The Weather Ledger

Taking the subjectivity out of weather disputes.

Last updated: 15th March 2021

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Innovation Lead: Liam Winder
Project number: 105876
UKRI funding: £588,699

Website:
ehab.co


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Summary

Risk management around weather has been a big challenge for the industry. Neither client nor contractor wants to carry the risk, leading to disputes and costly delays. EHAB has led a consortium of businesses to create The Weather Ledger - a data-enabled system that can automatically trigger weather clauses when terms are breached. The digital ledger technology gives everyone in the supply chain access to real, accurate and objective datasets, removing human interpretation often at the heart of these disputes. Money, time and supply chain relationships can all be saved, leading to programmes delivered on time and on budget.

Innovation type: Digital
Organisation type: Construction tier 1 contractors, Innovative SME

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Project pioneers

EHAB collaborates on technical research projects to show how the construction industry can digitise to accelerate its transition to net zero. Most recently it has been looking at how blockchain technology can improve the way the construction industry deals with weather risk.

The problem

Weather has always impacted construction companies and, with our changing climate, this impact is set to get worse. On average it is responsible for 21% of extensions to deadlines. That's why risk management around weather is so key. Currently the NEC3 (New Engineering Contract) weather clause is used by the industry to contractually share risk around these delays. It states that if a weather event occurs more frequently than once in every ten years, the risk is the contractors. But if it occurs less frequently than one in ten year value then it is the client’s risk. This seemingly simple mechanism is open to human interpretation and has led to many disputes around data and how impacts are calculated, as neither party wants to pay when there is a weather related dispute. About 5% of disputes are linked to this clause, which translates into hundreds of millions of pounds of legal costs, reduced profit margins and long delays in asset delivery, all of which could be avoided. Put simply, no-one in the supply chain wants to own the risk and pay the compensation.

Vision

This innovation will improve the way claims around weather-related risk are settled, and reduce admin, delays and costs. By drawing on big weather data, IoT sensors and blockchain technology, the Weather Ledger essentially digitises the NEC weather clause and automatically trigger claims if clause thresholds are breached. And because the data reflects reality and is captured in an accurate and transparent way, everyone across the supply chain will have access to the same data at the same time removing subjective interpretations. This will minimise disputes, reduce cost, increase margins, leading to more timely project delivery and increased productivity. Not only that, the ledger has the potential to remove the need for the clause itself as it can help companies improve their visibility of ultra-local weather conditions, so they can plan schedules better and try to prepare for, or even prevent, the impacts of weather delay.

Key Insight

The idea for the Weather Ledger came from a series of blockchain field lab sessions hosted by the Digital Catapult to bring startups and established industry partners together to brainstorm how Distributed Ledger Technology (DLT) could solve problems in the industry. As smart technology and data is becoming more common on construction sites, EHAB saw an opportunity to investigate ways of reducing the risk and disputes. It led a consortium to begin testing and developing a handful of prototypes around contract automation. They landed on the NEC weather clause as the best starting point, as it was universally agreed to be a recognised industry concern. Funding from the Transforming Construction Challenge helped them establish a new blockchain tool - The Weather Ledger - that could utilise IoT devices and DLT to automate the NEC Weather Clause.

First step

EHAB formed a consortium of experts with technology, construction, legal and technical expertise to explore this challenge from every side and create a proof of concept for The Weather Ledger. The first action was to go out and speak with those who are most affected by weather and the disputes that happen as a result - the contractors - to better understand the issues the team were trying to solve. This led them to identify five sites to test the software and hardware, which included an app and a desktop tool, all fed by hyper-local weather data collected via sensors. The idea behind this is to give people on sites and at head offices the exact same information so that they are aligned in the way that they are seeing and dealing with weather related risk. This initial consultation also identified the need to normalise the use of these devices as commonplace on a  construction site, and help allay fears of the unknown to those looking to adopt new technologies.

Barrier

The reality is that no partner - client or contractor - wants to carry the cost of compensating for weather-related delays. That's why settling disputes around who carries the weather-risk in the supply chain are often costly and time-consuming. Decisions based on human interpretation of data that may be incomplete or not visible to everyone on the programme are likely to be highly subjective and more open to challenge. These wasteful processes are costing the industry time, money and productivity. Blockchain technology will not only add transparency across the supply chain but add objectivity and automation to these claims, reducing the disputes and delay.

Digital Innovation

The Weather Ledger will allow the industry to bring a statistical and automated approach to risk-management. But how does it work? Initially sensors are placed onsite to track hyperlocal weather. This data is paired with decades of weather and stored using Distributed Ledger Technology (DLT). It is shared between all the parties to the contract and teams can access The Weather Ledger via an app or a desktop tool, meaning that whether teams are onsite or at head office, they are all receiving the same information. The ledger hosts contracts so that metrics on risk are agreed at the start of a programme. These smart, legally-compliant contracts are automatically triggered if the data shows that any of the predefined thresholds are breached. And because the distributed ledger protects the integrity of the dataset, all parties have confidence that the information they receive is untampered and reflects reality. This removes the subjective interpretations and challenges of human error that are currently at the heart of many of the lengthy and costly disputes. As well as settling, or avoiding, disputes altogether, the ledger will greatly improve the way planners put schedules together giving the same decision-improving tools and data.

Whole life innovation

The project helps normalise the use of technology on construction sites and encourages the industry to see the benefits of this approach. The ambition for the Ledger is that it could help launch more tools to examine the impact that weather has on a building over time which can in turn then inform design to optimise the whole life value of buildings. More automated contract clauses reduce bureaucracy, which in turn reduces human error and improves productivity. As this solution is rolled out, it will help the industry realise the benefits of smarter contracting and this could empower others to follow and provide other automated contracting services. 

Collaborators

BAM Nuttall provided a huge amount of support in the form of several project sites for testing, countless personnel supplying feedback and helping steer the direction of the solution and broad industry expertise that the entire consortium relied on. Ferrovial Construction provided much needed support in the form of a project site for testing, enthusiastic staff providing invaluable feedback which helped steer the direction of the solution, as well as broad industry expertise that the entire consortium drew on. Clyde & Co were key in providing the legal support and smart contract review which will enable the code to be commercially deployable on projects who choose to adopt it. Digital Catapult produced reports at the start and the end of the project which helped frame the problem and the findings, as well as providing ongoing support with the development of the tool. Ranging from tech & design, to marketing support. Connected Places Catapult are leading on the impact assessment and the standards creation. The standards will help inform how construction sites should and can set up industrially robust Internet of Things. The impact assessment provides a solid foundation from which commercial discussions can be had.

  • BAM Nuttall
  • Clyde & Co
  • Connected Places Catapult
  • Digital Catapult
  • Ferrovial Construction

Lead support

The Transforming Construction Challenge and UKRI provided the very necessary capital to make the project happen, and sent out a rallying cry that the wide and varied consortium collaborated under. Without this support the project would not have gone ahead. 

EHAB are also part of the Infrastructure Industry Innovation Partnership (i3P). This is a community of client and supply chain organisations that have made a commitment to delivering collaborative innovation through projects supported by a large network of experts, innovators and world leading industry knowledge, driving the future transformation of the infrastructure and construction industry.

Long Term Vision

Weather can have a huge impact on delivering construction programmes on time and on budget. Delays can lead to disputes which impact productivity. Weather Ledger is a digital tool that taps into big weather data and helps the industry make its weather-related risk analysis more accurate, for any project anywhere in the world. It has the potential to not only minimise human error and poor judgement in how sites assess and respond to weather conditions through its use of big data, but more automated claims and clauses reduce the admin burden for those on site and could even see the end of having to include a weather clause entirely.

Human Stories

At the heart of this project is a need to make construction less litigious as a result of adverse weather conditions. Weather Ledger will help planners make better decisions, will provide a level of automation in risk analysis and increase collaboration between client and contractor. The technology is ready. It now relies on clients and contractors to come together to see the value that more integrated, electronic contracting could bring, which is why the consortium is focusing on ways to normalise the technology on site, as much as develop the technology itself.

Powerful Processes

The availability of large weather datasets, via the Weather Ledger, will enable the industry to bring a statistical approach to weather risk and improve the way planners put schedules together. IoT sensors can provide site teams with the real-time, hyperlocal insights. Teams can access the Weather Ledger via an app and desktop tool, so whether teams are on-site or at head office, they are all receiving the same information. The ledger can also host smart contract and policies so that metrics on risk are agreed beforehand, reducing the need for lengthy and costly disputes.

Fascinating Facts

The current proof of concept estimates that one day of delay on a construction site worth £100m could be as much as £125,000 and the weather is responsible for extending projects by 21% on average.

Benefits

Assurance
The Weather Ledger helps planners identify risk at the bid and planning stage which means they can try and avoid scheduling in a way which increases the likelihood of delay. It also automates the risk analysis process leading to more effective resolution of disputes. The smart contract and insurance part of the tool still needs further testing before adoption, but this could remove the need for a weather clause entirely and allow a third party to share the risk in a manner which sees client and/or contractor automatically paid if weather breaches a threshold. Further research is being conducted with the University of Exeter to scope this out and understand how replacing the weather clause can have knock on positive effects.  The Standards piece of work being led by Connected Places Catapult is creating a standard for construction companies to deploy IoT on their construction sites to normalise the use of these devices.

Cost
It's estimated that an extra day of delay on a £100m project could cost £125,000. As weather is responsible for extending projects by 21%, the potential cost impact can be enormous. More efficient contract management will have a positive impact. For example, the tool reduces the time it takes to establish that a compensation event has occurred from as much as twelve weeks to a just a few minutes. Pre-agreed smart contracts can also be used to issue a parametric insurance, which could limit the exposure of projects to weather risk, saving valuable time and money when extreme weather hits.