The UK findings from the annual global survey of construction disputes by Arcadis has found that the value of UK claims has nudged down, while the time taken to resolve them has increased.
The survey shows that UK disputes typically took 10 months to resolve in 2014, up from 7.9 months in 2013. Meanwhile, their average value dipped from £17.8m to £17.2m.
But that was counter to the global trend, with the average value for disputes handled by the Arcadis contract solutions team internationally rising sharply to £32m, up from £21m in 2013.
The firm now predicts that 2015 will see a further increase in disputes, when low margins sagreed during the economic downturn and labour shortages in some markets provide a catalyst for disputes.
Global Construction Disputes: The Higher the Stakes, the Bigger the Risk, is Arcadis’ fifth annual study into the duration, value, common causes and methods of resolution of construction disputes across the globe.
The research found that the most common causes of construction disputes related to the administration of contracts, with the top three causes in 2014 being failure to properly administer the contract; poorly drafted or incomplete and unsubstantiated claims; errors and/or omissions in the contract document.
Gary Kitt, head of contract solutions at Arcadis, said: “[Dispute] values relate to the projects worked on by our teams, and that’s been fairly stable. But in terms of the length of the dispute, they’re taking a bit longer.
“Often it’s down to poorly drafted and incomplete claims – it could be companies are saving on costs by compiling claims in house or using smaller claims consultancy services, and it’s so difficult to understand you can’t fathom out what the dispute is about!”
Kitt added that Arcadis had seen a wave of disputes linked to payment notices under the Construction Act. “If people took their payment obligations properly, a whole raft of disputes would die away,” he said.
“With the recession of 2008-13, employers and contractors ended up with their key people spread too thinly – then the contract doesn’t get administered properly. It’s about the back to basics of adminstering the contract.”
Kitt also commented that there appeared to be increasing frustrations with adjudication as a method of dispute resolution. “We’re seeing concern about the quality of adjudicators, and the unpredictability of the result. There are adjudicator decisions where lawyers are finding it hard to advise on.
“Many adjudicators are well into their 70s and it’s perhaps 15 or 20 years since they were in operational role so some are perhaps getting out of touch – the younger generation aren’t sufficiently well represented and times do change,” he said.
The likelihood of a joint venture ending in dispute was also reviewed in the report. Arcadis found that, where a joint venture was in place, almost a third of disputes (31%) were driven by a joint venture related difference. This represents a slight dip from 2013 where instances of a JV dispute were marginally more commonplace.
Arcadis’ 160-strong Contract Solutions team helps clients avoid, mitigate and resolve disputes. It offers advice on procurement, contract, risk management and also quantum, delay, project management, engineering defects and building surveying experts.
