• Newsbeitrag
  • 25. Juni, 2015
  • Amsterdam

Construction disputes rise in value by over 60 percent to $51 million, ARCADIS report finds

Amsterdam - Disputes relating to major global construction projects increased significantly in value to, on average, $51million in 2014 according to ARCADIS, the global natural and built asset design and consultancy firm.

This represents the second consecutive year in which values have increased with the average now reaching $51million, up almost $19million on 2013. Significantly, the number of projects going into dispute is also expected to rise during 2015, with low margins agreed during the economic downturn and labor shortages in some markets likely to prove a catalyst for disputes.

This year’s report, Global Construction Disputes: The Higher the Stakes, the Bigger the Risk, is ARCADIS’ fifth annual study into the duration, value, common causes and methods of resolution of construction disputes across the globe. The report found that construction dispute values were the highest in Asia at $85.6milllion where values more than doubled, closely followed by the Middle East at $76.7million. However, in the North America and the UK, dispute values dipped to $29.6 million and $27 million respectively.

Meanwhile, the average time taken to resolve disputes rose to 13.2 months, up from just under a year in 2013. Significantly, all areas of the world saw the resolution process take longer with the exception of Asia where the average dispute length took two months less.

Mike Allen, Global Leader of Contract Solutions at ARCADIS, said:

“Right across the world, governments and developers are commissioning large-scale construction programs with levels of investment reaching the tens of billions. These programs are often highly complex and with a combination of tender pricing made during the recession and low availability of resources, disputes are not only much more likely but also potentially more costly. While many of these situations are resolved behind closed doors, the time taken to do so and the expense involved can create huge problems for all parties involved.”

The research found that the most common causes of construction disputes related to the administration of contracts. The top three causes in 2014 were:

1. Failure to properly administer the contract

2. Poorly drafted or incomplete and unsubstantiated claims

3. Errors and/or omissions in the contract document

The transportation sector saw the most disputes arise in 2014, followed by social infrastructure and real estate.

The likelihood of a joint venture (JV) ending in dispute was also reviewed in the report. ARCADIS found that, where a joint venture was in place, almost a third of disputes (31%) were driven by a joint venture related difference. This represents a slight dip from 2013 where instances of a JV dispute were marginally more commonplace.

Mike Allen continued:

“With the global economy increasingly buoyant and construction outputs on the rise, joint ventures are becoming more commonplace as developers opt to divest risk across major programs and blend specialist skills in the supply chain into one contract. However, this approach comes with many potential risks attached. Joint ventures can be typically described as a compromise agreement and our research shows that almost a third enters dispute proceedings.”

The full report can be downloaded from here 

ARCADIS’ Contract Solutions team helps clients avoid, mitigate and resolve disputes. The 160 strong team is based around the globe and encompasses one of the industry’s largest pool of procurement, contract, risk management and also quantum, delay, project management, engineering defects and building surveying experts. The team provides procurement, contract and dispute avoidance and management strategies, management expertise as well as dispute resolution and expert witness services. This is delivered through a blend of technical expertise, commercialism, sector insight and the use of live project data, combined with a multi-disciplined and professional focus.

-Ends-

For further press information, please contact:

Nathanael Moyers

Corporate Communications Manager at ARCADIS

+44 (0)20 7812 2881

nathanael.moyers@arcadis.com

Notes to editors

This research was conducted by the ARCADIS Contract Solutions experts and is based on construction disputes handled by the teams during 2014.

Global construction disputes – summary of results

 

Region

 

Dispute values (US$ millions)

Length of dispute (months)

 

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

Middle East

56.3

112.5

65

40.9

76.7

8.3

9

14.6

13.9

15.1

Asia

64.5

53.1

39.7

41.9

85.6

11.4

12.4

14.3

14

12

North America

64.5

10.5

9

34.3

29.6

11.4

14.4

11.9

13.7

16.2

UK

7.5

10.2

27

27.9

27

6.8

8.7

12.9

7.9

10

Cont. Europe

33.3

35.1

25

27.5

38.3

10

11.7

6

6.5

18

 

Global average

 

35.1

 

32.2

 

31.7

 

32.1

 

51

 

9.1

 

10.6

 

12.8

 

11.8

 

13.2

Source: ARCADIS Global Construction Disputes: The Higher the Stakes, the Bigger the Risk

About ARCADIS: ARCADIS is the leading global natural and built asset design & consultancy firm working in partnership with our clients to deliver exceptional and sustainable outcomes through the application of design, consultancy, engineering, project and management services. ARCADIS differentiates through its talented and passionate people and its unique combination of capabilities covering the whole asset life cycle, its deep market sector insights and its ability to integrate health & safety and sustainability into the design and delivery of solutions across the globe. We are 28,000 people that generate more than €3 billion in revenues. We support UN-Habitat with knowledge and expertise to improve the quality of life in rapidly growing cities around the world. Please visit: www.arcadis.com