ARCADIS found that construction disputes in the U.S. lasted, on average, 14.4 months in 2011, compared to 11.4 months in 2010. This was longest in the study, with the global average being 10.6 months. Disputes in the U.K. were resolved the quickest at 8.7 months.
Globally, the average value of construction disputes in 2011 fell to $32.2M from $35.1M in 2010. The highest value dispute handled by ARCADIS during 2011 was $350M on a project in the Middle East.
"The dramatic fall in the value of U.S. construction disputes was largely due to a generally depressed construction market," said Joe Seibold, executive vice president at ARCADIS U.S. "We also saw an increasing emphasis from both public and private sector owners to avoid and mitigate disputes through risk management and early, field level, resolution of disputes. Nevertheless, despite this drop, disputes are still costing the industry significant time and money."
The most common causes of disputes in global and U.S. construction projects during 2011 were:
- Ambiguities in the contract document
- Incomplete design information or employer requirements
- Conflicting party interests
- Failure to make interim awards on extensions of time and monetary relief
- A failure to properly administer the contract
When it came to dispute resolution, party-to-party negotiation was the most common method used in the U.S., followed by mediation and arbitration.
For more information, please contact Debra Havins of ARCADIS at 303-471-3485 or Debra.Havins@arcadis-us.com.