Introduction to Claims Intelligence
A startup based in Florida has introduced an AI tool designed to minimize contract disputes in the construction industry. Contract Dispute Analytics has developed this AI bot named Claims Intelligence, which functions as a legal assistant to identify words and phrases associated with disputes in project communications.
The Role of Claims Intelligence
Claims Intelligence can identify references to additional work, unforeseen conditions, interruptions, and delays. Upon detecting such terms, it alerts the project team to reassess the situation, potentially preventing costly disputes before they escalate.
Richard Nasrawy, the founder of Contract Dispute Analytics, is an attorney with 20 years of experience in construction contract management. Nasrawy noticed a recurring issue where contractors focus on getting work done without evaluating the additional costs they might incur. On large projects, this can result in millions of dollars in unpaid work. Nasrawy observed bankruptcies due to poorly handled disputes, prompting him to create a solution using AI to address these challenges proactively.
Existing Products and AI Efficiency
The sector already offers products for contract analysis, notice tracking, evidence assembly, and AI-assisted claims drafting. Documents related to construction disputes have become increasingly voluminous. Berkeley Research Group (BRG) highlighted that a typical case could involve thousands of emails, daily reports, and change orders, far more than records generated five years ago.
AI tools led by experts might reduce time and costs for repetitive review tasks by up to 85%. For instance, manually reviewing 100,000 project emails could take several lawyers seven weeks and cost $216,000. In contrast, AI-assisted review would cut it to four business days, costing about $27,000. Although these figures relate to retrospective document reviews, they illustrate why construction firms are progressively using AI.
Unique Features of Claims Intelligence
Claims Intelligence stands out for its ability to proactively monitor routine project communications. This tool doesn’t require users to identify potential claims beforehand. Nasrawy emphasized related but different products like Document Crunch, Procore/Procore AI, and InEight, with Claims Intelligence uniquely focusing on proactive identification before disputes become formal.
Nasrawy directed his developers to add an automatic folder scanning feature, allowing the system to periodically scan projects without user intervention. The platform assists users in linking emerging issues with contract requirements, supporting documentation, and potential impacts, instead of replacing broader project management systems.
Broader Benefits
Nasrawy asserts that Claims Intelligence benefits more than constructors. With his experience in state government and consultancy for government agencies, he crafted the tool to be useful to various stakeholders, including owners, agencies, and consultants. Early warnings could help all parties clarify instructions, preserve records, adjust plans, and resolve disagreements, minimizing prolonged delays and extra costs.
Global risk consultancy HKA examined distressed construction projects worldwide, finding that disputed costs averaged 33.4% of contract budgets and requested project extensions averaged 65.8% of schedules. Early alerts reducing misunderstandings across projects might lead to significant cumulative savings.
Combating ‘Claim Blindness’
Nasrawy coined the term “claim blindness” to describe unawareness of an event’s possible contractual impact. Extra work not swiftly acted upon can hurt the profit margin or cause losses for the project. Penalties and added costs can arise if work completion dates exceed contracted deadlines.
A routine email might become significant later, with personnel changes and faded memories dispersing relevant information among various records. Claims Intelligence’s timely prompts could potentially save substantial sums for companies.
Example of Savings
Nasrawy provided an example involving a roadway reconstruction project where delayed utility relocation affected work access. Routine emails and schedule discussions led to a dispute over proper notice of the claim, resulting in a settlement far less than incurred costs. Claims Intelligence aims to catch these early warnings, allowing project teams to document impacts and resolve issues before major disputes arise.
User Experience
David Jewett, a project manager with Masci General Contractors Inc, underscored the tool’s value. Managing multimillion-dollar projects, he receives hundreds of emails daily and risks missing early delay signals. He believes Claims Intelligence helps flag issues early, reducing risks of costly disputes. Jewett finds the AI tool provides specific contract spec references, enhancing project team efficiency and reducing risks.
Operational Mechanism
Users first upload their project contracts to enable Claims Intelligence to identify relevant obligations. The system scans project communications for terms related to extra work, delays, and potential impacts. Relevant communications trigger alerts and assist in preparing notices for review before issuance.
Claims Intelligence offers four subscription tiers: Essential ($49/month), Team ($149/month), Business ($399/month), and Enterprise ($999/month). Pricing scales with usage, catering to organizations processing varied project communication volumes.