Construction Disputes At All-Time High
DISPUTES on UK construction projects reached an all-time high in 2013 and were worth £16.5m, says new research from EC Harris.
Despite the rise in value of disputes, UK cases on average took five months less resolve at 7.9 months, down from 12.9 in 2012, and the value of disputes was less than the global average of £19.4m. The report found that construction dispute values were highest in Asia at £24.9m, followed by the Middle East at £24.3m. In the US, disputes values tripled to £20.3m and also rose in the UK to their highest value since the report started at £16.6m (US$27.9m).
The three most common methods of alternative dispute resolution used in the UK were: adjudication (contract or ad hoc); party to party negotiation; and arbitration.
Gary Kitt, UK head of contract solutions at EC Harris said: ‘The report reflects the scale of the increasing pressures on the construction industry of a reticence to invest in the skills and training required to implement and understand a clear procurement strategy.
‘With pressures to start and finish projects on time and on budget, we are also likely to see more pressures at the end of the project as disputes are lodged. By investing in time and resources at the outset, clients have the opportunity to reduce the spend on dispute resolution by as much as tenfold.’
Common causes of UK disputes:
1. Errors and/ or omissions in the contract document;
2. Failure to make interim awards on extensions of time and compensation;
3. Differing site conditions;
4. Incomplete design information or employer requirements (for D&B/D&C); and
5. Failure to properly administer the contract
Mr Kitt added: ‘Adjudication is preferred over costly litigation. As the market improves, more companies will look to go through the shorter adjudication route, leading to temporarily binding decisions that are rarely challenged in the courts.’
This article has been reproduced from the Contract Flooring Journal website. You can find them at www.contractflooringjournal.co.uk.