The Middle East was the only region that saw its dispute values rise last year, according to a new report by Aracdis.
Global Construction Disputes: Don’t get left behind report is Arcadis’ sixth annual study into the duration, value, common causes, and methods of resolution of construction disputes across the globe.
The report found that construction disputes were the highest in the Middle East at $82mn, followed by Asia at $67mn.
However, in North America, the United Kingdom and Continental Europe, dispute values dipped to an average of $25mn.
Craig Beeson, Head of Contract Solutions, Middle East at Arcadis, said: “In an economic environment impacted by the oil price, the market continued to see a restriction in decision-making within the industry.
“This drove a lack of appropriate delegation to project management consultants and client representatives, thereby prolonging critical commercial decisions and generating cash flow issues related to instructed variations.”
Failure to properly administer the contract holds on to its top position regionally from last year as the main cause of construction disputes, followed by poorly drafted or incomplete and unsubstantiated claims.
The top three causes in 2015 were: Failure to properly administer the contract, Poorly drafted or incomplete and unsubstantiated claims, Incomplete design information or employer requirements (for D&B/D&C)
In the Middle East, where a JV is in place, the proportion of disputes caused by a JV-related issue dropped in 2015, moving down almost ten percent to 32.3%.