Average length of time needed to resolve a dispute fell by 10%, says Arcadis
Middle East construction disputes are on the rise, but are being resolved more quickly than before, according to the Arcadis ‘2017 Middle East Construction Disputes Report’.
The report said that ongoing liquidity issues due to lower oil prices in the region led to an increase in the volume of claims submitted.
But it found that disputes are now being resolved 10% quicker than in the previous two years, while the value of disputes has dropped from $82m in 2015 to $56m in 2016.
Failure to properly administer contracts was found to be the most common cause of construction disputes, while party-to-party negotiation was still found to be the preferred method of solving disputes across the region.
Rob Nelson-Williams, regional head of contract solutions, Arcadis Middle East said, “This trend towards swifter resolution is particularly welcome as it helps to improve liquidity across the wider supply chain. In a tight market, we’re seeing an increase in the number of claims submitted as contractors take a tougher approach to entitlements to help protect their cash flow position.”
The report indicated that poorly drafted, incomplete, and unsubstantiated claims were also causes for disputes. Arcadis said its findings pointed to a need ‘to get the basics right’, while the importance of experienced technical and commercial advice was called for, with regards to contract and claims strategy.
“Every year, we see the same basic issues repeatedly cropping up when we analyse the causes of disputes on construction projects. Within the industry, there’s a pressing need for better education on how to avoid these pitfalls. A sharper focus on removing ambiguity from within a contract at the very outset, and better training on how to prepare a robust and credible claim are two relatively simple steps that would make a significant difference,” added Nelson-Williams.
The 2017 Middle East Construction Disputes Report found disputes were found to be most common in the public sector and on social infrastructure projects, while a rise in claims was also noted on oil and gas projects.
The full report can be found here.