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27/05/2014
Construction Disputes Rise To £16.5m
The cost of construction disputes in the UK rose to £16.5m ($27.9m) in 2013, according to a report by ARCADIS.
The company's figures show the average global cost of disputes relating to major global construction projects increased in value to about £19m ($32.1m) in 2013.
According to ARCADIS, this was $400,000 more than in 2012, when disputes were valued at £18.8m ($31.7m).
This year's 'Global Construction Disputes: Getting the Basics Right' is ARCADIS' fourth annual study into the duration, value, common causes and resolutions of construction disputes across the globe.
The report found that construction dispute values were the highest in Asia at £24.8m ($41.9m), closely followed by the Middle East at £24.2m ($40.9m). In the US, disputes values tripled to £20.3m ($34.3m).
Disputes took, on average, less time to resolve in 2013 at 11.8 months, down from 12.8 months in 2012. They took longest to resolve in the Middle East and US with 13.9 months and 13.7 months respectively. Disputes in Continental Europe tended to be resolved the quickest at 6.5 months.
Mike Allen, Global Head of Contract Solutions at ARCADIS said: "Today's major construction programmes are fast paced, complex and involve a multitude of supplier parties, so there are numerous points at which a dispute can occur.
"Many of these disputes are resolved out of the public eye but do often result in heavy costs and time overruns. Our research indicates the scale of this problem and highlights the need for better contract administration, more robust documentation and a proactive approach to risk management to help mitigate against the most common causes of dispute."
The research found that the most common causes of construction disputes related to the administration of contracts were:
• Failure to properly administer the contract
• Failure to understand and/ or comply with its contractual obligations
• Incomplete design information or employer requirements
• Failure to make interim awards on extensions of time and compensation
• Poorly drafted or incomplete and unsubstantiated claims.
(IT/JP)
The company's figures show the average global cost of disputes relating to major global construction projects increased in value to about £19m ($32.1m) in 2013.
According to ARCADIS, this was $400,000 more than in 2012, when disputes were valued at £18.8m ($31.7m).
This year's 'Global Construction Disputes: Getting the Basics Right' is ARCADIS' fourth annual study into the duration, value, common causes and resolutions of construction disputes across the globe.
The report found that construction dispute values were the highest in Asia at £24.8m ($41.9m), closely followed by the Middle East at £24.2m ($40.9m). In the US, disputes values tripled to £20.3m ($34.3m).
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Disputes took, on average, less time to resolve in 2013 at 11.8 months, down from 12.8 months in 2012. They took longest to resolve in the Middle East and US with 13.9 months and 13.7 months respectively. Disputes in Continental Europe tended to be resolved the quickest at 6.5 months.
Mike Allen, Global Head of Contract Solutions at ARCADIS said: "Today's major construction programmes are fast paced, complex and involve a multitude of supplier parties, so there are numerous points at which a dispute can occur.
"Many of these disputes are resolved out of the public eye but do often result in heavy costs and time overruns. Our research indicates the scale of this problem and highlights the need for better contract administration, more robust documentation and a proactive approach to risk management to help mitigate against the most common causes of dispute."
The research found that the most common causes of construction disputes related to the administration of contracts were:
• Failure to properly administer the contract
• Failure to understand and/ or comply with its contractual obligations
• Incomplete design information or employer requirements
• Failure to make interim awards on extensions of time and compensation
• Poorly drafted or incomplete and unsubstantiated claims.
(IT/JP)
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