HIGHLAND RANCH, Colorado., June 17, 2021 / PRNewswire / – A report released today by Arcadis reveals a significant increase in the cost of construction disputes in 2020, while the time required to resolve disputes has decreased. The average value of litigation worldwide has increased from $ 30.7 million in 2019 at $ 54.26 million in 2020, while the duration of disputes increased from 15 months in 2019 to 13.4 months.
The data, presented in Arcadis’ 11e “Global Construction Disputes Report 2021: The road to early resolution” illustrates the ripple effects of the COVID-19 pandemic at scale of the sector. While trends in the value and length of litigation varied from region to region, all surveyed regions experienced an increase in “mega litigation” related to larger capital programs and private projects. . Notably, more than 60% of survey respondents have encountered project impacts due to COVID-19.
Owners, contractors or sub-contractors who do not understand and / or comply with their contractual obligations have become the leading cause of construction disputes in 2020, followed by owner-led changes and third party changes or of force majeure as the second and third main causes. , respectively.
Highlights of the report include:
- Good contract administration was a theme around the world for the successful and expeditious resolution of disputes.
- Most disputes were resolved through party-to-party negotiations, and the willingness to compromise played a key role in speedy resolution.
- Among the regions studied, the buildings sector (education, health, retail / commerce, government) experienced the most conflicts.
- In North America, the value of construction disputes rose from $ 18.8 million in 2019 at $ 37.9 million in 2020, while the duration of litigation fell from 17.6 to 14.2 months.
Although costs and duration have changed since 2019, risk management was still considered the most effective claims avoidance tactic, while owner / contractor willingness to compromise was again the most important factor. for the mitigation / early resolution of disputes.
“COVID-19 has irrevocably changed every industry,” said Roy Cooper, responsible for contractual solutions for Arcadis North America. “Experts in construction litigation will need to continue to adapt, even after the pandemic, as labor expectations, climate events and government infrastructure funding change the way projects are designed and contracted in the future. ”
The research presented in the report was compiled by Arcadis based on survey responses, global construction disputes the team addressed in 2020, and contributions from industry experts.
Arcadis is the world’s leading design and consultancy organization for natural and built assets. We maximize impact for our clients and the communities they serve by providing effective solutions through sustainable results, focus and scale, and digitization. We are more than 27,000 people, active in more than 70 countries and generating 3.3 billion euros in turnover. We support UN-Habitat with knowledge and expertise to improve the quality of life in rapidly growing cities around the world. www.arcadis.com