Mega disputes’ dominated pandemic year of 2020, Arcadis finds

The average value of construction disputes across the world jumped 76% to $54.3m during Covid-dominated 2020, a report by Arcadis shows, with the Middle East remaining the world’s most disputatious region. The average value of disputes in 2019 was $30.7m.

The overall volume of disputes stayed relatively constant year on year, but all regions surveyed saw an increase in "mega disputes" related to large capital programmes. The highest value dispute handled by Arcadis was worth $4bn.

The average value of construction disputes in the Middle East was $86m in 2020, a 38% increase from 2019. The number of reported disputes increased as well.

The UK saw the average construction dispute value rise to £27.7m, an increase of 117% from 2019. Despite the rise, the UK continues to lead the world in resolving disputes in a timely manner, with the average length of time taken to resolve disputes remaining constant with the previous year at fewer than 10 months.

More than 75% of survey respondents in the UK encountered project impacts due to the pandemic.

The top cause of disputes globally was owners, contractors, or subcontractors failing to understand or comply with their contractual obligations, a jump from number three cause in 2019.

Owner-directed changes was cause number two in 2020, and third-party or force majeure events was cause number three, globally.

In the Middle East, Arcadis commented that dropping the habit of heavily amending standard forms of contract would improve cash flow in the construction supply chain. It said sticking to standard forms like FIDIC or NEC might make it easier for parties to understand and comply with their contractual obligations.

In all regions, the construction of buildings, whether for education, healthcare, commercial, or government, saw the most disputes.

The full 2021 Global Construction Disputes Report can be found here. 

Image: Riyadh, Saudi Arabia. The Middle East remained the world’s most disputatious region in 2020 (ekrem osmanoglu/Unsplash)

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