As industries across the globe adapt to the rapid advancements in technology, the construction industry is no exception. As it stands, standard form construction contracts don’t fully address the unique challenges posed by ‘Smart Infrastructure,’ a term coined to represent infrastructure projects that integrate both digital and physical elements.
The analysis by Hogan Lovells highlights critical areas that industry leaders, legal professionals, and policymakers should turn their attention towards to ensure future infrastructure is sustainable and legally sound.
Unlike traditional construction projects, smart infrastructure involves digital aspects like Internet of Things (IoT) devices, artificial intelligence, and cloud services, necessitating a re-evaluation of existing standard contracts. The integration of digital and physical infrastructure introduces unique risks, such as cyber threats, data protection, and intellectual property rights, which are not typically present in traditional construction projects.
Addressing these risks upfront in construction contracts could prevent potential future disputes, saving corporations and law firms time and considerable legal fees. However, when standard construction contracts fail to account for these new risks, a breach or dispute may become increasingly complicated and costly to resolve.
Recognizing the evolving needs of construction projects, there is a case to be made for reviewing, and potentially amending, the standard form construction contracts to explicitly cater to the realities of smart infrastructure projects. These amendments could include clauses to address data protection, intellectual property rights, and mitigation of cyber risks, among other relevant issues.
Having a redesigned contract that foresees the intricate nature of smart infrastructure projects will not only ensure that the risks are properly addressed but also provide clarity to all parties involved, reducing the likelihood of litigation. By acknowledging and addressing these distinctive risks through comprehensive legal frameworks, the construction industry can ensure a smoother path to the digitised future.