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The bug is still out there

Don't get complacent. Despite all the checks the Millennium Bug could still strike construction a heavy blow.

Grim legal wrangling is forecast for the construction sector early next year as the Millennium Bug takes its toll on business.

Having your own IT system in order will do little to ward off angry claims for, say, missed deadlines, breaches of safety and security, or failure to fulfil service and maintenance contracts caused by breakdown elsewhere in the supply chain. And it will not save you if your client's accounting and payment system goes on the blink leaving you cash-strapped.

Recent changes to the legal system have made it easier for small firms to prosecute cases and win, warns vice president of the Lawyers Association Graham Ross. Subcontractors, suppliers, consultants, contractors and clients are all as likely to be plaintiffs as defendants.

Many firms have acted individually to clear their IT systems of embedded chips and date-reliant software likely to fail at zero hour 2000. But checking for the Bug cannot guarantee its total eradication. Systems should be double-checked, advises Construction Industry Computing Association managing director Ian Hamilton, but even the most fastidious firms could grind to an unexpected halt. Many more firms are acting on the basis of cure rather than prevention and will tackle problems as they arise, after the event, Hamilton predicts.

It is the knock-on effect created when one player in a construction project goes down that is to be feared. With construction programmes becoming increasingly tight and interfaces between suppliers and subcontractors ever more complex, there is little slack. Very swiftly, everybody else is affected. Imagine the effect of a rebar supplier experiencing problems with its computer-controlled bar bending system, Hamilton suggests. Drawing analogies with a popular chaos theory, Ross says: 'Y2K may be the butterfly wing that triggers a tornado'.

The damage threatened by this construction industry 'tornado' will appear in different ways. Inability to deliver materials or products, perhaps the most obvious supply chain problem, is likely to trigger claims against the main contractor for lost time and productivity from other subcontractors. The client may sue for late completion if the entire project is thrown off course.

However, problems are also forecast to affect networked IT systems, with exchange of highly time-sensitive design drawings or project management schedules particularly at risk. What happens if a supplier or subcontractor works to outdated instructions? asks Business Contingency Initiative chief executive John Sharp. Work will have to be redone and somebody has to carry the cost. Meanwhile, this spells more delay to the project.

Glitches in databases used for specifying and ordering materials could lead to unexpected shortage or glut. Suppliers may find themselves with more widgets than they know what to do with and be saddled with negotiating their return or alternatively with paying for and storing them. Contractors should anticipate that products may simply become temporarily unavailable.

Contractors, subcontractors, suppliers and consultants alike, though, should brace themselves for a short-lived cashflow freeze. Payment and payroll databases are known to be highly susceptible to the bug. While larger firms may be able to tighten their belts until financial normality is re-established, smaller firms could be sent to the wall, warns Hamilton. 'Banks have hearts of stone. There's no point in going to a bank and saying 'I've done work but nobody's paying me'.'

Who to blame for bug-related problems is to some extent a grey area needing clarification and open to interpretation, believes Ross. He warns that opportunists will blame micro-chip failure for delays and foul-ups with entirely different causes. And for every bona-fide bug-related payment delay there will be an invoice unpaid by a firm on the make and using the bug as cover.

All these problems could have long-running repercussions. But it is site security where it is feared bug-induced lapses could exact an instant cost in fire and theft. If safeguards fail because of Y2K gremlins, insurance will do little good.

Insurers are taking the line that because theoretically the bug problem is solvable, and is entirely foreseeable, no cover is offered for directly attributable disasters. If the bug is even vaguely implicated, prepare to argue your case in court, advises Ross, or more realistically shoulder the cost.

To minimise millennial disaster, Business Contingency Initiative chief executive and adviser to the Government on Y2K issues John Sharp recommends firms establish alternative ways of carrying out business: set up methods of ordering by phone and fax.

Meanwhile, in addition to carrying out a comprehensive search for defunct chips within a firm's own systems and double checking, Sharp says they should audit and double check firms in the supply chain. According to Kvaerner, though, it is not just a trading partner's ability to deliver the goods that should be under scrutiny. It is important to assess whether they will remain in business should cashflow dry up or if a third party trading partner suffers problems.

Sharp is also encouraging contractors to find and audit alternative supply sources.

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