Construction disputes can take many forms. Primarily, disagreements occur due to a lack of understanding of a contract or an outright violation of the written agreement. Delays are often an issue that is contested. Resolution can come through arbitration or litigation.
In 2019, construction disputes in North America increased in both the number of cases and the monetary value of the projects. The study released by Arcadis also revealed that resolving complex issues took longer as well. Overall, the findings from the Global Construction Disputes Report 2020: Collaborating to Achieve Project Excellence noted the first uptick in disputes since 2013.
Disputes Dominated Domestically
The most common dispute in North America involved an overall lack of understanding or failure to comply with the document’s obligations by a contractor or subcontractor. Poorly drafted claims or those that are considered incomplete or unsubstantiated also dominated legal issues on not only a national, but also a global level.
Significant disputes in larger capital programs and private projects were at the top. In North America, the average project value where disputes arose was nearly $19 million, an increase from $16.3 million in 2018. On a global level, numbers went down from $33 million to $30.7 million.
Dispute resolution timelines in North America were also higher by an average of 17.6 months this year, yet another increase from 2018 where agreements were reached in 15 months. On a global scale, reductions were down two months from 17 in 2018 to 15 this year.
The coronavirus pandemic has affected businesses in practically all industries worldwide. This year brought uncertainty, something that is unlikely to change in the coming year. Industry professionals predict significant and unprecedented changes in 2021. That potentially quantum shift will further necessitate a more proactive approach, with both sides being flexible when it comes to alternative forms of dispute resolution.