The dynamic construction industry is reaping the benefits of proactive dispute avoidance, mitigation and resolution techniques
Highlands Ranch, Colorado — June 26, 2019 — A report released today by Arcadis, (EURONEXT: ARCAD), the leading global design and consultancy for natural and built assets, reveals that the value of construction disputes in North America dropped for the fifth consecutive year, while the average time taken to resolve these disputes also dropped in 2018.
The ninth annual report, titled “Global Construction Disputes Report 2019: Laying the Foundation for Success,” provides insight into the causes, duration and value of construction disputes, highlighting best practices for avoidance, mitigation and resolution.
This year’s focus is on the importance of being proactive with early, formal and contract-mandated techniques such as risk management, dispute review boards and mediation.
Research is based on construction disputes handled by Arcadis in 2018, with contributions from industry experts.
Report Highlights
- With positive economic drivers and larger and more complex projects anticipated in 2019, there is a critical need to embrace more sophisticated risk management and claims avoidance techniques, including leveraging digitalization.
- Not all regions attempt to resolve disputes in the same way, and regions using early dispute avoidance techniques have been successful.
- Human factors and misunderstanding of contractual obligations continue to be primary causes of disputes.
- The most common cause for disputes in North America was “errors and/or omissions in the contract documentation.” Globally, it was “owner/contractor/subcontractor failing to understand and/or comply with its contractual obligations.”
- The average value of North American disputes decreased from $19 million in 2017 to $16.3 million in 2018. Globally, the figure dropped from $43.4 million in 2017 to $33 million in 2018.
- The average time taken to resolve disputes in North America decreased from 17.7 months in 2017 to 15.2 months in 2018. Globally, the average increased from 14.8 months in 2017 to 17 months in 2018.
“With mega-projects continuing to expand around the globe, contracts, plans and projects themselves will be more complex, and more parties will be involved in the construction process,” said Roy Cooper, head of contract solutions for Arcadis North America. “With more project participants, it is essential for those involved to understand the contract, their role in the project and how to work with the team.”
Download the full report.