AI Bot Aims to Transform Construction Industry by Reducing Contract Disputes

6 days ago 0

A startup based in Florida has introduced Claims Intelligence, an advanced AI bot designed to safeguard the construction industry from costly contract disputes. Developed by Contract Dispute Analytics, this tool functions like a legal assistant, meticulously scanning project communications to spot words and phrases that hint at disputes.

Preventive Measures

Claims Intelligence can identify references to added work, unforeseen challenges, interruptions, and delays, notifying the project team for reassessment. Richard Nasrawy, the founder of Contract Dispute Analytics and an attorney with two decades of experience in construction contracts, emphasized the risk contractors face by taking on extra work outside their original agreements, often leading to severe financial consequences including bankruptcy.

Nasrawy harnessed AI technology to create a proactive solution to preempt disputes, potentially saving the industry significant amounts of money.

Technology Solutions

Existing tools for contract analysis focus on reviewing documents from disputes after they’ve occurred. Berkeley Research Group (BRG) reports that construction disputes are increasingly document-heavy, involving thousands of emails, reports, minutes, and more.

AI-powered systems could reduce the time and cost of document reviews by up to 85 percent. For example, manual review of 100,000 project emails would take several lawyers seven weeks and cost approximately $216,000; AI-assisted review cuts this to four days for about $27,000.

Claims Intelligence stands out by proactively monitoring project communication rather than waiting for dispute claims to emerge.

Broader Application

Nasrawy explains that Claims Intelligence benefits not only contractors but also project owners, agencies, consultants, and stakeholders, facilitating early identification and resolution of potential issues. This preemptive approach helps parties manage instructions, records, work plans, and disagreements efficiently, mitigating financial risks.

HKA’s CRUX Insight Report indicates that sums in dispute average 33.4 percent of distressed project budgets, and requested schedule extensions can average nearly two-thirds of the planned completion time. Early issue alerts could greatly reduce additional costs and disputes.

Addressing ‘Claim Blindness’

Nasrawy describes a failure to recognize contractual significance in new events as ‘claim blindness.’ Unnoticed extra work might lead to unchargeable efforts, impacting profit margins or causing financial losses.

The founder believes AI can bridge the gap between project execution and contractual administration, improving visibility and action on unanticipated work or missed notices that may affect schedules and costs.

Real-World Application

An example Nasrawy cited involved a road project with delayed utility relocation affecting access. Routine emails became relevant after the fact, necessitating valuable resource expenditure on resolving claims. Claims Intelligence aims to identify such warnings early, preserving notices and resolving issues before they escalate.

David Jewett, a project manager with Masci General Contractors Inc, highlighted the challenge of processing numerous emails daily, where Claims Intelligence proved essential in flagging potential issues early. The AI offers specific spec references, enhancing efficiency and risk management.

Operation and Pricing

To use Claims Intelligence, users upload project contracts so the software can determine relevant obligations and requirements. The AI analyzes communications for mentions of extra work, delays, or cost impacts, alerting users to prepare notices for review.

Contract Dispute Analytics collaborated with Second Life Software to finalize development, offering four subscription tiers based on token usage: