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Fri July 19 2019

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North American construction becomes friendlier

28 Jun The cost and length of North American construction disputes decreased in 2018 according to a new report by Arcadis, though globally issues are taking longer to resolve.

It is the fifth successive year in which the value of disputes has dropped in North America.

The company’s ninth annual report on the topic discusses the causes, duration and value of construction disputes, highlighting best practices for avoidance, mitigation and resolution.

Global Construction Disputes Report 2019: Laying the Foundation for Success says that the construction industry is reaping the benefits of proactive dispute avoidance, mitigation and resolution techniques. The research is based on construction disputes handled by Arcadis in 2018, with contributions from industry experts.

The average value of North American disputes decreased from US$19m in 2017 to US$16.3m in 2018. Globally, the figure dropped from US$43.4m in 2017 to US$33m in 2018.

The average time taken to resolve disputes in North America decreased from 17.7 months in 2017 to 15.2 months in 2018. Globally, the average increased from 14.8 months in 2017 to 17 months in 2018

Positive economic drivers and anticipation of larger and more complex projects create a critical need to embrace more sophisticated risk management and claims avoidance techniques, including leveraging digitalisation, says Arcadis.

Human factors and misunderstanding of contractual obligations continue to be primary causes of disputes, the report found. The most common cause for disputes in North America was “errors and/or omissions in the contract documentation”. Globally, it was “owner/contractor/subcontractor failing to understand and/or comply with its contractual obligations”.

“With mega-projects continuing to expand around the globe, contracts, plans and projects themselves will be more complex, and more parties will be involved in the construction process,” said Roy Cooper, head of contract solutions for Arcadis North America. “With more project participants, it is essential for those involved to understand the contract, their role in the project and how to work with the team.”

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