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Thu December 13 2018

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UK construction disputes: costly but quicker to settle

24 Jul A report by cost consultant Arcadis reveals that the average value of construction and engineering disputes in the UK was £26m in 2017.

Front cover of the report
Front cover of the report

This continues to represent the highest average level since Arcadis started producing its Global Construction Disputes Report in 2010.

It finds that UK construction disputes are now costlier on average than in North America and Europe.

In recent years, the UK construction industry has seen the average value of construction disputes change from being the lowest globally, to one of the costliest. While the average value of UK disputes in 2017 remained the same as 2016, at £26m, this compares to $19m in the US and £22m across the rest of Europe as a whole Europe.

Globally, the average value of construction disputes stood at £32.8m, up from £32.4m in 2016.

The report, entitled “Does the construction industry learn from its mistakes?”, provides insight into the causes, duration and value of construction disputes while highlighting the best ways to avoid, mitigate and resolve them. This year’s report focuses on human behaviours, highlighting the need to find new ways to avoid disputes at the onset.

Despite being one of the costliest markets, the time taken to resolve disputes in the UK fell in 2017, to an average of 10 months, reversing the trend of the previous two years where disputes took longer to resolve.

Compared to other jurisdictions, the UK has the shortest average time taken to resolve disputes, some 3.5 months quicker than the Middle East, which is ranked second. Globally, the length of time to resolve disputes stood at 15 months, a one month increase over 2016.

The highest value dispute handled by the Arcadis team in 2017 was worth £1.5bn.

Gary Kitt, head of UK contract solutions at Arcadis, said: “The primary causes of disputes are all matters that could be avoided by a more integrated and collaborative approach to project procurement. The fact that many of the leading causes of disputes remain the same as in previous years begs the question of whether construction professionals are learning from their mistakes when it comes to disputes. However, investment in technology represents an enormous opportunity to help the industry. If companies can thoroughly understand the root challenges of their disputes, technology can help them overcome the status-quo by co-creating the solutions and strategies to tackle elusive and recurrent problems.”

Download the full Arcadis Global Construction Disputes 2018 here.  Research is based on construction disputes handled by Arcadis in 2017 as well as contributions from others.

MPU

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