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"E” things are increasingly impacting our lives. Each day we receive tens if not hundreds of e-mail messages. We make on-line travel reservations and use e-tickets. As consumers, we can buy merchandise (even groceries) from e-retailers without even leaving our homes. No matter what you think about e-technology (“awesome” or “the end of civilized society”), it will eventually change the way you conduct business.

As the internet has evolved from a purely information-based platform (i.e. information driven) to a transaction-based platform (i.e. information and transaction driven), the internet-based opportunities for businesses have expanded. Technological advances have made it possible for businesses to not only obtain and exchange information over the internet, but also to conduct business transactions through electronic media. As discussed below, E-Construction embodies both informational and transactional advantages of the internet, and brings them to bear in construction projects. See generally Elias M. Gordon, E-Commerce and the Construction Contract – Parts I and II, Indiana Constructor, (October/November 2000).

E-Construction: What Is It?

It is difficult to provide a precise definition of “E-Construction.” E-Construction is an evolving concept; what is meant by “E-Construction” today is far more sophisticated than was employed just a few years ago. Generally speaking, “E-Construction” simply refers to the use of electronic media and technology in the construction process. E-Construction involves, for example, using an internet website to review and submit RFPs, sign contracts, electronically monitor supplies, exchange information regarding a project’s status, and review plans and specifications.

E-Construction: How Will It Be Used?

Project managers and owners are driving the use of electronic media and technologies in the construction process. Owners are seeking to capitalize on the efficiencies and quality improvements that can be captured through the use of the internet and other e-technology. Owners are beginning to manage entire construction projects through the internet (i.e. using project websites). Outlined below are some of the ways project owners and contractors are increasingly using the internet and e-technology for their projects:

Design. Computer programs enable designers to combine digital imagery, mapping, and modeling to efficiently design projects.

Transactional. Procurements, re-ordering and even payments to vendors and contractors are becoming internet based. For example, owners can make payments via EFT (electronic funds transfers). Project owners may manage the entire bidding process through electronic media.

Data Transfer and Collaboration. Owners can communicate project changes to contractors via e-mail and electronic files. As a result, everyone will receive crucial project data within seconds as compared to days (via ordinary mail). To the extent collaboration among parties is required, it can be accomplished through the internet. For example, communications among vendors, contractors and designers regarding changes to plans or designs can occur quickly through the exchange of electronic files as opposed to shuffling paper.

Project Websites. Much of the above described E-construction occurs within the confines of a project website owned and maintained by the project owner. The advantage of a project website is that it serves as a centralized data hub for the entire project. Owners can post project data on the website (i.e. design and specification data, construction timelines, etc.) for viewing and downloading. Information can be updated and sent to contractors and vendors instantly via automatic distribution lists.

Remote Technology. Project owners and contractors are using remote internet-based technology with greater frequency. PDAs and notebook computers with remote internet access will become commonplace as owners, contractors and designers communicate with each other and share data concerning the project (i.e. design issues, change orders, etc.). Thus, the ability to share electronic data with people in the field will become the norm.

The [Contractor or Owner] is not liable for any loss or damage, including but not limited to incidental or consequential damages, to the [Contractor or Owner] resulting from electronic transactions, including but not limited to failure of computer systems, virus damage, data loss, system security, or other electronically caused damage.

Force majeure. Force majeure clauses should be considered and negotiated to protect your interests in the event of delays or damage caused by problems with electronic transactions.
(See Felhaber’s Business Report (Summer 2003) which is available at http://www.felhaber.com/main/pastissues.html.

Insurance Issues. You need to consider who will be responsible for insurance in the event of electronic failures. Your contract should identify who will “bear the risk.”

Data Ownership (Intellectual Property). It should be clear in your E-Construction transactions who owns the intellectual property associated with the e-transactions. For example, you need to clearly establish who owns the copyright for the website and other software designs.

Protection of Proprietary and Confidential Information. If you submit confidential or proprietary information to a project owner on-line, you must have contractual assurance from everyone with access that the information will be kept confidential. If you have information that you do not want shared with certain parties, you should make sure this is clearly indicated and defined in your contract. Finally, the owner should have a privacy policy regarding the project website which should be incorporated into your contract.

Choice of Law and Venue. Electronic contracts often involve transactions and projects that spread over many states. It is important your contract identify both the choice of law and (more importantly) the choice of venue.

Choice of law merely indicates what state’s law will be applied in a lawsuit. More importantly, a choice of venue clause indicates that if there is any dispute, the clause specifies where the trial will be conducted. Such clauses mean that, no matter where you are located, you will be forced to litigate in the stated jurisdiction. If an agreement is between businesses, these clauses are usually enforced despite the great hardship it may cause one of the parties. You should carefully consider whether you are willing to agree to litigate disputes far from where you are located.

Spoliation of Evidence. If you are in a dispute with another party, you need to be aware of your obligation to preserve relevant information (including electronic information and data) when litigation is reasonably “foreseeable.” In the construction industry, litigation may be foreseeable (thus triggering a duty to preserve) when a dispute arises over a change order. The duty to preserve relevant information requires more than just preventing intentional destruction of data. It may require you to make back-up tapes of your hard drives to prevent deletion though ordinary, on-going use.