The average value of UK construction disputes hit £6.5m in 2011, up from £4.8m in 2010, while the average time taken to resolve disputes stretched to 8.7 months from 6.75 months, research by EC Harris reveals.
The Global Construction Disputes 2012: Moving in the Right Direction report found that, despite the push for collaborative working, UK disputes are becoming increasingly expensive and complicated, mainly due to failures to administer contracts properly.
The report found that most contract failures in the UK stemmed from clients spending too little on technical and legal advice needed to deliver jobs during procurement, which had lead to administrators trying to operate inappropriate contracts.
A reluctance to go to adjudication had also created longer disputes, said Gary Kitt, Head of Contract Solutions in the UK at EC Harris: “The length of time for resolution of disputes in the UK has increased due to parties’ reluctance to refer disputes to adjudication quite as readily as in past years.
“This would appear to be as a result of the inconsistent results obtained in adjudication proceedings. In addition, once matters are referred to adjudication these proceedings regularly exceed the statutory period of 28 days for a decision,” he said.
The report argued that too many projects were shaped around contracts, rather than the reverse, and clients’ enthusiasm for contracts such as NEC3 meant they were adopted without adequate budgeting for the associated extra administration support.
Construction dispute specialist William Gard, a partner with law firm Burges Salmon, told Construction News: “There is a lack of appreciation of the level of project management needed to operate an NEC contract …It is a good way to pro-actively manage a contract but it only works when both parties do that, otherwise it makes things worse.”
Project managers were also to blame, because they either had insufficient understanding of the procedural aspects of the contract or were deemed too partial to the employer’s interests, the report said.
