According to the Arcadis Research Global Construction Disputes Report, the average construction dispute in North America takes a little over 17 months to settle. With an average dispute value of $19 million, that is a costly venture for any size firm. While your firm likely won't be sued for $19 million worth of damages, the fact that the average dispute is that high means that, big or small, when litigation comes for your firm it is going to be costly, and it's going to take a long time to figure out. But that doesn't mean it's all hopeless and bleak.
The researchers at Arcadis shed some further light on the state of construction disputes in North America. They provide the top three causes of such disputes and listed them in order.
- Error or omissions in the contract document
- Failure to deliver on the contract
- GC/Subcontractor failing to understand or comply with the contract.
What's particularly interesting is that each of these causes is linked: they all have to do with the contract. In this case, the contract just means the scope of work: a GC or subcontractor building what they were contracted to build and, perhaps more importantly, building it in the way the contract/owners want it done. When someone in the field runs into a problem or technical issue with the design and either doesn't submit an RFI in time, or just uses their best judgment and goes ahead anyway, or even completes the project but with one portion containing an error or omission, then you've opened yourself up to that costly litigation.
But the good news is that each of these top three reasons for getting yourself sued can be avoided, and you can avoid all three of them at once with just a few simple steps. Because each of them deals with properly fulfilling contractual obligations you can easily prove, with a daily report, exactly how you are completing your side of the contract. That way, when disputes arise, you can have the information you need to prove without a doubt that you delivered on your contract without ever having to call in a lawyer or set foot in a courtroom. As Arcadis research notes, "Addressing the issues upfront proves to be effective. The survey indicates that when an early resolution technique is utilized (ex. settlement forums prior to litigation) there is an 82% success rate of settlement prior to trial." And that's good news for everyone.
However, if having all of your construction documents in order is a good way to avoid incurring the costs of expensive litigation, what is the best way to go about doing it? In an industry that is still dominated by the pen and paper daily report, we thought it was worth digging in and weighing whether or not pen and paper or digital daily reports were better for settling construction disputes.
Of course, given the website you're on, you can guess what position we'd argue for. But hear us out.
Don't Let a Dispute Become a Lawsuit
As the researchers at Arcadis pointed out if you have a dispute or a disagreement between companies on the jobsite the best way to avoid it escalating is to get everything out in the open right away. That way you avoid the problem getting worse in the case of a technical or design question. That's pretty sound advice, considering that according to that same report the number one method for resolving construction disputes was party to party negotiation. The second was mediation, and the third was arbitration, which are essentially just escalated levels of negotiation that you can do before an argument has to go into the courts.
Think about it for a second and it makes perfect sense: both parties in a dispute want to avoid a costly legal battle if they can. Just talking it out person to person is an obvious first step. If you can settle an issue yourself there's no need for any more fuss. Mediation and arbitration usually involve trained professionals in dispute resolution, often with a legal background, but it's still less costly and a whole lot faster than going to court. When each of these methods fails, that's when companies go to war with each other.
So how can you make sure that you can settle something out of court? How can your documents tell such a clear story that there will be no doubt as to your position or who's in the right? That's where the digital daily report wins out over the pen and paper: the details. You'll get a clearer picture of what happened on site that day with a digital daily than you will with a pen and paper report. Here's why.
A (Construction) Picture Tells A Thousand Words
The single biggest advantage of digital over paper daily reports comes in how easy it is to include pictures and video right there in your report: something that's impossible with the paper daily. Daily reporting mobile apps like Raken allow you to capture jobsite photos right there as you walk the site. You see a job is done, you snap a photo of it, and it's automatically included in your daily, right where it's supposed to be. That photo is then associated with that day and project forever because the report is both automatically sent in an email to stakeholders at the end of the day and the report itself is uploaded to a cloud storage service and automatically date, time, and project organized so it's never lost. On top of all that when you take a photo in the field and use it in your daily report that picture shows up, in real time, on the Raken dashboard of every project stakeholder so they can know, right to the minute, what's happening out there.
At this point, you might be saying "hang on. Paper dailies don't always mean pen and paper. I type my notes into an Excel sheet at the end of the day and upload photos to that. It does the same thing and costs me less." You're right there: when we say pen and paper we realize that most supers and foremen type their handwritten notes into a document in the trailer at the end of the day and as they're writing that report up they can include photos from their phones or other devices.
But here's the thing: it takes a long time to type up those notes, and even longer to download those photos, rename them, and put them in the report. That's time that worker could be spending doing other things at the end of the day. Those photos often aren't organized or stored in an easy way. So when you think about the time it takes your field worker to do all that, and at the end of the day you have a disorganized report that, because it took him so long, might not even get done on a regular basis, you start weighing the cost of all that time and hassle with the low price of a daily reporting app.
Construction documentation with photos easily solving construction disputes isn't just an idea we have: we've seen it actually work in the field. Take Sam Bacon, Manager of Green Circle Demolition. He says "In this business, he who has the best information always wins, and Raken provides me with the best information." He explains that as a subcontractor most of his disputes come from another subcontractor not fulfilling their part of the contract, which Bacon needs to be done in order to do his.
Before switching to digital, Bacon would have to write down what he saw and then when called upon to explain why he had or hadn't completed a scope of work, he'd spend hours trying to explain it. But a digital daily report changed all that for him. "If there's a dispute all I have to do is forward them the report with the photo proving it. There are no ten phone calls going back and forth, it's all right there in the report. It provides you with the ability to prove you're in the right and come to the conversation with the backup you need."
That just about sums it up: because his photos were automatically included in the report he could forward the whole thing to whoever he was having a dispute with. When they saw the photo in the context of the rest of the report the issue was solved. No lawyers. No courtrooms. No fees. Heck, no ten phone calls back and forth.
"But Pen and Paper is More Reliable..."
It's a romantic notion when you think about it: a dispute arises and the superintendent pulls out his trusty notebook. You can feel the paper in your hands. He slams down just the right sheet of paper on the desk and points to it, exclaiming that it's all right there in black and white, the dust from the site still fresh on the page. Or, worse yet, imagine a courtroom and the lawyer needs to enter something into evidence: how can he enter a digital daily report?
Here's the thing: pen and paper reports, if anything, are less reliable legal documents than digital. We've already talked about how photos are the most conclusive pieces of evidence you can have and, technically, most pen and paper reports don't have them. But laying the photos aside, a pen and paper report is often written hastily on the jobsite. Poor penmanship, which is a nuisance in the field, is enough to keep a dispute open to costly interpretation for longer than it needs to be.
Beyond that, pen and paper reports are open to after-the-fact amendments that make them less reliable. Scribbling out a date or an entry compromises the document.
Perhaps most significant of all is that these pen and paper reports often live in musty old binders hidden away in a trailer somewhere and are hard to find when you need them. When a dispute comes and you need to go back into the documentation you find yourself flipping through sheets or worse, hiring an expensive team of lawyers to do your searching for you.
A digital report is date and time stamped the moment it's signed so it can't be compromised. They are automatically sorted into the right folder and stored in the cloud so they can be immediately found. And individual elements within those reports are searchable so you can always find what you need in as little as a few minutes.
But if you absolutely must have your reports printed in order to dramatically slam them down on a table you can always print them.
The Digital Daily Report Is Better for Settling Construction Disputes
Of course we think that: we're a company that provides a digital daily reporting solution. But that doesn't mean we're wrong or that there's not something to transitioning from pen and paper to a digital format. You can more easily include photos, the reports themselves will be more organized and detailed, and you'll have the proof you need to settle a potentially costly dispute out of court before it gets out of hand.
But that's just the beginning. A digital daily report also takes less time than pen and paper. Because they're easier to fill out, superintendents and foremen are more apt to do them, increasing compliance. And with the Raken Super Daily, subcontractor reports are automatically included in the daily report so you never have to chase guys down bugging them to turn their reports in: you'll be able to see who has and hasn't done them in one spot.
So even if you're an old pen and paper loyalist hopefully that's enough of an argument to convince you to at least try streamlining your reports. If nothing else it'll help you win an argument, and that always feels great.