HKA and RICS recently co-hosted an invigorating Breakfast Dialogue with a group of industry leaders from across Singapore’s built environment sector to share their views on three pressing business themes: crisis preparedness, economic resilience and the role of artificial intelligence (AI) in dispute resolution. We discuss below some of the key insights, challenges and forward-looking strategies gathered from 10 leaders across different sectors, including cost consulting, real estate, mining, education and technology.

In uncertain times, businesses can benefit from sharing knowledge that brings regional and global perspectives to plan their best route ahead. HKA and RICS brought together a panel of industry experts to do exactly that.

The timing of the event was appropriate with so many major construction projects currently underway that are transforming Singapore’s landscape, particularly in the residential, healthcare and transport sectors. Technology plays an increasingly significant role in driving many of these exciting developments. However, alongside the opportunities presented by AI advancements, there are also risks – one of the key points scrutinised by the speakers.

Are we ready for the next storm?

Faced with ongoing global geopolitical uncertainties and the post-Covid environment, a key question is how prepared construction sector businesses are for the next crisis – and how best they can avoid disputes.

In the construction sector generally, rigid procurement frameworks and adversarial contracting practices pose challenges. HKA’s latest annual CRUX research shows recurring problems across years, sectors and borders. The research identified changes in project scope as the leading cause of disputes, especially in Asia, where it impacts nearly half (47.6%) of projects, well above the global average (36.1%).

Source: HKA CRUX Insight Seventh Annual Report

Typical changes include modifications to project requirements, unexpected alterations in deliverables, or shifts in project timelines. Changes like these can often lead to disagreements among employers, contractors and other stakeholders, resulting in claims and disputes.

HKA’s CRUX research shows that the following causes impact 40-50% of projects globally:

• Contract-related conflicts
• Speed to build
• Behavioural factors
• Skill gaps
• Environmental risks.

Amanda Clack, Partner, Regional CEO, International who moderated the dialogue, started engaging the speakers by posing the question of what the top drivers of claims and disputes in their experience are. A speaker remarked that “failure to learn from the past lies behind many of these challenges”. The speaker observed that people tend to repeat the same mistakes. For example, when traditional contracting practices favour passing risks down the supply chain, this tends to instil a mindset of “you took on the risks, so it’s your problem”. This is especially true where projects with stringent time constraints increase the risk of human error and miscommunication often leads to unresolved differences and ultimately disputes between the parties.

Another speaker, quoting their experience particularly in relation to multiple data centre projects, remarked that the amount of change requests can be very significant. The ability to manage information at high speed and foster a spirit of partnership is critical. The speaker cited an example of frequently making the rounds of visiting the desks of project team members to openly speak about project issues and how best to resolve them in the moment. This helps allow collective decisions to be made expediently and effectively.

As with all project challenges, it boils down to the mindset of each stakeholder. Whilst sharing the experience of working on an iconic project in Singapore, which still stands as a modern engineering feat to this day, we learnt about how the project had “around 10,000 change requests” and how those change requests rippled through to impact multiple subcontractors and suppliers. The project had to be completed at breakneck speed and credit was given to the high level of collaboration that was evident by the team to get things done at such a pace given the complexity. Each party was aligned to a partnership spirit to deal with multi-faceted challenges. There were early warning processes in place and people were open to “come to the table and discuss” and “this absolutely worked”.

In contrast, we considered another project that was less complicated but ended up delayed by five years and raking in about 3,000 change requests. We learnt that every additional cost impact, no matter how minimal, required rigid auditing as part of the approvals governance requirements. This was cited as an example of broken communication that contributed to the project suffering massive delays that ultimately took the project inadvertently into the Covid-19 pandemic. To make matters worse, the delayed project caused subcontracts and consultancy agreements that were entered into on a similar contracting basis, i.e. lump-sum fixed price, to also take a hit.

Reflecting on the pandemic, Amanda explored with the speakers some examples where their company navigated challenges posed by Covid-19 and key lessons learnt. A speaker shared that “before the pandemic, virtual meetings were a foreign concept. There is a culture that is much less based on a presenteeism culture and is more output-oriented.” “Now, we also understand the necessity for digital investment to share resources and talk in real-time”. Indeed, this helps improve the level of collaboration. Businesses appear to be more open and committed to investing in technology and AI. We learnt how such a boost in investment had contributed to the ability to control and operate the likes of robots from as far as 1,000km from where the project site is located. Another speaker observed how the pandemic had helped to bring the human element in business relationships to the fore in solving business problems differently.

In terms of preparedness, we also heard views of how the Singapore government was better equipped to deal with the Covid-19 pandemic than many others, by making use of lessons learnt from the 2003 SARS pandemic. The speaker noted that the Singapore Parliament acted swiftly, for example, by providing temporary reliefs with extension of time and cost-sharing mechanisms for eligible construction contracts with the Covid-19 (Temporary Measures) Act 2020. Coming out of the pandemic, the speakers also discussed another key challenge to attract people into the construction industry, noting in particular that the salaries of the quantity surveying profession desperately need an uplift, which would benefit from wider government support.

Being prepared: Recommendations

• Promote collaborative contracting and early warning systems
• Reform procurement policies to support flexibility and partnership
• Invest in talent development and elevate the QS profession

Economic outlook: should we brace for a recession?

Is the construction industry on the verge of a recession, and are we overlooking the warning signs? We asked speakers to discuss the turbulence being caused by global trade tariffs. With construction input prices surging, fixed-price contracts would be under severe strain. Consequently, we are seeing businesses planning for multiple outcomes by diversifying suppliers and reassessing their procurement strategies.

Amanda observed that the construction industry is not immune to the effects of a global economic landscape that at times can be fraught with uncertainty, noting that the recent US tariffs will undoubtedly have “added to the complexity for construction at a global macro level”. This manifests in the increased cost of materials, disrupted supply chains and increasing the complexity of international trade relations.

Identifying the warning signs and understanding their impact is crucial, she noted. However, as well as threats there are opportunities, with one speaker saying they didn’t think tariffs would affect their business but there were “some uncertainties, for example, in estimating material costs”.

Another speaker observed that China’s commitment to maintaining its construction sector could help bring down some costs. However, they were also concerned that a recession was coming and uncertainty about how long it might last would affect businesses.

Others said they were already taking steps to prepare for a recession. Examples given included reducing headcount and building up cash reserves. One speaker said their approach was “scenario planning to see the potential impacts and looking at different procurement strategies”.

The key to dealing with uncertainties was to build on strategies that would allow businesses “to be able to scale” and this was emphasised by one of the speakers in the context of keeping large infrastructure going amidst turbulent times.

Recession proofing: Recommendations

• Encourage government stimulus through continued infrastructure investment
• Support local industry resilience through strategic procurement and policy alignment
• Monitor macroeconomic indicators and adapt business models accordingly.

Can we trust AI?

Amanda then directed the speakers’ attention to AI. The benefits of AI are becoming evident, while its drawbacks are not yet fully understood. She remarked that AI had made significant advances in the construction industry, where its “potential to enhance decision-making, streamline processes, and prevent disputes is immense. However, the role for AI in adjudication and arbitration is still very much in its infancy”.

The speakers analysed how AI was used in online dispute resolution during the Covid-19 pandemic, AI in predictive analytics during arbitration and AI-assisted quantity surveying and project controls. Practitioners must weigh the benefits against the potential pitfalls of integrating AI into dispute avoidance and resolution. And that comes down to a discussion of whether the construction industry can trust AI to be a fair and effective tool.

AI positives include being able to:

• Improve the speed at which dispute proceedings are conducted
• Review and categorise large volumes of data and documents quickly
• Identify relevant evidence quickly to reduce time and costs in disputes
• Analyse historical cases to predict likely outcomes and settlements
• Support decision-making by analysing evidence and patterns in data

AI negatives include:

• A lack of transparency about decisions made without human oversight
• A lack of detail about where and how AI can best be used
• Poor quality control processes governing the use of AI
• Significant upfront costs to implement AI systems

As well as putting your trust in AI is the question of taking it on too quickly. The speed of AI adoption was highlighted by one speaker as a major challenge. They felt “technology is moving fast and policies aren’t keeping up. Disclosure of sources is an important criterion when using AI”.

In particular, the speakers expressed concern that trust in AI can break down when it ‘hallucinates’ by providing false or misleading information. A speaker shared that a law firm was reportedly fined by a federal judge in New York for relying on fictitious opinions and AI-created legal precedents.

The speakers agreed that fact-checking and human intervention remain relevant when using AI. As one of the speakers pointed out: “We should be responsible for the information we use”. Their company relies on ChatGPT for translation work but would always check its output before relying on the work. They are also developing their own AI-assisted construction tool in areas such as cost estimating.

In agreeing with the need to check AI output, another speaker pointed out that “we mustn’t forget that AI makes predictions based on what history has been put in there”. Their concern was “a risk that it might remove critical thinking”. There should be transparency when AI is being used, recommended another speaker. Its use is acceptable “so long as you attribute the source”.

The ability of AI to help people work smarter was another important benefit raised by one of the speakers, especially with the younger generation of employees. The speaker also highlighted the need to control its use so AI tools “enhance your performance but not to a point where it replaces your thought process”.

Another topic that was addressed is data protection. Common AI usage may involve divulging personal information, whether intentionally or otherwise. We learnt about the release of a Model AI Governance Framework for Generative AI developed by Singapore’s Infocomm Media Development Authority (IMDA) and how the nine proposed dimensions aim to support a comprehensive and trusted AI ecosystem. It is no surprise that ‘accountability’ is the first dimension of the proposed framework.

Using AI: Recommendations

• Develop AI governance frameworks to ensure accountability and data security
• Train professionals to use AI responsibly and critically
• Foster a culture of digital literacy and ethical innovation.

Looking ahead

The construction industry continues to face challenges that range from economic shocks to technological disruption, which on a lighter note can “also be a massive opportunity” as one speaker noted. The discussions with our expert panel underscored the need for resilience, reform and responsible innovation in the built environment sector.

The panel concurred that a positive outlook can come through greater collaboration, adaptability and leadership as businesses in the sector navigate the road ahead.

Acknowledgements

The author would like to thank the following distinguished guest speakers (in alphabetical order by last name) for their contributions to the discussion and this article: Istilah Abali of Turner & Townsend, Sam Asher of Cushman & Wakefield, David Fogarty of CBRE, James Hinchcliffe of Rio Tinto, Colin Kin of RLB, Gabriel Kor of the National University of Singapore, Lisa Liu of Glodon International, Daniel Malacchini of JLL, Stephen Rae of HKA, Lin Tan of RICS, and Yvonne Tho of Northcroft Lim Consultants.

Fabian Lim is a quantity surveyor professional and associate director at HKA in Singapore.