Weather Ledger Impact Report - Connected Places Catapult
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April 2021
Weather
Ledger
Impact Report
Connected Places
2 EHAB Weather Ledger Impact Report Weather Ledger Impact Report 3
Executive summary Contents
The Weather Ledger project explores the potential for site-specific IoT
devices, Distributed Ledger Technology (DLT), data insights and smart
1. Introduction 4
contacts to reduce costly and time-consuming negative impacts of weather
in the construction industry. The proposed solution is a suite of hardware 1.1 About the EHAB Weather 4
and software that aims to reduce foreseen and unforeseen weather risk, Ledger project
namely: automating key stages of weather-related Compensation Event
1.2 Purpose of this document 5
claims processes; helping site teams manage day-to-day weather risk;
and applying historic weather-data analysis to site schedules at
pre-planning stages, identifying unidentified risk. 2. Rationale for Change 6
2.1 The problem 6
The construction industry has an estimated of calendar duration and £4,800 of effort to 2.2 Proposed solution 8
size of £117bn in 20181, with civil engineering resolve the claim. This claim is still ongoing
alone expected to account for £42bn in at time of writing at end of February 2021.
2.3 Intended outcomes 17
turnover in 20212 – weather is a persistent During claims negotiations periods, close to
challenge, with rainfall, wind speeds, snow, £700,000 across the four study sites is being 3. Approach 22
temperature and other types of adverse claimed and is at risk, with varying degrees
weather causing delays and costly mitigations. of uncertainty on how much will be borne by 3.1 Approach 22
To some extent, weather risk is built into client and how much by contractor, or when
project schedules and contract pricing, with payment will be agreed. In one example, the 3.2 Study site information 23
contractual mechanisms in place to allocate majority of £500,000 impact from extreme
risk for unexpected adverse weather. rainfall occurs outside the boundaries of 4. Findings 28
However, the claims process for the “1-in-10 year” criteria, highlighting the
extreme weather events can be challenges with existing contractual 4.1 Summary 28
time-consuming, costly and clauses and opportunities for
place strain on contractor- alternative risk allocation 4.2 Smart contract execution 29
client relationships. And methods such as parametric of Compensation Events
the outcomes of the claims insurance, underpinned by site- 4.3 App site study 41
process (often based on “1- specific IoT and DLT solutions such
in-10 year” weather events) as Weather Ledger. 4.4 Other key benefits 50
can be uncertain. 4.5 Scale up 53
The question of risk allocation is a
This report explores the potential key concern in an industry with thin
4.6 Recommendations on next steps 56
benefits of onsite IoT and DLT technology to profit margins and where there is the
streamline some of those processes, equip potential for lengthy costly disputes.
site teams with better insights into weather The solution’s potential scale up, including
5. Conclusion 58
risk, and support day-to-day management of enablers and barriers, are also discussed, as
sites. During the project, five compensation well as the softer benefits it could bring to
claims were triggered across four study sites, client-contractor relationships and the 6. Appendices 60
with the largest claim accounting for 21 weeks building of trust.
6.1 Time and effort studies 60
1
6.2 Site diary review evaluation 70
https://commonslibrary.parliament.uk/research-briefings/sn01432/
2
https://www.statista.com/outlook/io/construction/civil-engineering/united-kingdom#segment-revenue feedback
4 EHAB Weather Ledger Impact Report EHAB Weather Ledger Impact Report 5
Connected Places
1
Clyde & Co – Legal Expertise Connected Places Catapult –
Providing legal input throughout the Standards and Impact Assessment
development phase of the project as the Proposing standards to ensure alignment
platform, processes and standards are with industry and that the work done can
developed, based on deep knowledge of be quickly taken forward by government
Introduction
construction law, smart contracts and and other standards bodies, and assessing
blockchain technology. potential impacts.
1.2 Purpose of
Digital Catapult – Industry and this document
Commercial Research
Conducting researching into innovation This report assesses the potential impacts
in construction with a specific focus on of the EHAB Weather Ledger solution.
blockchain and smart contracts. Also These are considered across different
assisting in the development of the stakeholder groups, including intended and
1.1 About the EHAB Project partners: business model and commercial strategy unintended consequences. Where data has
for EHAB. allowed and according to priority, impacts
Weather Ledger project have been measured quantitatively. Given
the exploratory nature of this project, other
The EHAB Weather Ledger project EHAB – Product Development impacts have been assessed qualitatively.
explores the potential for site-specific Leading on the full product development
IoT devices, Distributed Ledger Technology lifecycle, through prototyping iteration,
(DLT), data insights and smart contacts to MVP, testing, and full enterprise build, and
reduce costly and time-consuming negative commercialisation of the project results.
impacts of weather in the construction
industry. It aims to do this through a suite
of hardware and software that can:
automate key stages of weather-related BAM Nuttall – Construction Expertise
Compensation Event claims; Supplying live sites on which to run Proof
help site teams manage risk with a weather of Concepts, as well as supplying time
forecasting app, alerts and site diary; and expertise to help shape the product.
input historic weather-risk analysis Additional input provided by legal counsel
into schedules at pre-planning stage. and corporate risk teams.
The InnovateUK funded project runs
from April 2020 to March 2021, with
consortium partners inputting to
problem definition, solution design, smart Ferrovial – Construction Expertise
contract design, standards design and Supplying live sites on which to run Proof
development of the solution from prototype of Concepts, as well as supplying time
to Minimum Viable Product to Enterprise and expertise to help shape the product.
Level Software. Additional input provided by legal counsel
and corporate risk teams.
6 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 7
were 3,202 insolvencies in the construction with all of the UK’s ten warmest years
sector in 2018, more than any other sector on record occurring since 2002.
;151 of those were in civil engineering.7 Contractual mechanisms exist to help
2
alleviate some of contractors’ burden
Even amongst the leading firms, of unforeseen weather risk. JCT ( Joint
maintaining sustainable margins is a key Contracts Tribunal), FIDIC (Fédération
concern. Compared to a UK all-industry Internationale Des Ingénieurs-Conseils),
average profitability of 17.9%8, the largest ICC (The Infrastructure Conditions of
Rationale for
100 contractors in construction saw an Contact) and NEC (New Engineering
average margin of 2.6% in 2018.9,10 Contract) are common contract types
in infrastructure and civil engineering,
When it comes to weather risk, there are often containing provision for adverse
change several key problems:
A lack of data insight at planning stages:
time allowances in schedules are often
weather, although in varying degrees of
specificity. The NEC suite of contracts
contain provisions for initiating
Compensation Events in the event of
assigned by gut feel and experience, weather that occurs “on average less
rather than data-driven insights or frequently than once in ten years”, with a
analysis. Without objective findings claims resolution process based around
This chapter sets out the problem driving the need for driving allowances, risk and uncertainty early warnings, collaborative contractor-
change, the proposed solution and its expected outcomes. remain. If schedules extend beyond client discussions and “a spirit of mutual
contractual completion dates, there are trust and co-operation”. Through these
often liquidate damages to pay, in some mechanisms, and upon agreement being
cases over £17,000 per week and up to reached with the client, contractors are
15% of the project’s Total Target Cost. 11 eligible for changes in the price and key
2.1 The problem part of those complications, affecting site delivery dates.
operations and activities and – in cases of When it is identified, risk is perceived
The UK construction sector is a significant unusually adverse weather – giving rise to as allocated poorly. CBI research has The Compensation Event processes,
part of the UK economy, contributing compensation claims and disputes between found construction firms attribute poor however, can be time-consuming, lengthy
£117bn in 20183, approximately 6% of annual contractor and client. allocation of risk as one of the biggest processes, with site teams needing to
GDP and accounting for 2.4 million jobs.4,5 factors blocking firms from achieving compile evidence bases for how weather
Current views of the infrastructure pipeline The question of who should bear this risk more sustainable margins. 12 affected site activities and to what extent,
estimate approximately £600bn of public can be a volatile area when negotiating and negotiate those with the client. Further
and private investment in infrastructure contracts – if tenders are priced too high Weather predictability is set to hampering discussions is the fact that some
over the next 10 years, with flagship projects then contractors risk losing out on contracts, decrease as climate change leads to contractors must back their weather related
currently underway such as Crossrail, HS2, and if they are priced too low, then the more extreme and unusual weather. claims using contractually-specified weather
Thames Tideway Tunnel and more. contractor may take on excessive risk at the In comparison to 1990 weather stations large distances away from the actual
expense of financial objectives and even averages, the Met Office predicts site where the works are being carried out
The sector is well known for its thin profit survival. Whilst high profile cases such as the 2070 to see winters up to 30% wetter, – in some cases over 100 miles14 – offering
margins. Tenders are submitted under 2018 collapse of Carillion make headlines, summer rainfall increasing by up to weather data that does not match the reality
price pressures in order to win the work smaller firms and sub-contractors face 20%, and heatwaves more likely, with onsite. Even when stations are closer, site
and pricing is still subject to delays and cost similar issues6 – weather is just one of many summer days between 4 and 7 degrees teams who experience adverse weather at
overruns, which can erode already thin factors introducing risk but can play a role in warmer.13 Whilst 2070 is many years the beginning of a month may have to wait a
profit margins. Weather is an inextricable unexpected cost and cashflow issues. There away, already changes are underway, number of weeks before the end-of- month
9
3
https://commonslibrary.parliament.uk/research-briefings/sn01432/ CN100, September 2019, Construction News
10
4
ONS, Construction statistics: Great Britain: 2018, August 2019 CBI (2020). “Fine Margins: Delivering Financial Sustainability in UK Construction) using ONS analysis and Construction
5
ONS, Workforce jobs data News inputs
11
6
CBI (2020). Fine Margins: Delivering Financial Sustainability in UK Construction Interviews with project consortium partners
12
7
https://www.ons.gov.uk/businessindustryandtrade/constructionindustry/articles/constructionstatistics/2019 CBI (2020). Fine Margins: Delivering Financial Sustainability in UK Construction
13
8
https://www.ons.gov.uk/economy/nationalaccounts/supplyandusetables/datasets/ https://www.metoffice.gov.uk/weather/climate-change/effects-of-climate-change
14
ukinputoutputanalyticaltablesdetailed, ONS Digital Catapult (2020). Industry Insights Report, The Weather Ledger
8 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 9
weather reports are issued (at approximately
£250 per request) in order to determine if
there was indeed a “1-in-10 year” weather
event. In each case, evidence bases need to
be formed from site documents, diaries and
allocation sheets that can be in varying levels
of detail and quality, presenting challenges
for the contractor to present their case. In
the most extreme cases, weather events may
form part of Compensation Events escalated UK Government policy supports such
to internal legal teams and external lawyers. a digitalisation drive, with policies such
as the Construction Sector Deal (part of
A recent publication by Arcadis15, reports the Industrial Strategy) providing the
that the average cost of construction framework and targets for reduction in the
disputes in the UK is £12.9m and lasts cost of construction and the time taken
almost 12.8 months (this is for all types of from inception to completion, and with
disputes, not weather-specific ones, but digital techniques playing a key role.
highlights the scale of legal disputes in the
industry.) The same report offers a view In line with this strategy, the EHAB Weather 2.2.1 Site weather station Power regulator connecting solar
of the three most important activities in Ledger project explores the potential (optional) panel and the battery, sealed for
helping to avoid disputes: for site-specific IoT devices, distributed industrial operation. A battery guard
ledger technology, data insights and smart Third party local weather sensor and cuts power if battery levels drop beyond
Contract-mandated early resolution contacts to reduce the costly and time- data transmission kit installed on site at a set threshold, in order to protect
forums such as mediation, disputes consuming negative impacts of weather appropriate height and location, including: against risk of battery drainage.
review boards, etc. in the construction industry.
Owner/contractor willingness to Sensor module: weather station Additional components as required.
compromise sensor with multiple parameters See the Weather Ledger project’s
Contractor transparency of cost data
in support of claimed damages
2.2 Proposed solution including temperature, wind speed,
rainfall and more.
accompanying white paper by Digital
Catapult for a fuller description of the
technical architecture.
The Weather Ledger solution combines
Digital processes and automation can LoRaWan base station with ingress
IoT devices, distributed ledger technology,
play a role here, in a sector known for protection ratings robust enough
smart contracts, desktop tools and apps
lagging in digital uptake. The industry for industrial operations and able to 2.2.2 Desktop tool
to streamline the currently manual and
in Europe scores lowest of sectors in transmit data over a range of up to 10
uncertain process for weather-related
the McKinsey Global Institute’s digital miles, either via 3G or ethernet. Able Web-based tool linking accurate forecast
Compensation Events, as well as provide
index and by the Centre for Digital Built to be powered over ethernet or other data and IoT data from the site weather
project-specific insights into weather risk.
Britain’s reports, digitalisation of the sector sources such solar power. station to the project plans, notifying
In future, it may seek to provide the third
around the world could lead to a potential parties on key trigger events and enabling
party weather data used to underpin
$250bn in savings to the sector each year Mini-base stations with LoRaWan radio site teams to see:
parametric insurance policies.
driven by efficiencies and productivity and wifi connectivity, extending range
improvements.16 by approximately 1 mile. Potential ‘Compensation Event’
As the project has progressed, the solution weather events
has developed from prototype onwards Solar panels of approximately 60W If any weather events have been detected
towards Minimum Viable Product to for remote charging where mains / that surpass the “1-in-10 year” threshold,
Enterprise Level Software, and by the generator power not available. they are listed with weather type, intensity,
final phase of the project has several key start and end times.
elements, outlined as follows.
15
Arcadis (2019). Global Construction Disputes Report
16
https://www.cdbb.cam.ac.uk/news/press-release-global-bim-summit
10 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 11
Smart contract code is forecast to exceed task thresholds PDFs and paper books.
Codified versions of the NEC contract Enhanced planning tool (e.g. if wind is expected to rise above Potential ‘Compensation Event’
clauses governing weather-related A later addition to the toolset that applies 14 metres per second, the threshold for weather events
Compensation Events, in the form of weather analysis of 40 years’ worth of some crane lifting operations) then users An app version of the desktop feature
executable smart contract code. This could historic data to tasks in the project plan, are also notified via email to assist in pre- described opposite.
be agreed between contractor and client highlighting probable dates of completion at emptive mitigations.
at contact stage and likely included in a 25%, 50% and 95% certainty.
wrapper agreement with details set out in Site diary
contract annexes that guide under what A set of fields for Project Engineers and
circumstances weather events trigger 2.2.3 Smartphone app other roles to log activities of the day onsite
Compensation Events. See Figure 1 (pages that need recorded for future retrieval, for
12-13) and Figure 2 (pages 14-15) illustrating Smartphone app for site teams to view and example progress or issues with materials,
the portions of the Compensation Event enter key weather information as relates to productivity, accidents or incidents, plant
process that are addressable with the their project, including: equipment etc. This is intended to be enable
current version of EHAB, and the intended the user to capture information throughout
future versions. Weather forecast the day, as a digital, machine-readable
Readings on key weather types of contrast to normal manual processes of
temperature, wind and rainfall for the spreadsheets, Word documents, emailed
day and week ahead. Where weather
12 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 13
Weather Compensation Event: NEC contract process flow (high level)
Addressable by the current stage of EHAB's development Intended addressable by a future stage of EHAB’s development
Contractor withdraws
claim / escalates
no claim no claim to legal team
Client asks for
resubmission or
assesses impact
themselves.
Contractor agrees or
escalates to Legal
no no no
no
yes Agent / Quantity Surveyor and
Agent assesses Agent / Commercial Client yes
Weather is Commercial Team Quantity Surveyor Impact yes Client yes sub-contractors estimate
weather data / Team notifies client Client instructs impact. accepts Client agrees to the
outside issues Early assesses if impact detected? agrees CE
reviews weather of Compensation quotation quotation claim
threshold? Warning to client resulted is valid? Agent / Commercial Team
reports and subcontractors Event submits quotation ?
Process step 8 weeks 1-3 weeks or 3 weeks 2-4 weeks
timelines per (NEC4 clause 61.3) as per agreement (NEC4 clause 62.3) (NEC4 clauses 62.3, 62.6)
NEC contract (NEC4 clause 61.4)
Can become a recurring
loop of reviews and
resubmissions
Figure 1: high level NEC contract process flow and timelines for weather-related Compensation Events.
Source: NEC contract terms, site teams and Agents.
14 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 15
Weather Compensation Event: ICC contract process flow (high level)
Addressable by the current stage of EHAB’s development Intended addressable by a future stage of EHAB’s development
Contractor withdraws
claim / escalates to
no claim legal team
no claim
Quantity Surveyor
reassesses impact, or
Contractor escalates to
legal team, or Contractor
drops the claim
no no no
no
yes
yes Quantity Surveyor and Quantity Surveyor and
Agent assesses Agent / Commercial Agent / Commercial Client yes
Weather is Quantity Surveyor Impact yes Client sub-contractors estimate sub-contractors estimate
weather data / Team issues Early Team notifies client impact. impact. accepts Client agrees to the
outside assesses if impact detected? agrees CE
reviews weather Warning to client of Compensation Agent / Commercial Team Agent / Commercial Team quotation claim
threshold? resulted is valid? submits indicative submits “full particulars of
reports and subcontractors Event substantiation the claim” ?
Process step Within 48 hours of adverse weather event
timelines per
ICC contract
Within 7 days of adverse weather event “Within such period as
the Employer’s
representative may
direct”
(often 2 to 3 weeks)
Figure 2: high level ICC contract process flow and timelines for weather-related Compensation Events.
Source: contract terms, site teams and Agents.
16 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 17
Figure 3: user views within the smartphone app.
2.3 Intended outcomes By demonstrating these links, impact
maps can demonstrate how changes are
expected to occur and help to identify
2.3.1 Theory of Change methods and data required to measure
them. Not all impacts are measurable –
For the purposes of identifying potential depending on their nature, some can be
impacts of the EHAB solution, a Theory quantified in financial terms, some can
of Change approach was used. This seeks be quantified in non-financial terms,
to identify the expected short and longer some can be described qualitatively.
term benefits (and disbenefits) by mapping Data availability plays a crucial role and
Figure 4: user view of the desktop Enhanced Planning tool. the relationship between the project impacts need prioritized in terms of
rationale, the activities undertaken, the expected scale of impact and measurability.
intended outputs and expected economic,
environmental and social outcomes. For the proposed solution an impact
map was drafted, with partners
prioritising key impacts to assess.
Results can be seen in Figure 5
(see pages 18 & 19,).
18 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 19
Weather Ledger Impact Map Key
CE = Compensation Event
Rationale for solution Inputs Outputs Outcomes
The gap in the market Resources Products / services Economic, social and
being solved and activities and users environmental impacts
What problem is Who does What end services So what? What difference does it make?
being solved? the work? do we provide? Short- and medium-term Long-term
High cost of weather User researchers A trusted single source of
Increased certainty on costs due to Efficiency gains
dispute litigation Technical specialists truth on weather data better risk insight and allocation in for construction industry
High cost of effort in making (IoT, blockchain) Semi-automated, multi- bids Revenue loss / productivity gains
Reduced effort negotiating weather for external legal teams
and validating claims Product developers party, smart contract
clauses in contracts Revenue loss / productivity gains
No trusted ‘single source of Construction team clauses Improved site management due to for UK courts
truth’ on weather patterns Legal team Published industry standard forecasts and alerts Improved trust and collaboration
Reduced effort assessing weather in construction
Long dispute resolution Standards team data to identify CE’s Increased trust in digital
times Commercial team Who do Reduced effort validating CE claims construction solutions
Breakdown of trust we reach? with the other party Increased investment in
Fewer disputes over trustworthiness digitisation in construction
between parties Construction clients
Economic
of data in claims Increased innovation in the UK
Lack of standardised Construction contractors Fewer escalations to internal legal outside the construction industry
teams, external lawyers and courts (e.g. agriculture, energy etc)
approach to IoT, blockchain Insurance firms Reduced effort for external legal
and smart contracts in Standards bodies teams assembling evidence and
construction Other innovators arguments
Reduced revenue / cashflow impact
on supply chains pending claim
Why not resolution
another product? How and what? What KPIs Enhanced scope of insurance
coverage
IoT deployment on Deploy IoT devices would you set? Reduced claims and admin burden of
construction sites is rare Develop blockchain stack Hours saved insurance
Blockchain on construction Develop user interface Disputes avoided Scalable Proof of Concept of
digitisation in construction
sites is non-existent Develop smart clauses Escalations avoided Accelerated use of IoT, blockchain
No existing standards in this Map standards best Legal costs avoided and smart contracts in construction
Innovation leveraging the ‘single
field practice, identify gaps, build Trust and collaboration source of truth’ in other industries
consensus, publish, iterate Standard adoption
Environ- Social
Shorter local disruptions due to Improved social impact on quality
Social media reception shorter disputes (congestion, noise, of life for local communities
cranes, etc)
mental Shorter local disruptions due to Improved environmental impact
shorter disputes (congestion, noise, on carbon, air quality and noise
cranes, etc)
Figure 5: impact map for the Weather Ledger solution.20 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 21
2.3.2 Expected outcomes Trust and relationships Positive outcomes Negative outcomes
Fewer disputes over trustworthiness of (intended and unintended) (intended and unintended)
As can be seen in the impact map in Figure data in claims.
5 on page 18 & 19, a number of key expected
Clients • Reduced effort negotiating weather • Potential unintended consequence of higher
benefits were identified, which can be
clauses in contracts priced contracts, if the improved contractor
grouped by the following categories: • Reduced effort validating Compensation insight into risk leads to extended schedules
Environmental and social Event claims with the other party or higher prices. However, can be argued this
• Fewer escalations to internal legal simply shifts the cost from unforeseen risk to
Risk management Shorter local disruptions due to shorter teams, external lawyers and courts upfront pricing clarity
Increased certainty on costs due to disputes (congestion, noise etc). • Reduced effort for external legal teams
assembling evidence and arguments
better risk insight and allocation in
• Increased certainty on costs due to
contracts. Scalability better risk insight and allocation in
Enhanced scope of insurance coverage Scalable Proof of Concept of digitisation contracts
• Fewer disputes over trustworthiness of
Reduced claims and admin burden of in construction. data / perceived fraudulent claims
insurance. Accelerated use of IoT, blockchain and
Improved site management due to smart contracts in construction. Contractors • Reduced effort negotiating weather • Potential unintended consequence of
forecasts and alerts. Innovation leveraging the ‘single source clauses in contracts contracts with higher prices or longer
• Improved identification of site level schedules due to improved insight into
Reduced revenue / cashflow impact on of truth’ in other industries.
Compensation Events risk, which then places the tender at
supply chains pending claim resolution. • Reduced effort assessing weather data competitive disadvantage with cost-
to identify Compensation Events prioritising clients. However, can be argued
• Reduced effort validating Compensation this demonstrates better risk awareness
Time and effort 2.3.3 Stakeholders Event claims with the other party to clients and tenders could be viewed as
Reduced effort negotiating weather • Fewer escalations to internal legal more favourable on those terms, for risk-
teams, external lawyers and courts prioritising clients
clauses in contracts. The proposed solution could give rise to a
• Improved site management due to
Reduced effort assessing weather data number of benefits and disbenefits unique forecasts and alerts
to identify Compensation Events. and shared across clients, contractors, • Increased certainty on costs due to
better risk insight and allocation in
Reduced effort validating sub-contractors, legal firms and the wider contracts
Compensation Event claims with the industry. See Table 1 (opposite) for details • Enhanced scope of insurance coverage
• Reduced claims and admin burden of
other party. per stakeholder group.
insurance
Fewer escalations to internal legal • Fewer disputes over trustworthiness of
teams, external lawyers and courts Innovations can sometimes involve data / perceived fraudulent claims
Reduced effort for external legal teams vulnerable groups being disadvantaged,
assembling evidence and arguments. for example if a local government were Sub- • Reduced revenue / cashflow impact • Potential unintended consequence that
contractors on supply chains pending claim automated identification of weather
to transition some of their services online resolution threshold breaches may increase the number
in a way that excluded those without of Compensation Event claims
digital literacy or access to the internet. As
Weather Ledger involves B2B interactions Legal firms • Reduced effort negotiating weather • Potential loss of revenue from reduction
between organisations, and the only clauses in contracts in escalated disputes
• Reduced effort for external legal
impact on local communities was seen to teams assembling evidence and
be reduced risk of prolonged construction arguments
site delays, no vulnerable groups were
identified as being disadvantaged.
Wider industry • Scalable Proof of Concept of
digitisation in construction
• Accelerated use of IoT, blockchain and
smart contracts in construction
• Innovation leveraging the ‘single
source of truth’ in other industries
Residents • Shorter local disruptions due to
shorter disputes
Table 1: expected outcomes across stakeholders.22 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 23
Data required Baseline source Intervention source
Contractor hours of Contractor key roles log daily effort in EHAB tests on time to return legal result
effort (by process step) a time tracking diary: in the DLT
3
• Agent
Contractor hourly rate • Quantity Surveyor
per role type • Planner
• Legal Team
• Other as identified by site team
Approach
Client hours of effort Contractor* key roles log daily effort EHAB tests on time to return legal result
in a time tracking diary for: in the DLT
Client hourly rate per • Project Manager
role type • Quantity Surveyor
• Other as identified by site team
*N.B. contractor site teams raised
commercial sensitivities concerns
during the claims process that meant
clients were not able to be engaged
in effort tracking, thus the view is
dependent on contractors capturing
meeting / phone call time as a view of
client effort
3.1 Approach • Fewer escalations to internal legal teams,
Sub-contractor hours Contractor Quantity Surveyor logs EHAB tests on time to return legal result in
external lawyers and courts. of effort daily effort in a time tracking diary, the DLT
Based on the Impact Map, partner • Reduced effort for external legal teams including meetings and phone calls
Sub-contractor hourly
prioritisation inputs, and solution readiness assembling evidence and argument. rate per role type
and the expected scale of impact and
measurability, key impacts were selected Key data Key dates Contractor Quantity Surveyor logs in a EHAB tests on time to return legal result
for measurement and appraisal, with See Table 2 (opposite). time tracking diary in the DLT
methodologies outlined as follows.
Dates Additional information Contractor Quantity Surveyor NA
1.Smart contract execution of From September 2020 to February 2021. on number of emails logs in a time tracking diary
Compensation Events
Limitations
Table 2: data requirements of time and effort studies for Compensation Events.
Purpose Contractor firms, clients and legal firms
To establish a baseline of how much effort do not have aggregate views on number of
is spent by clients, contractors and sub- Compensation Events per year, or splits by
contractors in Compensation Event claims, weather, presenting a challenge in scaling up 2. App site study interview techniques. The study operated
thus indicating potential addressable costs findings to firm or industry level. A review of across three participating sites: Dawlish,
(or liberated effort) were the EHAB Weather academic and industry literature likewise does Purpose Stubbington Bypass, St Mary’s (details
Ledger smart contracts to be applied. not return these. To assess potential for the EHAB app to assist below) with approximately 15 participants.
site teams with identifying “1-in-10 year”
Method Contractual obligations between client and weather, forecasting weather and taking Daily data gathering questionnaires were
Time and effort studies across any weather- contractor state the process Compensation Event pre-emptive mitigations. In addition, on one sent to two groups of site team participants,
related Compensation Event triggered during claims must follow and, as it is not currently site app-based site-diaries were tested for using online tool Tripetto:
the project. included in the site contracts, EHAB data would accuracy, ease of information retrieval and • a baseline group, using current
not be admittable in contractual discussions. Thus contribution towards assembling an evidence processes for day-to-day weather
Benefits assessed (per Impact Map) the study sites will not be able to deploy EHAB’s base on weather impacts. forecasting and logging.
• Reduced effort assessing weather data to smart contracts as an intervention during the • an ‘enhanced practice’ group, using
identify Compensation Events project. Instead, baseline data will be collected Method the EHAB app for day-to-day weather
• Reduced effort validating Compensation on Compensation Events as they arise during The study was designed by Digital Catapult forecasting and logging, providing
Event claims with the other party. the project using the current process, giving an and Connected Places Catapult, employing a view of additional benefits
indication of addressable costs. experience sampling and contextual attributable to the Weather Ledger.24 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 25
Based upon the quality of feedback provided and Key data
the nature of events recorded, five participants See Table 3 (below).
were selected for additional contextual interviews
on their tool usage, behaviours, decisions and Dates
responses. This helped to provide rationale 6th January to 28th February.
for the data provided via the daily questionnaire
and to uncover new observations and Limitations
qualitative findings. Potential for participant fatigue from daily
questionnaire entries. Mitigations: frequent
Benefits assessed (per Impact Map) engagement, Amazon voucher incentives,
• Improved identification of site level user-specific prompts sent via email / text /
Compensation Events. phone to encourage users to participate if they
• Improved site management due to had missed sending their feedback regularly.
forecasts and alerts.
Data required Baseline source Intervention source
Identification of “1-in-10 year” Control group daily survey App user group daily survey, EHAB
weather events data
“1-in-10 year” weather event Control group daily survey App user group daily survey, EHAB
outcome data
3.2 Study site collapsed, leading to line closures of almost
Adverse weather types Control group daily survey App user group daily survey, EHAB
information three months and significant impact to the
experienced onsite / forecast data South West economy.
The solution was trialled and developed
Time checking and recording Control group daily survey App user group daily survey using feedback from users on a number of Key activities include enabling works,
weather different civil engineering sites with project installation of large pre-cast elements,
partners BAM Nuttall and Ferrovial. In removing rock from marine parade beach,
Mitigation actions taken Control group daily survey App user group daily survey addition, data was gathered for the impact mass concrete pouring, promenade
assessment report from four key sites, as structural slab works and piling. An
Avoided costs Control group daily survey App user group daily survey follows: important part of the works is the use
of a ‘Wavewalker’: an eight-legged self-
Daily site diary entries Project Engineers, Site Project Engineers, Site Supervisors Dawlish contained jack-up barge that can operate
Supervisor A £27m approximately year-long BAM in tidal conditions that would otherwise be
Nuttall project for client Network Rail, required downtime. Up to 100 members of
Site diary review on: Project Engineers, Site Project Engineers, Site Supervisors, reconstructing the Dawlish sea wall. The staff may be working on the scheme at its
• Time to complete Supervisors, Quantity Surveyor, Quantity Surveyor, Sector Lead
• Frequency of completion Sector Lead Supervisor Supervisor
rail track runs alongside the sea wall as an peak (mostly self-delivered, no main sub-
• Level of detail important artery for passengers and freight, contractors).
• Breadth of information yet is frequently subject to disruption from
• Ease of use
• Time to access completed storms and wave overtopping the barriers,
site diaries made more frequent by rising sea levels
• Time to retrieve specific
information
and extreme weather. In 2014 the sea wall
• Overall benefits
• Overall negatives
Table 3: data requirements of the app site study..26 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 27
In contrast to the “1-in-10 year” event HS2 Enabling Works Central –
threshold typical in NEC contracts and in St Mary’s site
place on the other studies sites, Dawlish’s St Mary’s is an approximately year-long
ICC contract contains a clause specifying piece of work by Fusion JV (a joint venture
that Compensation Events are triggered between BAM Nuttall, Ferrovial and Morgan
by more than 24 hours downtime of Sindall) for client HS2, as part of the multi-
operations. Given the coastal nature and year HS2 Enabling Works Central project.
project activities, the main weather types The wider project conducts enabling works
of relevance to such events are: on the 100km long Central Section of the
windspeed. high speed railway which will join London
wave heights (received via buoy-based and Birmingham. There are two core parts
Met Desk sensors). of the St Mary’s site, archaeology and civil
overtopping risk/likelihood. engineering.
Houghton Brook Key project activities include ecological
A £5m+ approximately year-long BAM relocation of species such as bats and
Nuttall project for client Environment newts, archaeology works in the grounds
Agency, diverting the Houghton Brook and prior to construction, concrete pouring for
reducing risk of flooding to approximately foundations, crane work, excavation works
600 residential and commercial properties and construction of a new bellmouth, haul
in Luton. The area has a history of flooding, road and temporary works tent.
most severely around Toddington Road
where Houghton Brook joins the River Lea. St Mary’s operates using an NEC contract.
In addition to their role in Compensation
Key activities include construction of Events, rain and snow are important for
a new 700m long clay embankment their relationship to soil moisture conditions
using a clay source from Oxfordshire, – these conditions are fundamental to the
construction of a new reinforced concrete conditions of the ground and thus when
flow control structure, installation of archaeologists are permitted to operate.
Grasscrete protection to the 130m long The weather types of most relevance for
spillway, installation of access platforms, Compensation Events include:
permanent re-alignment of Houghton
Brook, construction of a permanent public Temperatures (particularly relevant for
cycle path and landscaping comprising bat mitigation and newt trapping).
of grass seeding, tree and shrub planting. Cumulative rainfall.
Approximately 20 sub-contractors are Number of days with rainfall more than
involved. 5mm.
Number of days with snow lying.
Per the NEC contact, weather types eligible
for Compensation Events over a given Stubbington Bypass Key project activities include drain Per the contact, weather types eligible for
month include: A £34.5m approximately two-year long installation, preparation of diversion Compensation Events over a given month
Cumulative rainfall. BAM Nuttall project for client Hampshire trenches, temporary surfaces, footpath include:
Number of days with rainfall more than County Council, preparing a 3.5km bypass preparation, brickwork, gas diversions, Cumulative rainfall
5mm. connection from the B3334 Titchfield Road excavations, kerb installation and water Number of days with rainfall more than
Number of days with minimum air to B3334 Gosport Road. Through a variety connections. Given local soil conditions 5mm
temperature less than 0 degrees Celsius. of traffic management measures and off- of clay, and its tendency to become Number of days with minimum air
Number of days with snow lying at 9am. road cycle routes, this aims to divert traffic waterlogged, rain is an important weather temperatures less than 0 degrees
around Stubbington’s north and east sides, condition on this site. Celsius
improving journey times and reliability on Number of days with snow lying at 12pm
the Gosport Peninsula.28 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 29
4.2 Smart contract
execution of
4 Compensation Events
4.2.1 Reduced effort assessing
Findings
weather data and validating
claims
During the project, five weather-related
Compensation Events were triggered across
three of the four study sites.
£500,000 impact suffered within the first
nine days. The weather threshold was only 1. Houghton Brook, October – “1-in-10 year”
breached on the 27th of the month. A strict cumulative rainfall threshold exceeded.
interpretation by the client could mean 2. Stubbington Bypass, October – “1-in-
only the last days of the month are seen as 10 year” cumulative rainfall threshold
4.1 Summary Risk: claim value across the eligible for compensation, highlighting the exceeded.
Compensation Events totals £696,765, challenges of the “1-in-10 year” approach 3. Dawlish, December – high winds
This chapter presents findings of the meaning that during the negotiation and potential importance of alternative suspended operations for 29 hours
time and effort studies, app site study periods close to £700k across the four arrangements such as parametric insurance. 4. Dawlish, January – sea state prevented
and additional data gathering. Results are study sites is at risk, with uncertainty on
mooring dive vessel from delivering.
structured per the outcomes identified in how much will be borne by client and how Site study benefits: site study 5. Dawlish, February – sea state and wind
the project Impact Map, with discussion on much by contractor, or when payment will participants report on the benefits of prevented departure of Wavewalker
scaling up findings to industry level and the be agreed. having all information in one place via jack-up.
associated challenges. the app, task-based alerts and improved
Timescales: only one Compensation awareness of weather forecasts. One site Each varied in terms of the activities
Key findings are summarised here, with Event (triggered in October) has reached saved an estimated 30-40 minutes per day affected, costs incurred, amount claimed
more details in the following sections: completion, the other four remain in assessing and logging weather data. and effort involved in processing the claim,
ongoing concerns with the largest
and most are still ongoing. None involved
Compensation Event process continuing for more than 21 weeks as at Potential barriers: some site study Legal Team support. Detailed context and
effort: time and effort studies on the five end of February 2021. participants struggled with app-based tools, findings on the five Compensation Events
Compensation Events triggered during the highlighting a potential barrier to overcome can be found in Appendix 6.1. A summary
project revealed large variance in effort Onsite / offsite station variance: a with deploying IoT and DLT technology in can be seen in Table 4 (see page 30), with
required, ranging from £240 (ongoing as comparison of onsite and offsite weather the construction industry. effort costs split across client and contractor
at end of February), to £4,800 (ongoing stations revealed the importance of onsite
by two stages:
as at end of February). 95% of the cost is stations: in one case the onsite Weather Key terminology referenced in this
by contractors, however clients were not Ledger identifying eight days of rainfall chapter includes: 1. “Effort costs for process steps until ‘client
involved in the time study due site team over 5mm as opposed to four by the offsite
agrees CE is valid’ “: the current stage of
views of commercial sensitivity, and it is Met Office station, and an additional 21mm Agent – the contractor’s site Project EHAB’s development.
possible clients expend more effort than of rainfall over the month (approximately Manager.
contractor teams were able to track. 90% 16% of the “1-in-10 year” threshold).
2. “Effort costs for process steps until claim
of the effort costs are attributable to the Quantity Surveyor (contractor) – finalised”: an intended future stage of
second stage of the claims process (“Effort “1-in-10 year” challenges: in one assists with the valuation of claims, EHAB’s development whereby an impact
costs for process steps until claim finalised”, Compensation Event triggered during assessing the impact of weather on calculation methodology can be agreed
intended addressable by future versions the project, over 50% of the monthly activities and schedule. at contractual stage and payments
of EHAB). threshold for cumulative rainfall occurred
automated through the Weather Ledger.
in the first three days, with the majority of30 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 31
live onsite. However, tests of the solution Fewer rejected claims
showed that the legal result of the “1-in- Data gathering calls with contractors
10” year weather threshold breach can revealed that weather-related
be registered in 1-2 seconds and notified Compensation Events are very rarely
to user dashboards in a maximum of 40 rejected by the client over weather data
minutes, showing the potential of future – once the weather is shown to exceed
iterations to free up the effort costs thresholds, the Compensation Event is
mentioned. Across the whole process this validated and discussion becomes about
would liberate an average of £2,150 in effort what activities were impacted, what
and eliminate 16 weeks of calendar duration, mitigations applied and to what extent.
with its associated delays to cashflow. These
savings would be dependent on the second Given the outcome of negotiations depends
stage functionality in future iterations of on what impacts occurred, this may be a
Table 4: effort costs for the weather-related Compensation Events triggered during the project. Dawlish January and
February Compensation Events were very early in their claims process at time of data collection, and therefore their effort the solution where contractor and client potential area that EHAB’s future intended
costs are excluded from effort averages in order to avoid skewing results. agree a smart-contract-based impact features (of contractors and clients agreeing
assessment methodology at contract stage impact assessment methodologies at
and payments are automated upon weather contract stage and the tool automating
thresholds being breached. payouts) could assist, resolving uncertainty
Effort costs / high level information that requires by enabling smart contracts to adhere
As per Table 4 (above), effort costs in the further investigation by the Commercial Based on current findings, 95% of the to pre-agreed terms and pay-outs. Data
first stage of the process (“Effort costs for Team. Effort costs in this stage range from effort savings identified would accrue to submitted from previous multi-million
process steps until ‘client agrees CE is a few hundred pounds for the simplest to the contractor, given the effort involved in pound civil engineering projects showed
valid’ ”, addressable by current version of £4,350 (and counting) for one of the most assessing impact by the contractor Quantity that of 15 Compensation Events submitted,
EHAB) are minor, given activities here are sizeable. On average across the studied Surveyor. However, it is important to note 12 resulted in payment – a conversion
mainly Agents checking weather reports Compensation Events, contractors could that we could expect this balance to rate of 80%. Of those 15 Compensation
for flagged breaches (no major assessment free up £1,886 worth of effort to more shift and cost savings to be higher for two Events, one set of claims was assessed at
required) and Quantity Surveyors or Agents productive tasks and clients £118 through key reasons: £277,000 yet ultimately agreed at £230,000 –
sending a formal Early Warning Notification automation. approximately 80% of the value claimed for
to clients, often in the form of an email Four of the five Compensation Events are was received. Pre-agreed assessment terms
with summary text describing weather Time and cashflow still ongoing as at end of February 2021, and pay-outs could reduce this uncertainty
events and activities impacted. On average Only one Compensation Event (triggered therefore could incur significantly more and improve risk allocation.
across the studied Compensation Events, in October) has reached completion, and effort if complications arise, negotiations
this effort is in the order of £200 or less for that was after 18 weeks of elapsed time. extend or Legal teams become involved. Claim efficiency and clarity
client and contractor. The other four remain ongoing concerns Beyond the cost savings identified, a swifter
with the largest continuing for more than Given commercial sensitivities of engaging resolution of key process points would
Effort costs in the second stage of the 21 weeks as at end of February 2021. Claim clients in the study whilst the claims also bring additional benefits in terms
process (“Effort costs for process steps value across the Compensation Events process was ongoing, the effort figures for of efficiency and clarity when compiling
until claim finalised”, intended addressable totals £696,765, meaning that during clients were reliant on the contractor’s the quotation.
by future versions of EHAB) account for the negotiation periods close to £700k view of client time in meetings. As such
approximately 90% of the effort costs across the four study sites is at risk, with there may be additional client effort spent As referenced, the largest pain point for
and therefore gains to be made through uncertainty on how much will be borne that the contractor is not aware of and is contractor effort is the process point of
automation. Here the largest pain point by client and how much by contractor, or not captured in their data. On occasion assessing impact, where Commercial Teams
for contractor effort is the process point when payment will be agreed. clients may assess the impact themselves piece together site diaries, allocation sheets
of assessing impact, where Commercial (in addition to the contractor), and and task schedules to demonstrate how the
Teams piece together site diaries, allocation Addressable cost and time savings tracking this effort would require weather affected which tasks and to what
sheets and task schedules to demonstrate Contractor-client contractual arrangements client and contractor willingness to extent. Per the NEC contract, there can be 12-
how the weather affected which tasks and specify the process for resolving engage clients during a Compensation 14 weeks between the weather risk identified
to what extent. This can be hampered Compensation Event claims, thus EHAB Event process. and quotation required to be submitted in
by poor quality site diaries with missing Weather Ledger was not actually deployed the event of a claim (see Table 5 on page 32).32 EHAB Weather Ledger Standardisation Report EHAB Weather Ledger Standardisation Report 33
NEC clause Process point Timescales given (weeks) Stubbington Bypass daily rainfall measurements in January (mm)
Offsite station (Met Office) Onsite station (hobbyist) Onsite station (EHAB)
61.3 Contractor notifies the client of 8
an event which has happened
or which is expected to happen 16
Daily rainfall measurements (mm per day)
as a Compensation Event
14
61.4 Client replies to the 1-3 12
contractor’s notification
10
62.3 Contractor submits quotation 3
8
Total 12-14 6
4
Table 5: Compensation Event timescales per NEC standard contract for key process points..
2
0
During this time the Quantity Surveyor reports to retrieve data on the annual
04-Jan
03-Jan
30-Jan
18-Jan
11-Jan
19-Jan
05-Jan
14-Jan
24-Jan
06-Jan
08-Jan
01-Jan
09-Jan
20-Jan
23-Jan
10-Jan
25-Jan
13-Jan
31-Jan
26-Jan
15-Jan
28-Jan
21-Jan
29-Jan
16-Jan
02-Jan
22-Jan
12-Jan
27-Jan
07-Jan
17-Jan
will need to build the case for impact, size of the problem. Further, a review of
potentially meeting and discussing with academic and industry literature did not
sub-contractors on what happened, when return any inputs or findings on number Figure 6: Stubbington Bypass daily rainfall measurements in January 2021 (mm).
and why. Being able to begin the process of Compensation Events per year (some
earlier whilst memories are fresh (due to data does exist on average legal costs
instant smart-contract notifications that and duration of all disputes, but not in a Compensation Events, one set of claims was Compensation Events – however the client
the Compensation Event is valid), could way that enables weather-specific data assessed at £277,000 yet ultimately agreed at also requested the project to have a weather
help the efficiency and accuracy of these to be identified). Finally, date inputs that £230,000 – approximately 80% of the value station onsite as a checking mechanism for
investigations. do exist (for example on claim values claimed for was received. any claims. The site uses a c. £100 ‘hobbyist
or weather-related downtime) are seen style’ weather station for this purpose.
A potential unintended negative as commercially sensitive, by both Whilst the weather thresholds themselves
consequence was considered that contractors and clients. are reported to not be a source of Of note from Figure 6 are three points:
automation of key process steps could contention, disputes can arise between
remove valuable time for Quantity Surveyors All of the above present challenges in contractors and clients over how to assess 1. The two onsite stations (EHAB and
to assess impact and prepare their case – scaling up project results to firm or the impacts arising from that weather hobbyist) correlate closely with each
however, Quantity Surveyors at the study industry level. Nevertheless, some data. This is compounded by the fact that other until the last week where the
sites responded that this would not be calculations are presented as very contractually mandated weather stations hobbyist station fails and takes no
the case as they wait to begin preparing high level indications of potential scale, can be over 100 miles away, displaying vastly more readings, suggesting the
quotations until the Compensation Event is with caveats as given – see Section different weather readings to the reality importance of trusted and validated
acknowledged as valid with the client. 4.5 ‘Scale up’ (page 53). onsite.17 The distances for the Dawlish, IoT and DLT technology.
Houghton Brook, Stubbington Bypass and
Financial gains at industry level St Mary’s sites were approximately 0 miles, 2. In the mid-January period the two
Given the variance in civil engineering 4.2.2 Fewer disputes over 10 miles, 1 mile and 20 miles respectively. onsite stations (EHAB and hobbyist)
projects, activities, contract types and trustworthiness of Even small distances can make a difference: can be seen to capture different rainfall
location land types, there are challenges data in claims Figure 6 (above) shows the disparity measurements to the offsite Met Office
in arriving at realistic industry averages between readings taken onsite and at the station suggesting that station may not
and totals. Construction firms, legal As noted, data submitted from previous contractually mandated station for the capture the day-to-day reality of weather
firms and clients consulted do not hold a multi-million pound civil engineering Stubbington Bypass site in January 2021. onsite – see for example 12th January
centralised view / database of the number projects showed that of 15 Compensation The contract stipulates that a Met which becomes a “day with over 5mm
of Compensation Events, or those related Events submitted, 12 resulted in payment Office station (Catisfield) is used for any of rain” as specified in standard NEC
to weather, and were not able to run any – a conversion rate of 80%. Of those 15 17
Digital Catapult (2020). Industry Insights Report, The Weather Ledger.You can also read
