A study, “Global Construction Disputes Report 2020: Collaborating to Achieve Project Excellence,” was recently released by US-based Arcadis, and reports that construction disputes in North America are increasing, both in quantity and dollar amount, but declining globally. The report also suggests that we’re likely to see a sharp rise in post-COVID disputes, especially in regards to timeframes and deadlines.
The report, which was released on June 3rd, does not cover the period of time during the national shutdown, so is only indicative of pre-pandemic disputes.
The highlights of the report were:
• All regions saw an increase in so-called “mega disputes” related to larger capital programs and private projects.
• Risk management is becoming more emphasized in construction companies, and is getting more investment into staff, infrastructure, and technology
• In the face of an uncertain economy, some regions are seeing significant growth and others are seeing major dips
• As is usual with this report’s history, human factors and misunderstanding of contractual obligations are the main cause of disputes.
The most common cause of disputes in North America was “contractor/subcontractor failing to understand and/or comply with its contractual obligation.” Globally, the most common cause was “poorly drafted or incomplete and unsubstantiated claims.”
In North America, the average value of construction disputes increased from $16.3 million in 2018 to $18.8 million in 2019. Globally, the average decreased from $33 million in 2018 to $30.7 million in 2019.
“It is very difficult to predict the true widespread impact of this global pandemic, but with construction projects shutting down in some areas of North America, we know projects will experience delays and disruption,” said Roy Cooper, head of contract solutions for Arcadis in North America.