Construction disputes in UK projects are increasingly triggered by lack of design information, and lack of clarity in the contract over who is responsible for coordinating the input of subconsultants and subcontractors.
Design management failures emerged as the third most common underlying reason for disputes in the UK a survey published this week by EC Harris and parent company Arcadis.
The two most likely reasons for disputes to emerge were parties failing to understand or comply with contractual obligations, and the client or project manager’s failure to properly administer the contract.
In its annual survey of disputes handled by its 160-strong team of contract solutions staff around the world, EC Harris and has also found that the average value of disputes it worked on in the UK – which can combine the value of the original claim plus counter claims and satellite litigation – was now £16.5m, compared to £16m at 2012.
EC Harris also suggests that improving economic conditions have encouraged more contractors to try their hand at litigation and adjudication. Gary Kitt FCIOB, partner and head of contract solutions, said: “We’ve certainly seen – and I don’t think it’s just us – an increase in work coming in and finding we’re busier and busier. More parties are more willing to speculate a bit of money.”
On design management problems, he said: “Often it’s not about legal issues, it’s because no one is coordinating the design between the architect and the engineer. Often it is the responsibility of the design team, but they try to put it on to the contractor. We find it a lot with M&E works – the design team will generally try to put it all on to the contractor, and then pushed down to the sub-contractors, but no one is making sure the obligations are transferred within the contract.”
He added that problems were more likely in traditionally procured projects than in design and build: “You often see it [incomplete design] in the traditional contracts, that manifests itself in the fact that Bills of Quantities are awry, so the contract price goes up and the contractor is often entitled to that money.”
Kitt said that client’s response to a successful contractor claim would often be to launch secondary litigation against the design team.
He added: “People use the same documents they had for the last job, and try to adjust them. The money to make sure all the design information and contract information is in place upfront just isn’t in anyone’s budget.”
On failures to understand or comply with the contract, he said that many clients are still entering into NEC contracts then acting as if they were in a traditional JCT scenario.
The EC Harris/Arcadis survey also found that adjudications in the UK were being resolved slightly faster, with an average duration of 7.9 months in 2013 compared to 12.9 month in 2012. But Kitt also said suggested that the number of referrals to adjudication had been rising recently.
