Early in 2025, a dispute between a design-build general contractor and its client related to a $1 billion construction project in Hopkinsville, KY, landed in court amid allegations of nonpayment and breach of contract, with a claim in excess of $138 million hanging in the balance. While the case was still pending as of this writing, it reportedly has caused cascading issues for stakeholders tied to the project, from unreimbursed costs and cash-flow challenges to construction delays, re-bidding and bottlenecked downstream payments.
Disputes are an unfortunate reality in the construction business, a costly byproduct of high-stakes projects with the financial and timeline pressures they put on the parties involved. Legal disputes are so pervasive in the construction industry, in fact, that organizations like Arcadis dedicate entire reports to tracking them. And if trends from the Arcadis 2025 Construction Disputes Report are any indication, that litigiousness isn’t subsiding. “Most of our respondents this year reported increased dispute activity,” Arcadis said in the report, which is based on a survey of North American construction industry executives, noting that the building sector claimed the most disputes in 2024. The average value of disputes also increased significantly in 2024, to $60.1 million, up almost 40% from 2023.
As prevalent as disputes are, and as damaging as they can be to project timelines, company reputations, business relationships and the financial bottom line, there’s plenty of incentive for stakeholders to avoid legal conflict. That’s where technology can help. By employing new digital tools and approaches on-site and in the back office, construction companies can:
• improve real-time project visibility into project status
• eliminate errors and discrepancies
• bolster connectedness between the field and the back office
• enable timelier, tighter communication and a freer flow of information among stakeholders.
As a result, construction companies and project stakeholders can identify and address issues long before they escalate into legal battles. Here are three specific areas where technology can help defuse potentially sticky situations:
As prevalent as disputes are, and as damaging as they can be to project timelines, company reputations, business relationships and the financial bottom line, there’s plenty of incentive for stakeholders to avoid legal conflict. That’s where technology can help. By employing new digital tools and approaches on-site and in the back office, construction companies can:
• improve real-time project visibility into project status
• eliminate errors and discrepancies
• bolster connectedness between the field and the back office
• enable timelier, tighter communication and a freer flow of information among stakeholders.
As a result, construction companies and project stakeholders can identify and address issues long before they escalate into legal battles. Here are three specific areas where technology can help defuse potentially sticky situations:
1. Real-time field data on project status keeps stakeholders on the same page. Clear documentation throughout the construction project lifecycle is critical to keeping the parties apprised of and aligned around how a project is progressing, keeping them accountable to one another, and enabling them to collaboratively problem-solve based on the data. Too often, however, progress reports, change orders and the like are “documented” using spreadsheets, siloed systems or even scraps of paper that lead to errors and thwart timely communication between the parties. That invites trouble. With the ability to capture, verify, and then collectively view in a shared digital system, real-time data from supervisors, subcontractors, vendors, etc., at the job site about how a project is tracking, construction companies can foster open communication and collaboration with stakeholders at pivotal moments in a project. Instead of information about a key, potentially course-altering development slipping through the cracks and only surfacing when it’s too late to address, the parties are alerted immediately to trigger a discussion and quick action, before the issue cascades.
2. Integration between the field and back office leads to synchronization around a single source of truth. With seamless, live digital connectivity between the job site and the construction enterprise’s financial and project management systems of record, all the data about a project, including information pertaining to field activities as well as cost, schedule, contract and procurement, can reside in one place that stakeholders recognize as the definitive source for an up-to-date, 360-degree view of a project. Importantly, that information not only is available via the shared digital system, it’s also auditable to help avoid the disputes that often arise when data is opaque, outdated, unverifiable or otherwise suspect.
So when pricing for a key material drastically changes, triggering a contract pricing clause, for example, or when a subcontractor identifies an issue that will require additional equipment and time for excavation work, all the field documentation and contractual information is there to inform discussions around a potential adjustment in terms and/or timeline. Instead of manually sifting through work tickets stored in a subcontractor’s glove box or a superintendent’s desk weeks or even months after the fact, that information is readily available and verifiable, and parties can be notified in a timely way, so there are no surprises later.
Now, with artificial intelligence capabilities (a generative AI-powered digital assistant, for example) connected to that single source of truth, a simple query to the system can provide finance, risk-management, project-management, insurance and other teams with quick insight about the trigger inside a certain contract clause, the status of a key subcontractor’s work, how costs are tracking relative to projections, etc. All it takes is a brief conversation with the AI assistant to surface information on-demand.
3. Automated billing and payment reconciliation helps avoid payment conflicts, administrative overhead, and costly delays. The vast majority of the construction industry’s legal disputes come down to money: who is entitled (or not entitled) to how much, when. With the ability to see and verify work progress in the field via the shared digital system (which is connected to the single source of data truth), including quality-control inspections by an owner representative, all the parties can align throughout each step and stage of a project. Then, once all parties sign off on the work, that automatically triggers billing per contractual terms. Because that work has been reviewed and approved by the relevant stakeholders, invoicing to customers and payments to subcontractors and vendors becomes a simple output instead of a potentially landmine-laden process. The result: shorter payment cycles and fewer disputes.
Construction projects usually begin with good intentions. The last thing the parties want is a dispute that ends up in a courtroom or in the hands of an arbitrator. With these digital building blocks in place, construction companies and their fellow project stakeholders can avoid costly clashes and stay focused on what matters most: positive project outcomes for all parties involved.
Shenaz Bilkis is the global head of professional services, construction & real estate industries at SAP, leading the company’s global strategy for these sectors. With nearly 15 years of experience across strategy consulting, digital ventures, and enterprise solutions, she brings a proven track record in scaling revenue, leading high-performing teams, and delivering industry-specific innovations Before SAP, Shenaz held leadership roles at Rocket Internet, AccelerAsia, LafargeHolcim, and Simon-Kucher & Partners, where she drove commercial excellence and digital transformation. She grew up in a family-run construction business and spent her early years on job sites, building a hands-on understanding of the industry she now helps transform. Shenaz also spent several years in management consulting, specializing in pricing and commercial strategy across industries including construction, building materials, manufacturing, textile chemicals, healthcare, telecommunications, MedTech, and insurance. main knowledge in professional services.
Image Courtesy of: Arcadis
Shenaz speaks five languages and has been a guest lecturer and trainer for high-performing teams at multiple multinational corporations including Standard Chartered and ExxonMobil. She enjoys traveling and exploring the natural world with her family. In addition to her professional achievements, Shenaz is an avid reader and enjoys sharing her insights through various speaking engagements and publications. Connect with her on LinkedIn at https://www.linkedin.com/in/shenazbilkis/?originalSubdomain=sg.
Ahmed Hamed is an engineering, construction & operations (EC&O) industry advisor expert at SAP, specializing in digital transformation for construction and real estate. At SAP, he leads the global strategy and business plan for the construction industry, aligning regional teams and building strategic partnerships to help customers realize the value of digital transformation.
Image Courtesy of: Arcadis
With a foundation in civil engineering and 17 years of experience in the construction industry, Ahmed began his career on-site and advanced through roles in quality, planning, and cost-control before leading value-engineering initiatives. Ahmed holds a B.Sc. in Civil Engineering and an MBA in Global Management. Before joining SAP, he contributed to digital transformation initiatives from the customer side. Connect with him on LinkedIn at www.linkedin.com/in/ahmed-hamed-3264a158
<p>The post Checking In: SAP on How Firms Prevent Litigation first appeared on CCR-Mag.com.</p>
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