Construction Trends: Be Prepared for a Black Swan Event
06 July 2022
Are you prepared for a *Black Swan event? In the world of construction this refers to an unforeseen and very serious job complication that results in extreme losses, compromised relationships, and may even bring your company to the brink of bankruptcy. Every construction company, if it exists long enough, will encounter at least one of these events. You are experiencing a Black Swan event if a single unpredicted event causes a major deficiency or delay on your project and 3 or more of the following statements are true:
Losses on the impacted project are outpacing even your most pessimistic predictions.
Your project is lasting significantly longer than expected and there is no end in sight.
Your insurance company is involved, the claim is in dispute, and your coverage is uncertain.
The relationships with the impacted customers and engineers are becoming severely strained.
Your legal team is involved, or legal costs are already incurred.
Most Black Swan events are seldom the result of just one thing going wrong. There are often many other contributing factors and contributing parties. Unfortunately, in Black Swan events, those other parties will not be much help to you; they will be busy covering their own butts! Your documentation will need to stand alone and might be your only line of defense. If your documentation is not complete and indisputable, you will be taking it on the chin alone.
Here is the bad news – Unless you have a solid Quality Control (QC) Software System, you will be hard pressed to irrefutably link your documentation to your assertions of a job well done. Even the most extensive documentation is useless if it cannot be specifically connected to locations, dates, and times. For example, a hydro-vac invoice to expose a gas line does not prove where exactly that line was exposed, nor will it prove what was seen at the bottom of the hydro-vac hole. Substantiating documents and photos and videos that are geo-stamped, dated, and oriented will be necessary to ensure you win your defense. Advanced QC Software is the only solution to ensure you are prepared.
Construction companies that invest in Quality Control Software fare far better in surviving Black Swan events and due to those same QC processes, the likelihood of these events even occurring are decreased significantly.
The following two examples are real-life construction events (details changed for privacy):
Black Swan Example #1:
ABC Excavating has won the contract to twin a sanitary line between two towns. The contractor is relying on the engineer’s drawings and those drawings show the location of the existing line as 8 meter away and parallel to their excavation. Under the contract, ABC is responsible to intermittently hydro-vac the existing line to verify its location. Although the contractor followed all required protocols, between two points the existing sanitary line zig-zagged into the work zone, contrary to the engineer’s drawings. Inevitably the contractor struck the line, and a Black Swan event was upon them. Millions of dollars of environmental clean-up triggered a chain of events and delays that culminated in that contractor enduring their largest loss in the company’s history. The ensuing legal case rested upon the contractor being able to prove their due diligence in verifying the parallel line, from the engineer drawing and the hydro-vac requirements as per the contract. Despite an overwhelming collection of hydro-vac bills, meeting minutes, toolbox meetings, photos, and grade sheets, none of the documentation could be definitively linked to any single hydro-vac line verification, and as a result the contractor had an uphill battle to prove their innocence. If that contractor had evidence to definitively link the hydro-vac invoices to a specific hydro-vac hole, complete with the photo of what they viewed inside that hydro-vac hole, the lawsuit would have been open and shut. Proper Quality Control Software would have irrefutably aligned documentation and photos to that specific scope of work.
Black Swan Example #2:
ABC Excavating installed a short 14-meter-deep storm pipe in downtown Riverdale. This installation was extremely complicated and required over 2 million dollars in sheet piling alone. Despite following the engineer specifications during backfill, the subsequent video inspection detailed that the pipe was crushed and needed to be dug up. Due to new adjacent infrastructure, the repair was 5x more costly than the original install. The engineers argued that it must not have been backfilled as designed. ABC could not prove otherwise due to inadequate documentation and that dig-up ended up being on their tab. If ABC had Quality Control Software the resulting documentation and photos would have created an iron-clad alibi.
As contractors, all we have at the end of a project is a paper trail. Proper QC Software will not only validate your documentation by a 10X factor but is also more likely to prevent quality control problems from happening in the first place.
Here are some key features of proper Quality Control Software Systems:
Unlimited quality control photos can be taken by anyone on the team at any time.
All photos go to a shared site map and overlay the drawings themselves.
Photos and videos are all geo-stamped and show the direction the camera was facing when taken.
Additional documents and forms, complete with signatures, can be attached to those same photos and identified points (also dated and geo-stamped).
Quality Control Plans, Quality Control Forms, and Quality Control Checklists, complete with signatures, can be generated for each project or scope.
To optimize the benefits of the QC Software, the contractor should also establish best practices that detail what, how and when documentation should be occurring. One example: Companies may mandate that all hydro-vac services are documented, complete with photos of the truck’s work as well as the view of the exposed hole.
Being a contractor is a risky business and Black Swan events are rare, but when they do happen there is no such thing as documentation that is too thorough or too well organized. QC Software is not just there to protect you from Black Swan events, but you will find that proper QC Software will eliminate many quality control problems from ever happening. See examples below of one of the leading QC Software providers and how you can document all aspects of your job site work: