With uncertainty reigning in markets around the world and construction projects more complicated than ever before, construction disputes are a major distraction that tie up key personnel and cash flow.
This is the seventh annual Arcadis Global Construction Disputes Report 2017: Avoiding the Same Pitfalls. It has been compiled using data and insights from the Arcadis Contract Solutions experts and reviews the causes, financial value, length and means of resolution of global construction disputes that the team dealt with during 2016.
This report provides insights into market conditions and behaviors that are driving market trends for construction disputes both globally and regionally.
Today's construction programs are fast paced, complex and involve a multitude of parties, creating numerous points at which a dispute can occur.
The Arcadis report highlights that for the third consecutive year the average value of construction disputes in North America have dropped slightly in 2016 to US$21 million. This average dispute value is lower than most parts of the world; however, the average time taken to resolve disputes increased by two months over the previous year. It appears the U.S. construction industry has become more sophisticated in their approach to managing risk and early intervention appears to be an effective means to keep average dispute values in check.
"The construction industry solves technical problems and develops innovative methods every day. I think formal, early intervention forums and robust contract provisions are the industry's technical answer to avoiding disputes."
— Roy Cooper, Vice President, Arcadis North America
The North American Contract Solutions team continues to stress the importance of addressing disputes early in their life cycle. The core reasons for this approach remain unchanged and are even more relevant now than in the past. All parties involved should resolve dispute issues early on to:
The global construction disputes report 2017 shows dispute values have remained steady but the time taken to resolve disputes has declined. Our global dispute resolution research highlights the need for better contract administration, more robust documentation and a proactive approach to risk management to help mitigate the most common causes of disputes.
The Global Construction Disputes Report 2017 shows that both the dispute value and the time taken to resolve a dispute has declined slightly. The social infrastructure/public sector was found to have the most disputes. Meanwhile, when it came to resolving disputes, party to party negotiation remained the most popular method of alternative dispute resolution.
This year, for the fourth year running, failure to properly administer the contract persists as the No 1 cause of construction disputes globally. Moving up the rankings two spots to No 3 is the employer, contractor or subcontractor failing to understand and/or comply with contractual obligations. Both are key indicators that experienced industry advisors are not being sought at the outset of a project.
The five most common causes of disputes were:
Arcadis contract solutions experts handled more construction disputes in 2016 than the previous year. If global markets see increased construction demand, continued hyper-competitive markets and major projects; our team expects the number of construction disputes to increase further this year.
Below are details on the Global Construction Disputes Report 2017 key highlights and overall findings.
