Business Process Automation is a game-changer in the world of all business processes, including contract management processes. It has been lurking in plain sight for more than 10 years, so there are many applications that have been waiting patiently for their moment. The recent interest in deep learning language models and blockchain applications has shone a spotlight on the immediate potential of business process automation.
Here are two charts produced by Goldman Sachs (downloaded from New Atlas), indicating what industry and employment sectors are exposed to automation. Contract management is close to the top of the list in both charts.
THE GOOD NEWS
The first chart indicates that if you are working in contract management, you will be affected by automation.
The second chart indicates that automation is more likely to complement your job and your business, than take it away. Embrace it.
To make this happen, we must work together - governments, clients, industry bodies, contractors and consultants - to understand the roadblocks to improvement and uptake and to change the processes that will release the benefits.
THE CHALLENGE
A construction project is amongst the most distributed, collaborative business ventures to embark upon. There are a myriad of stakeholders, from the public and clients (including government clients), design and management consultants, contractors, subcontractors and suppliers.
Contract management, supported by processes embedded in contract, are not keeping pace with business process improvement in the world, and are no longer fit for purpose in a fast-moving environment.
Are we, as a nation, up to the challenge?
Collaborative Contracting
There is general consensus (ref. Australian Constructor’s Assn.), that the way forward for the construction of major projects is collaborative contracting.
To have any real effect, this must mean more than collaboration at the head contract level.
It is taken as read that design/construction data, in the form of plans and specifications, is shared amongst stakeholders in order to undertake the work. However, critical financial and planning data is held in “data silos”, in vain attempts to isolate and package cost risk.
To be effective, we must first separate contract from process, as much as possible. It is the construction process that can, and should, become seamless, not constrained in contractual silos. I proposed this to the CII/QUT Research Task Force, Re-engineering the Construction Delivery Process, in 1999. This proposal was not explored, in favour of the then fashionable “Partnering” contractual model.
The second enabler to collaborative contracting will be the provision of rules-based, shared cost and project controls project management data, without which deep collaboration can not occur. To maintain transparency and trust for all stakeholders, these critical resources should be independently provided, owned and managed by clients, through their project management resource. Clients (including government) should be encouraged to understand the value embodied in critical project data that they routinely give away.
The provision of rules-based shared cost and project controls data will open new doors to productivity, with the ability to include real-time, productivity gains throughout the management cycle.
SMART CONTRACT
A major inhibitor to progress is lack of trust in tendering and contract management processes.
The development of smart contract applications, using Web3/blockchain technologies, has the potential to automate large parts of the contract management process, while restoring trust through the entire construction supply network.
The Queensland Government has just announced a further deferment of the next phase of the project trust account regime. One of the reasons given by the minister is the lack of fit for purpose software.
Smart contract applications, already in the first phase of development, will provide for the seamless transfer of moneys, based on pre-defined rules (contract and legislation). It will eliminate or minimise onerous reporting and auditing requirements built into the legislation.
Business Process Automation
Current manual contract management processes, now at least forty years old, are not fit for purpose in fast moving construction, if they ever were. Many contract management processes inhibit progress on site, causing conflict, delay and cost and time blowouts, because people can not comply with the conflicting interests of cost and time.
Existing and emerging automations will generate significant productivity gains through real-time reporting and process management.
Where to start
Sometimes big change can feel so daunting that we don’t know where, or how, to start. The Big Bang method is too destructive and too hard to wrap our minds around. There are many who are happy with the status quo, as long as it doesn’t disrupt or complicate their lives.
The starting point of any change process is to ensure that all stakeholders understand the issues, the benefits that will accrue and the risks if we do nothing.
As with all today’s business, with the advent of new technologies, including BIM, CAD/laser manufacturing and the myriad site improvements, construction processes are (or should be) performed faster and better than ever before. But contract management processes are not keeping pace, inhibiting progress.
Visualisation of complex processes is a relatively new area of work, spearheaded by Manuel Lima (visualcomplexity.com). Construction contract management involves a complex, fast-moving network of interactions within processes that we don’t generally consider; but failure in these tiny connections is one of the major causes of delay, unexpected cost blowouts and unproductive disputes. Visualising these complex processes will help us to see where and why failures and logjams occur, so that we can start to address them.
From there, mapping and activating new and better systems, processes and contract does not seem so daunting.
Conclusion
A healthy, productive construction industry is not a dream. It is possible to implement significant change now. However, it will require shifts in culture, improved management skills and competence, significant changes in the construction delivery process and supporting changes in contract.
It is not the first time that the industry has veered off course, and it can be corrected. Achieving this shift will require commitment and leadership from all stakeholders, especially governments, financiers and clients.
The result will be better productivity, more consistent results and, best of all, considerably less stress in the workplace.
We have the knowledge and the tools to successfully leverage the benefits of
AI and automation. All that is now required is understanding, commitment and energy to plan and implement meaningful change.
As Louis XlV’s department of works was recommended in 1683, as a result of what may have been the first government enquiry into the financial control of construction contracts: 'In the name of God: re-establish good faith, give the quantities of the work and do not refuse a reasonable extra payment to the contractor who will fulfil his obligations.'
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