Construction disputes around most of the globe took longer to settle in 2012 than the year before, according to a new survey.
The Middle East topped the chart in terms of both the length of disputes and the values involved.
The average time needed in 2012 to settle construction disputes increased by 20%, or about 60 days, to 12.8 months.
The money at stake in the disputes declined slightly, to $31.7 million.
The data came from the newest Global Construction Disputes Report published by EC Harris, a U.K.-based built asset consultant and a unit of ARCADIS NV.
Harris’ study measures trends in global construction contract disputes with data from cases resolved in 2012 by the firm, a unit of ARCADIS NV.
No data exists for South America.
“Small disputes are taking twice as long, and large disputes are taking 30% more,” says Michael Katz, an attorney with The Coleman Law Firm, Chicago. It focuses on litigation involving engineering and construction companies.
One of the reasons for the prolonged process derives from the complex nature of the work, says Katz.
“Projects are increasing in complexity and so the issues that are material to the dispute can be equally as complex, and therefore need appropriate time to consider the issues,” says the report.
Unsubstantiated Claims
The top cause for disputes last year was incomplete and/or unsubstantiated claims.
The trend in dispute causes fluctuates greatly year over year, and is very complex to generalize, notes Joe Seibold, executive vice president at ARCADIS U.Ss, a branch of EC Harris’ parent company ARCADIS Group. “It is almost impossible to predict or say with certain what the absolute single cause of a claim is,” says Seibold, “Every project is different.”
Disparities among different cultures and regions also add more time into negotiations. The report says that this is often because of the complexity and multi-geography and mixed cultures and the need for both contractors and clients to consult and engage with head offices.
The Middle East stands out for being the region that saw the longest and most costly construction disputes in the areas covered by the survey. Average disputes took 14.6 months to resolve, and carried an average value of $65 million, two thirds more than the second most-costly region, Asia, which had a value $39.7 million, according to the report.
The Middle East is one of the most complicated areas in the world in terms of disputes, “because we bring to the region a wide range of different nationalities, cultures, procedures, laws, customs,” says David Dale, head of contract solutions in the Middle East and Africa regions for EC Harris. “It’s problematic.”
