Ali - Associate - Construction and Infrastructure
Technology has over the years increasingly permeated nearly every aspect of our daily lives. It has also become the cornerstone of many industries, including healthcare, education, travel, communication and the environment – just a few of the sectors that have witnessed technology as a potent force for change and growth. Historically however the construction industry has had a relatively poor track record when it comes to embracing such change, lagging behind other sectors. This is why many are somewhat pessimistic as to the extent to which the industry is willing to adapt, capitalise on and benefit from some of the many advancements in technology that have been witnessed in recent years. This is especially surprising considering that there are more than USD 3 trillion in current or planned construction projects in the UAE alone – arguably providing stakeholders with innumerable opportunities to adopt and develop these new technologies in a manner that may ultimately help transform, not just their own projects but in the long term, the industry as a whole.
In this article we will briefly examine some of the notable recent technological developments within the construction industry and consider some of the implications for the sector embracing such innovation.
In a recent report published by the World Economic Forum in cooperation with the Boston Consulting Group entitled “Shaping the Future of Construction: Future Scenarios and Implications for the Industry”, it was noted that the full scale digitalisation of the construction industry could save up to a staggering USD 1.7 trillion in construction and engineering costs globally over the course of the next ten years. This is in addition to the potential quality enhancements and time savings that stakeholders may benefit from as a result of using methods and practices which are more quality-driven and which require less time and cost to manage. These efficiencies can stem from a variety of different innovations including the utilisation of building information modelling (‘BIM’) and other similar software, 3D printing and modular construction, the use of block chain and data analytics, the use of robotics and other autonomous equipment as well as the increased prevalence of drones. Here we examine some of these technological advancements in greater detail.
As technology continues to evolve and the construction industry tries to keep pace with this evolution, stakeholders must ensure they carefully consider the implications from both a legal and commercial perspective.
The use of BIM and blockchain will invariably require the relevant overarching contractual frameworks to be modified and updated to include bespoke provisions with respect to each parties’ rights and obligations, for example, regarding the use, management and implementation of BIM technology on a construction project. In the UK, BIM level 3 (which is essentially a more advanced form of BIM whereby data can be accessed by a broader cohort of project stakeholders and shared both within and across different projects in order to improve efficiency and drive collaboration and innovation), poses a number of legal challenges. For example, it is as yet unclear exactly what contractual changes are needed in order to address the potential risks associated with its use, what standard of care must be adopted when preparing elements of the BIM model (an absolute duty or one that is subject to reasonable skill and care), who is liable for mistakes in the BIM model, when would a party’s contractual limitation period in respect of information provided in the BIM model actually come to an end, to what extent do contractual insurance requirements need to be amended to ensure insurance coverage extends to and will respond in the event of a claim arising out of the use of BIM and furthermore if the intellectual property and licensing provisions (often included within construction contracts and consultancy services agreements) need to be revisited to allow a BIM model to be used for the purpose for which it was intended, including for example post-completion by the owners and/or users of the property to which it relates.
It should also be recognised that many of the forms of technology identified in this article are in a state of flux, constantly being developed to ensure that they are at the forefront of the industry. Contracts which address parties’ obligations with respect to the use of any of these forms of technology should therefore be periodically revisited in order to ensure they accurately reflect and address the current technical, regulatory and legal requirements of the jurisdiction in which they are being implemented and moreover such that any associated risks are apportioned between the contracting parties accordingly.
The use of drone technology, for example, may arguably have privacy implications with respect to the rights of adjoining neighbours and properties – an issue which may need to be considered especially if drones are being utilised in heavily populated residential areas where nearby inhabitants may be overlooked.
The gradual increased prevalence of robotics may result in certain labour-intensive roles eventually becoming redundant as contractors seek to save on the cost of employing certain types of labour. At the same time this may present opportunities for individuals and companies to upskill because any such equipment will also need skilled manpower to ensure their continued effective operation and maintenance.
In summary, it is important that stakeholders in the construction sector devote sufficient time and resources towards evaluating if and how new technologies that are being used and developed in the industry might impact them and furthermore how such technology can be best utilised in order to enhance productivity, quality, competitiveness and ultimately profitability, ensuring they are able to keep up with and remain a part of the industry’s evolving landscape for many years to come.
Al Tamimi & Company’s Construction & Infrastructure team regularly advises on all elements of the construction procurement process. For further information please contact Lyndon Richards (email@example.com) or Leith Al-Ali (firstname.lastname@example.org)
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