Consultant

Middle East dispute resolutions accelerated in 2019, reveals Arcadis report

After an almost 7-month increase in 2018, average duration of construction disputes in the Middle East decreased in 2019

Shawkat Abbas, Director of Claims and Contract Solutions, Arcadis

Average construction dispute value and time needed to resolve disputes in the Middle East continued to move in opposite directions according to the 10th edition of Arcadis’ Global Construction Disputes Report.

This time, however, the average dispute value increased while average resolution time decreased which reversed the movements seen in 2018.

The 2020 Global Construction Disputes Report is an annual study from Arcadis that examines the most common causes of disputes on construction projects, as well as the average duration and value of disputes, and the method of alternative dispute resolution (ADR) most commonly deployed.

The data used in this report was gathered prior to the COVID-19 pandemic, and how the industry collaboratively responds to the many challenges that flow from the pandemic will play a large role in the quantity, duration and value of construction disputes in 2020 and beyond.

“The fact that poorly drafted or incomplete and unsubstantiated claims is still the top cause of disputes in the Middle East is a reminder that claimants must focus more on producing well-written and fact-based claims that can be reviewed and assessed by the receiving party,” commented Shawkat Abbas, Director of Claims and Contract Solutions at Arcadis Middle East. “Considering the ongoing COVID-19 pandemic, it is a good sign that involved parties are realizing the need to resolve disputes fast as manifested in the shorter average resolution period in 2019 because having prolonged disputes during these times can easily compound the already negative effects of the pandemic. Hopefully, this trend will continue for the rest of 2020 and beyond.”

Disputes get resolved faster amid slight increase in value

Globally, the number of disputes in 2019 increased while average disputes value decreased. The Middle East, on the other hand, recoded a slight increase in average dispute value in 2019 to US$62 million from the US$57 million recorded in 2018. Despite this increase, the 2019 figure is still lower compared to the US$91 million average dispute value recorded two years ago.

The full 2020 Global Construction Disputes Report can be found here.

Fig 1 – Average value of construction disputes (2012-2019)

    Average value of dispute (US$ millions)
  2012 2013 2014 2015 2016 2017 2018 2019
Middle East 65 40.9 76.7 82 56 91 56.7 62
Global average 31.7 32.1 42.9 39.3 32.5 43.4 33.0 30.7

From a 9-year high of 20 months in 2018, resolution period in 2019 became much faster which averaged 17 months. The decrease was attributed to the involved parties’ inability to withstand long periods of uncertainty that have long-term impacts on projects.

Fig 2 – Average length of construction disputes (2012-2019)

  Average length of dispute (months)
2012 2013 2014 2015 2016 2017 2018 2019
Middle East 14.6 13.9 15.1 15.2 13.7 13.5 20 17
Global average 12.8 11.8 13.2 15.5 14.3 14.8 17 15

 

Open and consistent communication is still key to resolving disputes

The top two causes of disputes in 2019 remained the same from the previous year with poorly drafted or incomplete and unsubstantiated claims and a failure to properly administer the contract maintaining their ranking from 2018. Failure to make interim awards on extensions of time and compensation, a new common cause identified in 2019, ranked third.

Fig 3 – Most common causes of disputes on construction projects handled by Arcadis in 2019

Rank Most common dispute causes in 2019
1 Poorly drafted or incomplete and unsubstantiated claims
2 A failure to properly administer the contract
3 Failure to make interim awards on extensions of time and compensation

In terms of the most common alternative dispute resolution methods in the Middle East, the 2019 data mirrored the ranking identified in the previous year.

Fig 4 – Most common methods of alternative dispute resolution handled by Arcadis in 2019

Rank Most common methods of alternative dispute resolution in 2019
1 Party-to-party negotiation
2 Arbitration
3 Mediation

 

0 0 vote
Article Rating

Comments

Most Popular

To Top