3. Procedures of shifting workflows

Return to August 2020 Update

Length:20 min read; 4000 words. Includes the following 6 subcategories:

3.a) Current situation
3.b) Remote work; Work from home (WFH)
3.c) Site procedures
3.d) Supply chain
3.e) Workspace re-entry
3.f) Financials; cashflow / Contracts/ Litigations

Note: The following paragraphs summarize the category of Procedures of shifting workflows observed in June. More information about the specific category from June (and previous months) can be found in the downloaded report(s).The number in square brackets (e.g., [30]) refers to a reference where the reader can find more information about a specific statement. The references can be found in the References list below, Systematized References page or in the downloaded report.

May is characterized with a change of outlook; the industry came to terms with the situation and focusing on solving problems arising on daily basis. The discussion about the procedures of shifting workflows has the highest representation among publications and webinars (51.8%) allowing us to develop 5 subcategories. In June the interest in Procedures of shifting workflows has increased from 41.2% in May to 45.1%. The challenges reported in May are aggravated in June as the economies restart. Specifically, the issues with cash and working capital, and contracting with follow-up lawsuits are standing out in June prompting us to add a new subcategory of Financials; cashflow / Contracts/ Litigations. In July this category had the highest interest with representation of 31% in selected references, though the interest decreased from 45.1% in June to 31% in July in line with the overall communication decrease. All subcategories show decrease of interest in comparison to the June data. In August the category had again the highest interest with 44.3% representation in selected references. This category has taken the number one position for the fourth time in the past 5 months and we expect it to remain of the highest interest in the following months, due to challenges contractors are facing such as market conditions and issues with cash and working capital, contracting and potential litigations problems; delayed and/or canceled projects.

a) Current situation

August has been a bit gloomier than July with respect to the AEC sector data. Challenges reported in July continue in August: delayed or canceled projects [173][174][175][176][177][178] (e.g., $9.6B worth of infrastructure projects delayed or canceled during COVID-19 [179][180]), revenues declines [177][181] [182], backlogs diminishing [183] with small signs of recovery [176]; jobsite closures due to COVID-19 guidance violations and reported positive cases onsite [184]. Although many projects will continue ($8 trillion in capital delivery is expected to continue throughout 2020 [185]), and “the financing is available, many owners, investors and developers are playing the wait-and-see game. Projects that were in the pipeline pre-COVID moved forward for the most part, but owners have been hesitant to kick off new projects since.” [186]. “Our clients are rethinking some of the decisions that they might be making for the future,” AECOM’s CFO Rudd said. “On the design side of the private markets, we’re seeing the weakness.” [182]

Dodge Data & Analytics research shows that U.S. commercial and multifamily construction starts plunged 22% during the first 6 months of 2020 compared to 2019. In terms of sectors, only warehouse construction posted a very small gain, while office, retail, hotels, commercial garages and multifamily housing all showed decline. [174] Total construction starts declined further 7% from June to July, pulled down by a 31% decline in the nonbuilding sector, which includes infrastructure projects (31% decline), while the nonresidential sector gained 3% and residential starts increased 2%. Richard Branch, chief economist for Dodge. “The July decline in construction starts should not be interpreted as a setback on the sector’s road to recovery. The gains in the nonresidential and residential sectors mirror the general overall improvements in the economy.” Commercial starts grew 13% from June, led by hotel, warehouse and office projects. [175] Exhibition halls and hotels or motels starts have dropped by 67% and 47%, respectively, when compared to 2019. [176] A Construction Dive survey showed that readers are worried about the future of infrastructure projects, with 83% of respondents saying they have seen civil projects delayed or halted due to coronavirus-related funding challenges. [173]

August is providing July data. Construction backlog was a full month lower in July than in 2019, causing a 13% year-over-year decline. In an increasingly competitive bidding environment, profit expectations also fell in July, according to Associated Builders and Contractors (ABC), with 47% of contractors anticipating lower profit margins in the next 6 months (In comparison, just 12% of contractors foresaw lower profits at this time last year). [183] Architecture Billings Index (ABI) (a measure of nonresidential design activity, which is widely considered a leading indicator of work to come for construction firms) continues to decline during August (remained at about the same level as in July and June), posting an ABI score of 40.0 (any score below 50 indicates a decline in firm billings). Inquiries into new projects during August grew for the first time since February, and the value of new design contracts increased to a score of 46.0. As a result, fewer firms reported a decline in August, despite the fact that they remained negative overall. [187][182]

Anirban Basu, ABC’s chief economist, said that current economic indicators amount to “a perfect storm” for construction that won’t show up in firms’ financial results until early 2021, with smaller firms facing the biggest risk of business failure. [183] Large construction projects do not typically feel the fallout of economic downturns until long after the fact. “Q3 was a really solid quarter, and a really solid outlook for Q4,” said Adam Thalhimer, research director at Richmond, Virginia-based investment firm Thomson Davis & Co. “But with these downturns, it really just takes a while to see the impacts. When the pandemic hit, everybody was in full stride.” [182]

Contrary to revenue fall (5% in the 2020 third quarter in comparison to 2019) AECOM increased its guidance for the rest of the year and resumed discussions to sell its at risk, self-performing construction business. The talks about a potential merger with Canadian – based WSP Global resumed, after “other fairly advanced transaction processes were stopped due to pandemic in the second quarter.” [182] On the bright side, impact sourcing is here to stay: New York City is entering into new Project Labor Agreements (PLAs) with the city's building trade unions with proposed state legislation that would require contractors working in the city to hire low-income New Yorkers and those from areas with high poverty levels. [188]

Research is showing that the pandemic workday is 48.5 minutes longer and has 13% more meetings and people sent an average of 1.4 more emails per day to their colleagues [189], while COVID-19 protocols led to a 7% financial loss on construction projects [181]. The report from New Horizons Foundation, the research arm of the Sheet Metal & Air Conditioning Contractors’ National Association found that its members have taken a 17.9% hit to productivity since the outbreak began, resulting in a 7% financial loss, instead of profits, for the average project. It also found that over the course of an 8-hour day, the average worker lost 85 minutes dealing with COVID-19. [181] Construction Dive’s survey shows that 44% of respondents had a co-worker test positive for COVID-19. [184]

“Where is real estate now? Real estate is evolving from an asset into a business.”(Dror Poleg) Building owners have cleaned and declared reopening; first wave of stickers-on-the-floor and antiseptics. Tenants are slowly if ever coming back. Knowledge workers have enabled secure, cloud-centric working; now productive at home; and will return based on trust and knowledge. Implications include required iteration to build on what works and where; visibility informs iterations.”[190] The uncertainty continues in supply chains; data is showing a mixed picture, making future inventory buying plans and demand planning a challenging (if not impossible) feat. Warehousing, manufacturing employment is below pre-pandemic levels as peak nears. [191] Ron Simoneau, Shawmut executive vice president of education: “One of the biggest challenges was COVID’s impact on supply chain with factories shut down. We already tracked products carefully, but with COVID, it's now a new level of tracking parts that go together to prevent delays.“ [192]

We are in the midst of transformation. According to Bok Nam Lee, Professor at Seoul National University: Processes of change in South Korea (applicable globally) include: a) production systems: dispersion and fragmentation --> integration and convergence; b) market: single product contract base project --> multi-purpose product develop project business; c) technology governance: hardware-based visible tech --> software-based invisible tech; d) daily working hours: 8 h/day 9-6--> 24 hours operation time selection system; e) organizational structure and business operation: vertical --> horizontal; top-down decision and bottom-up approval --> collective intelligence sharing and fast-track approval, and chief officers permanent biz organization --> project oriented organizations; f) team work/ team play: aggregation, group, collected organization --> distributed and shared; g) reporting/ presentation: human touch --> un-tact Biz (cyberspace) – video conferences, cyber meetings (hologram, AR, Youtube, Skype); h) job training/orientation: classroom-based education and training --> online (major and minor). The change in AEC include: pre-COVID-19 muscle-based manual labor with equipment --> post-COVID-19: automation, remote control; AI; onsite manufacturing. On construction site: a) construction methodology: wet and onsite construction --> dry and offsite construction; b) construction management approach: drawings, specifications, CPM time-based schedule, visual inspection and visual monitoring --> BIM model + VR + 3D; programmed software; time-based simulation + VR/AR; drone + GPS + check and verifications; c) construction materials: natural ingredients --> artificial and recycle materials. [193]

b) Remote work; Work from home (WFH)

Of the 6 subcategories, only Remote work; WFH has been less discussed in August in comparison to previous months as we all adjusted our work patterns to the WHF situation. On the other hand, the discussion about Workspace re-entry increased substantially (11% in August vs. 6.9% in July) especially in the real estate segment. The future of workplace must accommodate hybrid work modes. In July we highlighted that hybrid approach is the only way going forward for AEC – but 100% WFH for AEC is not sustainable in the long run; “approximately 60% of the workforce can WFH” [231]. Only some tech companies can afford 100% WFH indefinitely. Many companies, such as Gensler, have been reporting high productivity from home-based employees, but humans need in-person connection. Being remote, we can also lose touch with the shared purpose behind our daily tasks. [257] Research is showing that the pandemic workday is 48 minutes longer and has 13% more meetings and people sent an average of 1.4 more emails per day to their colleagues. [189] 80% of parents who are both working remotely during the pandemic will also be handling child care and education. [291]

A Harvard Business School WFH survey found that many workers felt they could be just as productive at home as they had been at the office. In terms of job satisfaction, a small tremble in the first few weeks of lockdown eased as workers adjusted to new routines. But once that adjustment was made, satisfaction increased. Stress levels have fallen by more than 10%. Though workers work longer hours: an analysis of one technology company showed that working hours have increased by 10-20% during the pandemic. [292] On the other hand, isolation can also breed anxiety and a feeling of being out of control because of a lack of routine. While WFH, “we lose some of the sense of mission and part of our own sense of identity. Something as simple as the loss of a shared sense of attire can diminish the feeling that we work for a common goal.” [293] Architects continue to work with companies on workspace re-entry but also designing home office capsules that can fit in any house. [294]

Some surveys suggest that most of the workers want to return to the workplace but with critical changes, such as physical distancing, cleaning protocols, assigned workplaces and flexible arrangement (e.g., WFH a few days a week). MIT’s hybrid model of collaboration showed that productivity, efficiency, innovation, and creativity have all flourished (no commute means higher productivity, less stress means higher creativity; quieter people have found their voice in virtual collaboration; people are much more flexible and ready to help - less working in silos). [295] Owners, employers and real estate developers are using technologies to enhance the experience of all participants. [190] Hybrid environment is about creating consistency of work experience when moving from office to home and back and from office to office (hoteling). [238]

More information and examples of the technologies are in the sections of Workspace re-entry and Adoption of (new) technologies.

c) Site procedures

The interest in Site procedures remained on the same level as in July as all the companies have implemented various governmental requirements for PPE, worker screening (such as daily temperature taking), site/tool sanitation and other measures (such as self-screening apps and COVID-19 officer onsite enforcing safety rules) with flexibility, patience and significant effort. Countless H&S products are overwhelming the market: e.g., Trimble’s CrewSight (scans badges from a safe distance with touch-free entry tracking, provides up-to-date jobsite information, broadcast messaging to communicate with all on-site remotely, allows easy rules customization, add limits to access and monitor potential COVID-19 exposure cases, temporarily disable a badge if needed due to a recorded issue and set a re-entry allowed date in the system, add zones for temperature screenings and workforce management to support COVID-19 tracking and compliance). GoContractor and Trimble have partnered together to offer daily screening checklists, automating the process of asking and recording responses to daily screening questionnaires before workers get on site.[296] Electrical contractor Rosendin reports using industrial coolers (such as Power Breezer [297]) to spray disinfectant on jobsites [298]. Onsite challenges reported in previous months continue in August; such as increased wrench time due to new H&S measures, difficulty sharing information, and lack of on-site field engineers. Construction Dive’s survey shows that 44% of respondents had a co-worker test positive for COVID-19. [184] Research is showing that the pandemic workday is 48.5 minutes longer and has 13% more meetings [189], while COVID-19 protocols led to a 7% financial loss on construction projects [181]. In a post-COVID-19 world, developers need to think about the additional costs that pandemic mitigation adds to a project, such as social distancing and other new jobsite protocols. [186]

Contractors report that a design-build approach and prefabricated building elements (such as cross-laminated timber) provided speed and flexibility and construction continuity during COVID-19 outbreak. [192] Construction documentation has become vital tool for protection and preservation of resources during COVID-19 due to owners demanding insights (about the cause of delays), onsite safety measures and liability. Convenient digital technologies such as AI, VR, mobile and product management are used out of necessity for key applications: collaboration, policies and procedures for distancing, transparent scheduling, tagging and cataloging photos, virtual tours and project management. [299] For example, reviewing site images with technology that enables 360 deg. images and cloud storage [244]; sites have been equipped with cameras for 24/7 remote monitoring and some workers have wearable cameras [300]; AI have been used onsite for automated crane planning and operations [240]; robots have been used as autonomous equipment onsite (e.g., Mortenson & AWS TruePower working on Wind Farm Design Optimization), and virtual punch lists with robots (examples Spot, Boston Dynamics and Anymal, ETH) [246].

Robots, modular design and prefabrication coupled with AI and IoT were crucial in Wuhan, China to build a hospital in 10 days (Houshenshan Hospital: 33,900 m2, 1,000 beds, constructed in 9 days; and Leishenshan Hospital (79,900 m2, 1,600 beds, project finished in 10 days – including all stages from design to operation testing – during the peak period nearly 40,000 people were working on the two sites – domestic and global transportation channel were open to transport all material for free – there was no budget limit. The project was constructed during the peak of the outbreak; full-time personnel was assigned to take all around H&S measures (temperature screening, mask supply and disinfection)). Some of the construction methods applied in Wuhan: 1) Based on the existing hot-rolled section steel, the method of reversed engineering in stages was used to engineer the upper load first through detailed design and then the foundation were designed. The design process was optimized using “Engineering, Procurement, and Construction” (EPC) contracting method.; 2) Logistics methods were aplied such as zoning control, efficient conversion and off-site storage to address traffic challenges inside and outside the sites.; 3) Synchronous rapid construction of foundations and the main structure, supporting facilities and MEP systems in the form of “building blocks” was relying on the following methods and technologies: modular assembly methods, reinforced concrete composite foundations, modular construction of container structure, BIM virtual construction technologies, herringbone- shaped steel pipe truss roofing, preconstruction and assembly, multi-material connected tubes, lightning protection and grounding, installation of multidisciplinary pipelines, prefabricated integration center, etc.; 4) Methods such as independent zone formation, zone by zone commissioning, and the intervention of participants in early stage sped up the inspection and the “acceptance” phase; i.e., the notice of completion/certificate of occupancy. [259]

We are in the midst of accelerated digital transformation. According to Bok Nam Lee, Professor at Seoul National University: AEC processes of change on construction site in South Korea (applicable globally) include: a) construction methodology: wet and onsite construction --> dry and offsite construction; b) construction management approach: drawings, specifications, CPM time-based schedule, visual inspection and visual monitoring --> BIM model + VR + 3D; programmed software; time-based simulation + VR/AR; drone + GPS + check and verifications; c) construction materials: natural ingredients --> artificial and recycle materials. [193]

More information about digital technologies is in the Adoption of (new) technologies section.

d) Supply chain

The uncertainty continues. Supply chain data is showing a mixed picture, making future inventory buying plans and demand planning a challenging (if not impossible) feat. Warehousing, manufacturing employment is below pre-pandemic levels as peak nears. [191] Ron Simoneau, Shawmut executive vice president of education: “One of the biggest challenges was COVID’s impact on supply chain with factories shut down. We already tracked products carefully, but with COVID, it's now a new level of tracking parts that go together to prevent delays." [192] To achieve agility managers should 1) prioritize partners; 2) have mitigation strategies ( a) fostering a collaborative relationship for new products/services; b) joint tracking and resolution on mutually agreed performance metrics; c) maintaining alternate providers/competitors.; d) prospective in-sourcing of the activity in question; e) bailment agreements to repossess or re-deploy if necessary; f) inventory build-ups in case of interruptions; g) monitoring supplier likelihood of bankruptcy; h) insurance policies to address supplier lack of performance; j) technology back-up and disaster-recovery plans); and 3) let results speak for themselves. [281]

Digital investments pre-COVID-19 in supply chains are paying off. For example, Wayfair's data-driven approach to demand planning at the stock-keeping unit (SKU) level and a shift to biweekly forecasting has put hesitant suppliers at ease to continue production despite the fluctuating pandemic environment. The company is employing racking and automation to increase warehouse capacity without additional hiring. [233] Others credit technologies for their team's ability to assess changes in demand and adjust operations accordingly. For example, Tillamook’s Elaine Videau, senior planning manager called spreadsheets "archaic" and "static" and said relying on them wouldn't allow an operation to flex in a rapidly disruptive environment. The data, transparency and planning are more critical and useful than forecasting during this time. Peter Bolstorff, EVP of corporate development, ASCM: “You don't forecast in a pandemic. Instead, the focus should be on planning: S&OP, supply planning, demand planning, risk planning and using AI and analytics to understand patterns.” Supply chains have to manage by exception. The planning team is hard coding forecasts, because without the manual override, the machine learning software is basing forecasts on recent data and calling sales in the next 6 months at a much higher rate than before COVID-19, Videau said. “What we're saying is, 'don't learn' ... we're saying, 'this is a one-time event.'”[234] Walmart Canada shows successful blockchain implementation to track deliveries, verify transactions, and automate payments and reconciliation between the retailer and third-party trucking companies. This DLT Labs technology cuts the prevalence of invoicing disputes or discrepancies with trucking companies from up to 70% down to under 2%.[235]

Contrary to digitization and digitalization, in experience of Earle K. Wheatley, founder of Imaginative Materials (a plastic fabricator working on face shields), supply chain adaptation to the pandemic included quite the opposite strategies: a) for aligning supply to a fluctuating demand Wheatley did not rely on high-tech algorithm and “reverted back to a simpler, paper logs” marking inventory in and out by hand. (“Many times, on the shop floor, we can make more product in the time it takes to do the computer input.”); b) for sourcing during a pandemic: “Talk to humans” (Wheatley said he relied on his network and connections and a time-tested strategy: he worked the phones. “I’ve been in the business for 40 years. Fortunately, I know a lot of folks and a lot of manufacturers, so I was able to pull material from all different sources.”); and c) relying on an existing workforce (“Nobody likes to lay people off they hire now. My folks could work 50 to 60 hours a week right now.” That also gives him flexibility in scaling up or scaling down hours depending on whatever demand may be in the future.) [301]

3.e) Workspace re-entry

Workspace re-entry is taking again the momentum (11% in August vs. 6.9% in July) especially in the real estate segment. Real estate is seeing 5-10% occupancy in August. [190] The future of workplace must accommodate hybrid work modes. The technology will have to enhance the experience of all participants. [190] The office will need to offer more meaningful and immersive experiences to reconnect individuals and teams with their company culture. Like attending a company retreat or spending a day at a theme park, these shared experiences rejuvenate us and elevate us from our home-based work routine. [257] “Rebuilding occupancy is a new business imperative for owners. Iteration of many alternative solutions in various areas of the building is critical. Visibility into the actual effect of various solutions is essential to effective iteration. Sharing knowledge and insight with knowledge workers is part of building trust. This is all essential to determine what the new full occupancy and full value look like. A knowledge-powered approach will have lasting value beyond COVID-19.” [190] Strategic re-entry control includes: 1) external health protocols (e.g., CDC and local authorities); 2) safety kits to employees at home for re-entry: Masks, sanitizers, papers, touchless keys to press elevator buttons; 3) facilities readiness: hands cleaning, physical distancing, and new signage to help traffic patterns and new protocols; cleanliness, touchless sanitizers (in central locations), UV air purifiers and HVAC to support min. MERV 13 air filters or hospital grade air filters, assess floor plans for 6ft distancing to secure new spaces and protocols, food services and cafeterias have been converted to offer prepackaged food, vending machines support contactless payout options, touchless experience in restrooms (paper towels, faucets and soap); 3) digitize building entry (to provide building entry filtering and customization for specific employees - when they log in they get specific playbook for their location); 4) scheduling and tracking: how to schedule and track people at staggered times to make sure to not exceed capacities of lobbies and offices; 5) training communications: guidelines and new training protocols; journey maps to describe workers’ journeys from enter-exit; workers screening (currently focused on self-screening until it become mandatory – temperature scanning stands); 6) physical distancing: limit occupancy of conference rooms and elevators and every sitting area – signage; 7) Contact tracing that integrates scheduling and tracking tools – mobile application and dashboard monitoring. [238]

“Where is real estate now? Real estate is evolving from an asset into a business.”(Dror Poleg) Building owners have cleaned and declared reopening; first wave of stickers-on-the-floor and antiseptics. Tenants are slowly if ever coming back. Knowledge workers have enabled secure, cloud-centric working; now productive at home; and will return based on trust and knowledge. Implications include required iteration to build on what works and where; visibility informs iterations.[190] For example, RXR Realty had established digital lab even before the pandemic; 100 scientists, designers and engineers working on digital initiatives such as an app that enables move scheduling, deliveries, dog walking, and rent payments on the residential side, and real-time analytics on heating, cooling, and floor space optimization for tenants on the commercial side. During the pandemic this team worked non-stop to put in place the H&S protocols that allow tenants to feel safe as they return to the office. Its platform—RxWell—includes a new mobile app that provides information about air quality and occupancy levels of a building, cleaning status, food delivery options, and shift times for worker arrivals. Employees have their temperatures taken via thermal scanners when they enter a building, and heat maps are available online that show how full a restroom or conference room is at any given time. “The investments we made in our digital capabilities before the pandemic are why we’re able to give people peace of mind now as they begin to return to work.” (Scott Rechler, CEO of RXR) [225] Furthermore, contactless entries are common: e.g., properties developed by Rudin Management in New York have hands-free entries – occupants use a QR code on an app created by Rudin’s tech start-up, Prescriptive Data, that also allows users to check the air quality and elevator wait times (some are limited to four riders at once). Rudin buildings have also sanitizer dispensers at each entry point and diagrams that illustrate how to enter and exit the building to prevent crowding. [45]

Return to workplace toolkit from Join [276][190] is creating the new technology standard for the office:a) Access (understand and improve entry, lobby and elevator flows thru time; schedule and communicate entry with individual users and guests; provide new entry systems with secure connectivity (e.g., w/ thermal scanning); b) Tracing (electronically identify and track users thru spaces and time; collect location, utilization and identity data for analysis; and provide data to management and authorities via report and APIs); and c) Compliance (strong personal data privacy compliance for collection and sharing; maintain strong cybersecurity and data loss prevention; and report/certify actual vs. designed density/physical distancing). [276][190] Resilient workplaces with new emphasis on rebuilding worker’s trust (Connect – Secure – Sense – Automate steps) include a) resilient operations (redundant internet and cloud access; site – or campus-wide cybersecurity; virtual private network for remote access; lean networking – legacy sunset; privacy compliant data lake; and vendor-agnostic analytics and automation); b) elastic tenancy (turn-key flex office and collaboration; hub and spoke elastic offices; safe WFH/ work anywhere VPN; enterprise identity integration; location and utilization visibility; and workspace and location scheduling); and c) elevate trust (common and private indoor and outdoor Wi-Fi; privacy-assured backbone for entry-tech iteration; track and share density and disinfecting info; safe-space finding and reservation; secure guest entry, guidance and tracking; and elevator scheduling and real-time coordination). [276][190]

3.f) Financials; cashflow / Contracts/ Litigations

This subcategory has been 96% more discussed in August than in July due to increased challenges such as changing market conditions and issues with cash and working capital backlogs decline; contracting and potential litigations problems; delayed and/or canceled projects. COVID-19 protocols led to a 7% financial loss on construction projects. [181] Skanska posted a 69% decline in profits in July attributed to coronavirus-related disruptions while the Architectural Billings Index has shown sequential declines since April, signaling fewer projects to bid on [181]. Construction backlog drops 13% YoY as contractors engage in "survival bidding". [183] Many projects will continue ($8 trillion in capital delivery is expected to continue throughout 2020 [185]), and “the financing is available, BUT many owners, investors and developers are playing the wait-and-see game. Projects that were in the pipeline pre-COVID moved forward for the most part, but owners have been hesitant to kick off new projects since.” Lenders and financiers still want to back good projects, but fewer developers are willing to take the risk during the continued economic uncertainty of COVID-19. [186] Contractors should assess risks before bidding for a project. [280]

Investing for the long term: “Be patient and focus on the big trends.” [277] Digital technologies and startups that bring innovation to the built environment are relatively safe investment. Corporations can receive financial, and strategic value from startup relationships. Self-sustaining innovation flywheel includes following steps: 1) Invest; 2) Form commercial relationship; 3) Grow; 4) Exit; 5) Re-invest. [221] Corporate venturing types: 1) launch a dedicated fund; 2) strategic investing; 3) VC fund investing; 4) deal by deal investing; 5) hybrid model of 2), 3), and 4); and 6) corporate private equity. Adopting technology and signing commercial agreements with startups creates “valuation value.” E.g., $1 in new revenue can result in a 5-15x increase in a tech companies’ valuation. [221][278] Investment in digital technologies is a safe bet, but companies should be careful about the patents as some companies have been sued for patent infringements (in the news Skanska, DPR, Schneider Electric face VR/AR patent infringement lawsuits [302]). Efficient and effective financial forecasting strategies include: make it a collaborative process, minimize assumptions, leverage a rolling operating cashflow forecast with multiple scenarios, make reforecasting a norm, and automate the processes. [279] Most contractors are resilient and doing whatever it takes to survive. Though not all jobs are worth the risk. 5 red flags in a bidding process that should be recognized and evaluated: 1) bad owner reputation; 2) unorganized project; 3) uncertain financing; 4) unfavorable contract provisions; and 5) taking over for another contractor.[280]

Navigation through the unprecedented COVID-19 crisis poses a new set of legal challenges; leases, agreements, and insurance policies are scrutinized for contractual obligations. Experts provide advices: 1) Analyze in depth contracts to understand positions (past and future), negotiate what will be drafted in the future; 2) Be flexible and ready to shift (not easy for lawyers but necessary); 3) Stay informed to understand nuances, latest technologies (for e.g., testing and tracing), etc.; 4) “The devil is in the detail” – dig down and reach out when unclear – ask; 5) “Think big”(this is a shared global problem); 6 – be generous (share knowledge and data). [303] In the US the workspace re-entry recommendations/ guidelines / lists of best practices from the Occupational Safety and Health Administration (OSHA) and the Centers for Disease Control and Prevention (CDC) are not mandatory, leaving employers to decide if those guidelines should be enforced. The state of Virginia has become the first state [268] to mandate workplace safety rules in response to the pandemic. [45] Before returning to the office employees should find out what is expected of them and know their rights (“If you feel as if your employer isn’t taking the necessary steps to ensure your safety or is discriminating against you for any reason, read up on federal, state and local laws. Not sure where you stand? Find a local advocacy group that can offer advice.”). [45] Impact sourcing is here to stay: New York City is entering into new Project Labor Agreements (PLAs) with the city's building trade unions with proposed state legislation that would require contractors working in the city to hire low-income New Yorkers and those from areas with high poverty levels. [188] Process of moving environmental racism to climate justice is discussed. [289]

AI in contract law has been discussed at the AI4AEC colloquium. [248] Value added by AI in law includes cost reduction for reading in B2B (e.g., in privacy protection/ user agreement); and cost reduction for contract development in B2C (e.g., in construction contracts, mergers and acquisitions). Julian Nyarko, Stanford Professor’s case study of reducing the omissions of provisions in human-drafted contracts (thousands of filings with SEC were analyzed using AI to classify them based on the inclusion of provisions) showed that 50% of contracts missing provisions specifying the choice of court, trust forum and arbitration. Implications of the study: lawyers are not always consistent in drafting contracts – AI can remedy these deficiencies, quickly and on scale. Recent trends and challenges of AI application in law include a) AI for contract development where the definition of “good” contract depends on the industry (need for customization); and b) Computable (or “Smart”) contracts are expressed in code (ideally: fully automatically implemented and enforced, without lawyers, no disputes, no judges, no costs, and, if using blockchain, without tempering); But key issues are ambiguity and vagueness (is it a bug or a feature?); ex ante design vs. ex post enforcement costs; rules vs. standards (rules are precise and standards are general); contract review vs. code review (computer science experts are equally expensive as the lawyers – do you really lower the cost if you move from natural language to code?). [248]

Previous July Category Summary