The aggregate sum disputed in construction claims on 1,185 projects worldwide is US$ 48.6 billion according to the CRUX insight report from HKA, an engineering and construction claims and dispute resolution firm.
HKA reports that design-related problems and changes in scope are among the top causes of claims. The firm analysed construction projects with a combined CAPEX of US$ 1.8 trillion. It found that sums in dispute totalled US$ 48.6 billion, and that on average claims reached nearly 56% of the projects’ planned capital cost. Total extensions of time claimed across all the projects amounted to 593 years.
In addition to design and changes in scope, the CRUX report highlights poor management of third parties, inadequate project management and poor contract drafting as major causes of disputes. On a more positive note CRUX reports there has been a reduction over prior years in the number of disputes caused by failures in the management or administration of contracts, and clashes over interpretation.
Simon Moon, HKA Chief Operating Officer, said the report’s findings are timely for the construction industry: “Now is the time to learn the lessons and re-set the industry by tackling the root causes with practicable measures that will result in more mature designs, robust schedules and effective governance of major projects.”
James Burgoyne, Director – Claims & Technical, Brunel Professions says that changes in scope and design of construction projects have always been challenging for the industry to manage. “This report highlights the shocking cost to the industry of failing to manage change effectively. Construction professionals should invest time and effort in managing change if they are to avoid costly disputes and claims.”
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