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1st June 2016

Construction disputes highest in Middle East: Arcadis

The Middle East saw its dispute value increase to nearly 7%, once more, to their highest value since 2011 and remains the only region with increasing dispute values compared to last year, according to the Global Construction Disputes: Don’t get left behind report released today by Arcadis.
This year’s report is Arcadis’ sixth annual study into the duration, value, common causes, and methods of resolution of construction disputes across the globe. The report found that construction disputes were the highest in the Middle East at US$ 82 million, followed by Asia at US$ 67 million. However, in North America, the United Kingdom and Continental Europe, dispute values dipped to an average of US$ 25 million.
Craig Beeson, Head of Contract Solutions, Middle East sat Arcadis, said: “In an economic environment impacted by the oil price, the market continued to see a restriction in decision-making within the industry. 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.”
Failure to properly administer the contract holds on to its top position regionally from last year as the main cause of construction disputes, followed by poorly drafted or incomplete and unsubstantiated claims. The top three causes in 2015 were:
1. Failure to properly administer the contract
2. Poorly drafted or incomplete and unsubstantiated claims
3. Incomplete design information or employer requirements (for D&B/D&C)
In the Middle East, where a JV is in place, the proportion of disputes caused by a JV-related issued dropped in 2015, moving down almost ten percent to 32.3%.
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