Out-Law.com | June 22, 2017
The value of construction disputes and the time taken to resolve them have both fallen over the past year, according to the annual Global Construction Disputes report from construction consultancy company Arcadis.
The global average value of disputes dropped by $42,800,000 while the time taken fell by one month, to 14 months, the report said.
Disputes in North America tend to last the longest, at an average of 15.6 months, the report said.
Asia took the top spot from the Middle East with the highest average construction dispute value at $84 million, it said, and the UK saw a double-digit increase in both average dispute value at US$34 million and dispute duration of 12 months.
The most common cause of disputes globally was ‘failure to properly administer the contract’. This has been the most common reason for four years running, Arcadis said. It is followed by ‘poorly drafted or incomplete/unsubstantiated claims’, and ’employer, contractor or subcontractor failing to understand and/or comply with contractual obligations’.
The social infrastructure and public sectors had the most disputes, Arcadis said.
When it comes to resolving disputes, party to party negotiation remains the most popular alternative dispute resolution method.
Construction law expert Fraser McMillan of Pinsent Masons, the law firm behind Out-Law.com, who contributed to the report, said: “The report highlights the most common cause of disputes. As construction contracts become increasingly complex, the allocation of risk and the administrative requirements of these contracts are not properly appreciated by those who have to operate them, at all levels of the supply chain. Something is being lost between the contract and the site. Parties in the process need to find a way ensure their people get the commercial understanding they need if disputes are to be avoided.”