The research found that the Middle East and North America had both seen an increase in the number of disputes during 2010 when compared to 2009 with Europe the only region to see a fall in disputes.
EC Harris found that disputes were lasting, on average, 9.1 months from beginning to resolution. Disputes in Asia, however, were lasting longest at 11.4 months, with the shortest in the UK at 6.75 months. Overall, the average value of disputes handled by EC Harris was US$35.1m in 2010, with the highest average value being in Asia (US$64.5m) followed by the Middle East (US$56.25m). The highest value dispute handled by EC Harris during the course of 2010 was for US$200m in Asia, albeit EC Harris did work on a major dispute in the Middle East where the disputed value was higher but undisclosed.
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The research, compiled by EC Harris's Contract Solutions team, found that a failure to properly administer the contract was the most common cause of construction dispute in 2010, demonstrating poor governance during the course of the construction project.
Mike Allen, Global Head of Contract Solutions at EC Harris said: "Resolving these disputes represents an extremely expensive, time consuming and often unnecessary distraction for clients and contractors alike. In an age of ever slimmer margins, the industry needs to focus far more attention on anticipating and preventing complex disputes in the first place and where disputes have already arisen, to resolving them swiftly and effectively, before they disrupt - or even jeopardise – construction projects."
Where a Joint Venture was in place to deliver a construction project, EC Harris found that nearly a third (31%) of these JVs had disputes within the JV itself. The conduct of the Project Manager or Engineer was also found to be at fault, with their conduct being at the heart of the dispute on more than half (53%) of occasions. In these cases EC Harris found that a lack of understanding of contract procedure by the Project Manager or Engineer was the most common reason for the dispute, followed by being too partial to the employer's interests.
When resolving their clients' disputes, EC Harris also tracked the most common means of dispute resolution. Overall, arbitration was the most popular method, followed by party-to-party negotiation and contract or ad hoc adjudication.
(CD)
