Arcadis report: U.S. Construction Industry buoyed by reduced dispute time, costs

Highlands Ranch, Colo. — The 2016 Arcadis Global Construction Disputes report shows that while the cost and time involved solving construction disputes is rising in some parts of the world, the costs have decreased for the third year in a row in North America — the only global region where it’s also taking less time to resolve disputes.

“The North American industry has become more sophisticated in recent years, realizing what we have said for a long time – focusing on managing risk and early intervention will help reduce the number and cost of disputes,” said John Jastrem, CEO of Arcadis North America.

The construction disputes report provides insight into the main causes of disputes and how best to avoid, mitigate and resolve disputes quickly and cost effectively. Further, the report predicts that the decline in duration and value of construction disputes in North America will continue into 2016. These trends represent a positive signal for the U.S., reducing the financial drag on construction overall.

Global construction disputes – summary of results

Source: Arcadis Global Construction Disputes 2016.

The report explains that in the U.S., more participants are including provisions in construction contracts specifying a procedure to address disputed issues. The result is a growing number of disputes being dealt with early while fewer are growing into full-blown disputes involving consultants and counsel.

Notes Roy Cooper, vice president, Arcadis North America, “This trend is good news for the U.S. and Canada, but there is one downside. Even though more disputes are being settled early, the ones that remain grow into complicated, emotional affairs, with large damages at stake. These also take longer to resolve, since U.S. courts hate to try construction cases due to their large volumes of documents and greater complexity.”

The most common cause of disputes remains the failure to administer contracts properly, perennially the most common reason. A new cause in the rankings is related to incomplete design information, which is considered to be linked generally to the poor quality of design information and a proportionate increase globally in the use of design and build forms of contract.

In North America, Arcadis sees more disputes in the transportation, water and wastewater sectors. Globally, the property/building construction sector had the most disputes, closely followed by the social infrastructure/public sector, although the natural resources sector has some of the largest disputes.

The 2016 report, now in its sixth year, analyzes how global economic conditions are impacting the construction industry as well as construction disputes. This research was conducted by Arcadis’ Contract Solutions experts and is based on construction disputes handled by the teams during 2015.

Download a full copy of the Arcadis Global Construction Disputes 2016 report at https://www.arcadis.com/en/global/our-perspectives/2016/06/construction-disputes-hit-record-length-of-over-15-months.