The value of disputes relating to major UK construction projects has fallen from £19M in 2014, to £17M in 2015, according to a new report by consultant Arcadis.
Arcadis said that it was the second consecutive year in which the UK had registered a fall. It also stated in the report that the time taken to resolve disputes in the UK was just 10.7 months which was the shortest globally.
The Global construction disputes: don’t get left behind report is Arcadis’ sixth annual study into the duration, value, common causes, and methods of resolution of construction disputes across the globe.
The consultant said that the report found that failure to properly administer contracts or comply with their obligations remained the most common cause of dispute in the UK. However, where a joint venture was in place, related issues were the root cause in just 12.5% of cases in the region; half that of 2014.
It attributed the fall to judicial pressure to limit costs, combined with the commercial pressure on construction executives to minimise the cost of disputes. This, it said, meant that mediation and party-to-party negotiation was increasingly becoming the preferred method of resolution. It added that effective dispute avoidance mechanisms needed to be actively deployed as early as possible within a project, and involve the right expertise and support at the right time. The company said it expected the focus on mediation to be a trend that would continue to gain traction in future.
“In the UK we have seen a number of disputes, particularly adjudications, brought about by the failure of the paying party to administer the payment provisions within its contract correctly,” said Arcadis partner Gary Kitt. “This, in turn, has led to a number of enforcement cases reaching the Technology and Construction Court.”
The bigger picture
The property/real estate sector had the most disputes globally, closely followed by projects related to social infrastructure and the public sector. The natural resources sector has some of the largest disputes, the report said.
According to the findings, the top five causes of global disputes in 2015 were:
- Failure to properly administer the contract
- Poorly drafted or incomplete and unsubstantiated claims
- Errors and/or omissions in the contract document
- Incomplete design information or employer requirements (for design and build (D&B) / design and construct (D&C))
- Employer/contractor/subcontractor failing to understand and/or comply with its contractual obligations.