With a deep background in design and architecture, Luca Calaraili has a unique perspective on the forces shaping construction projects today. His passion for technology and innovation, combined with his expertise in navigating complex project disputes, gives him a clear view of the industry’s evolving landscape. We sat down with him to discuss the latest CRUX Insight report, which reveals a fascinating shift in the Americas: while projects are staying closer to budget and schedule, disputes are moving away from traditional technical issues toward financial pressures and workmanship failures, creating a new set of challenges for the industry to overcome.
Your report shows scope changes are the leading cause of disputes in the Americas at 25.7%, yet this is far better than the global average. Can you detail the specific project control measures that are proving most effective in the region for managing scope and preventing disagreements?
It’s a really encouraging trend, and it speaks to a maturity that’s been hard-won over the last few turbulent years. What we’re seeing on the ground isn’t one single silver bullet, but rather a more disciplined, front-loaded approach to project management. The most effective teams are implementing rigorous change order management systems where every potential deviation is documented, priced, and approved before any work proceeds. They’re also leveraging collaborative platforms from day one, which keeps the owner, designer, and contractor in constant communication. This transparency demystifies the process and prevents the small misunderstandings that often snowball into major disputes over scope. It’s a direct result of the industry learning some tough lessons and realizing that proactive control is far less costly than reactive conflict resolution.
It’s striking that workmanship deficiencies are a bigger problem in the Americas than globally, impacting over 20% of projects. What on-the-ground factors contribute to this, and could you walk us through a step-by-step quality assurance process that could directly address this regional weakness?
This is a very concerning statistic, and it points to a few underlying issues, including persistent skilled labor shortages and perhaps an over-reliance on compressed schedules that can compromise quality. When you’re on a job site, you can feel the pressure to keep moving, but that can lead to cutting corners. A robust quality assurance process is essential to counteract this. It starts with pre-qualifying subcontractors not just on price, but on their proven track record. The next step is mandating physical mock-ups for critical installations—let’s see the work before it’s replicated a hundred times. This is followed by a non-negotiable inspection schedule with clear hold points, all documented with photos and digital checklists. Finally, there must be a clear system of accountability, where rework is tracked and its costs are borne by the responsible party. This creates a culture where quality is everyone’s job, not just the inspector’s.
The Americas outperform on both budget and schedule, with cost overruns at 31.1% versus 34.7% globally. What specific project management disciplines or technologies are driving this success, and what are the top three metrics a team should monitor to maintain this performance?
This outperformance is a testament to better project discipline. Teams have become much savvier in risk management, especially after the supply chain shocks of the past few years. Technologically, the adoption of advanced scheduling software and Building Information Modeling (BIM) has been a huge factor, allowing teams to identify and resolve clashes in a digital environment before they cause delays and cost overruns in the field. To maintain this edge, I advise teams to obsessively monitor three key metrics. First, the Cost Performance Index (CPI) to ensure you’re getting the value you’re paying for. Second, the Schedule Performance Index (SPI) to track progress against the plan. And third, a forward-looking metric like a detailed cash-flow projection, because as our report shows, financial pressures are the new frontier of disputes, and you have to see them coming.
You noted that while traditional disputes are declining, financial pressures and payment issues are “rising fast.” Can you provide a real-world example of how a simple payment delay spiraled into a major project conflict and explain how contracts can be structured to prevent this?
I saw this happen on a large commercial project recently. A mechanical subcontractor submitted a payment application that was delayed by the general contractor over a minor documentation issue. That delay meant the sub couldn’t pay its supplier, who then held back a critical shipment of air handling units. The delay in receiving those units pushed back the entire project schedule by three weeks, triggering liquidated damages clauses and leading to a complete breakdown in the relationship. The initial issue was worth a few thousand dollars, but the resulting dispute cost hundreds of thousands. To prevent this, contracts must include unambiguous terms for payment, such as “pay-when-paid” clauses being replaced with clear deadlines. They should also feature tiered dispute resolution mechanisms, forcing parties to mediate payment disagreements quickly before they can poison the entire project.
Looking forward, the report identifies AI as a potential “game changer” with its own risks. What are the top two or three dispute types you anticipate emerging from AI’s use in design or project management, and what proactive steps should firms take now to prepare?
AI is incredibly exciting, but it opens a new Pandora’s box for liability. I anticipate two major types of disputes. First, we’ll see conflicts over “AI-generated design defects.” If an AI algorithm produces a flawed design that leads to a structural failure, who is at fault? The architect who used the tool, the engineer who signed off on it, or the software developer? Second, there will be disputes stemming from AI-driven project management, where an AI might optimize a schedule in a way that is logistically impossible, leading to delays and claims. To prepare, firms must start developing clear protocols for AI validation, ensuring there is always a qualified human in the loop to approve AI-generated outputs. Contracts will need to be updated to explicitly assign liability for AI-related errors, and firms should invest in training their teams to understand both the capabilities and limitations of these powerful new tools.
Do you have any advice for our readers?
Absolutely. The biggest takeaway from our findings is that the nature of risk is constantly evolving. Yesterday’s primary concern was a design flaw; tomorrow’s will be a cash flow crisis or an AI-generated error. The best defense is a proactive offense. This means investing in robust project controls, fostering genuine collaboration among all stakeholders, and writing contracts that are resilient enough to handle volatility. Don’t wait for the dispute to happen. Stay ahead of the curve by continuously learning, adapting your processes, and building strong relationships. That is the most effective way to not only avoid conflicts but to deliver successful projects in this increasingly complex environment.
