The construction industry is increasingly adopting new technologies to facilitate efficient project management. Project communication systems such as Aconex are now used widely due to their ability to offer significant cost savings and enhanced project efficiencies.
New technologies raise practical legal issues which construction contracts have been slow to address. Failure to do so increases the risk of disputed ownership and denial of access to the information retained on project databases if the relationship between Owner and Contractor/ Consultant subsequently breaks down. This potentially gives significant commercial leverage to the Contractor/ Consultant in possession of the relevant software licence and the database of critical project information. These risks can be readily anticipated and minimised by the inclusion of relatively minor amendments to commonly used construction contracts.
Project communication systems
Aconex is the proprietary project communication software package developed by an Australian company and is is reported to be the best known and most widely used online collaboration platform in the world for construction projects. Contractors and lead consultants are routinely required by Owners to obtain the necessary software licences and subsequently use and maintain project communication systems. This obligation is most frequently expressed in the technical specification of the relevant contract between the Owner and the Contractor/lead consultant, leaving the General Conditions silent regarding critical questions in relation to ownership and access to the resulting database, particularly on contract termination and expiry.
Aconex adopts a policy of neutrality in the event of any dispute between project participants and is ultimately constrained by the terms agreed between the project parties. Aconex has been approached by Owners on a number of occasions in the aftermath of a breakdown in relationship between Owner and Contractor/ Consultant, where the Owner seeks access to the data or transfer of the administration rights to the project database by Aconex from the terminated Contractor/ Consultant to the Owner. In these circumstances Aconex's ability to comply with the Owner's request is made significantly easier where the Owner is able to identify an express contractual agreement for transfer of the database or novation of the software licence to the Owner or its nominee on termination of the contract.
Inability to use the project communication database can cause significant delay and disruption to the Owner which seeks to engage a replacement Contractor or Consultant and in enforcement of rights against third parties (e.g. in relation to rectification of defects).
What you need to do
We recommend that construction contracts should now routinely:
- consider whether a project communication system is to be used;
clearly allocate the responsibility to obtain the relevant software licence and address which party bears the cost of doing so;
address the transfer of the administration rights to the consequent database of project communications to the Owner on expiry or termination of the Contract (including the potential for self-executing assignment or novation of the relevant licence agreement);
address whether the project communication system is an authorised mode for service of documents (e.g. contractual notices and claims under Security of Payment legislation);
address the question of when documents are considered to have been received when communicated via the project communication system.
Amendment of construction contracts to address the use of Aconex or similar project communication systems (including for service of contractual and legal notices) and control of the consequent database of communications at contract inception will minimise the risk of subsequent dispute and consequent cost and project delay.