The way I see it, this year the commentary by Arcadis is more interesting than most of the statistical survey results in the company's Global Construction Disputes 2014 report. Especially for what the report says about disputes that plague U.S. joint ventures.
Now in its fourth year, the report shows that in 2013 failure to properly administer the contract was the number one dispute cause, up from a 2012 rank of 3. The dispute values and length of dispute in months don’t provide many surprises, as far as I can see.
Claims are by their nature unpredictable, Arcadis notes. But that random aspect also means the year-to-year fluctuations in causes and values and duration of disputes isn't very significant.
What stands out to me is one statistic about disputes plaguing joint ventures and Arcadis' commentary about it.
Just over a third of all U.S. joint ventures result in disputes involving either the owner or the joint venture, 36%. That’s a number I consider interesting because it speaks to a problem that may not be very well recognized yet.
Arcadis writes that the "increased use of alternative project delivery approaches such as design-build, combined with the frequent involvement of joint ventures as the delivery entity, means that there is a high probability of a dispute either with the owner or within the joint venture team itself,” writes Arcadis.
But that number, 36%, seems very high and should prompt questions about how design-build joint ventures perform in general for all involved.
Arcadis also notes the new phenomena of "mega disputes." The company says it is now involved in three conflicts that belong to that category and have ”a disputed sum in excess of U.S. $1 billion." One is the Panama Canal expansion project.
In a part of the report about Asia, Arcadis says correct payment is a big problem in that part of the world, the result of poor contract administration by all parties.
And across Asia, Arcadis writes, the contracting forms are shaped by custom and practice more than commercial sense with a “daunting spectrum of ad-hoc, bespoke, amended standard contract forms.”
In addition, “The driving force for any tender process, regardless of “scenery” purporting to award based on capability, is still lowest price.”
As the report’s title suggests, getting the basics right is important.
