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| Global construction disputes hit record length, Arcadis report finds  The value of disputes relating to major global construction projects have marginally reduced to, on average, US$ 46 million in 2015, according to the Global Construction Disputes: Don't get left behind report released by Arcadis. However, the length of time to resolve a construction dispute increased to an average of 15.5 months, impacting parties involved in a dispute and the overall construction industry.- Global construction disputes show a decrease in value whilst the length of disputes continued to increase - On average globally, dispute values related to major construction projects decreased by US$5 million per dispute - The average length to resolve a dispute increased by more than 17% compared to previous years - The average length of disputes in Asia rose by 62.5% - The Middle East overtook Asia as the region with the highest value of construction disputes in 2015 - Failure to properly administer the contract remained as the main cause of construction dispute around the world This year's report is Arcadis' sixth annual study into the duration, value, common causes, and methods of resolution of construction disputes across the globe. The report found that construction disputes were the highest in the Middle East at US$ 82 million, followed by Asia at US$ 67 million. However, in North America, the United Kingdom and Continental Europe, dispute values dipped to an average of US$ 25 million. Mike Allen, Global Leader of Contract Solutions at Arcadis, said: "The construction industry faced head winds, particularly with commodity and currency volatility. It is evident that the natural resources market is now operating against a very different economic backdrop. The business case assumptions that were likely used to endorse projects and programs have therefore changed, presenting a huge challenge to the project and entity risk profiles." The property/real estate sector had the most disputes globally, closely followed by projects related to social infrastructure and the public sector, albeit the natural resources sector has some of the largest disputes. The highest dispute handled by the team in 2015 was worth US$ 2.5 billion. Failure to properly administer the contract holds on to its top position globally from last year as the main cause of construction disputes. Party to party negotiation is also remaining as the most popular method of alternative dispute resolution. According to the report, 25.5% of joint ventures ended up in dispute in 2015.The top five causes in 2015 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 4. Incomplete design information or employer requirements (for D&B/D&C) 5. Employer/contractor/subcontractor failing to understand and/or comply with its contractual obligations Mike Allen continued: "These reasons are largely self-evident, and it is aspirational to suggest that all disputes can or need to be settled quickly. Even so we must continue to embrace the many initiatives that are being deployed by construction professionals, lawyers and the judiciary across the globe, and do all we can to facilitate the settlement of such disputes. This means that effective dispute avoidance mechanisms need to be actively deployed as early as possible within a project, and involve the right expertise and support at the right time." The full report is available here. write your comments about the article :: © 2016 Construction News :: home page |