Dubai: The Middle East’s construction sector was locked in disputes collectively valued at $82 million during 2015 — more than any other region in the world. Asia was a distant second with $67 million, while it actually dropped to an average of $25 million in North America, the UK and Continental Europe, according to findings from Arcadis, the consultancy.
The global average was $46 million for 2015.
For regional contractors and their clients, the uptick in disputes is bad news. It is also the highest tally since 2011, when a whopping $112.5 million worth of contracts ended up in legal issues. Also, tellingly, the disputes are stretching over an average of 15.2 months. (The global median during the same period was 15.5 months.) For contractors in joint ventures, there were better tidings. “In the Middle East, where a JV is in place, the proportion of disputes caused by a JV-related issue dropped in 2015, moving down almost 10 per cent to 32.3 per cent,” said the Arcadis report.
“In an economic environment impacted by the oil price, the market continued to see a restriction in decision-making within the industry,” said Craig Beeson, Head of Contract Solutions, Middle East at Arcadis. “This drove a lack of appropriate delegation to project management consultants and client representatives, thereby prolonging critical commercial decisions and generating cash flow issues related to instructed variations.”
The top three causes leading to disputes in 2015 were:
* Failure to properly administer the contract.
* Poorly drafted or incomplete and unsubstantiated claims.
* Incomplete design information or employer requirements.
