Construction Dispute Resolution Outlook

The value of UK construction disputes has fallen significantly below the global average, according to design and consultancy Arcadis report. Yet despite falling values, disputes are taking longer to resolve.

The annual Arcadis Global Construction Dispute Report reveals key themes and provides insights into the global construction disputes market.

It highlights the average value of disputes in the UK has fallen 47% to $17.9m; well below the global average and a significant decrease on average values over the last six years. The report identifies the UK as being the jurisdiction with the shortest average length of time to solve a dispute – just 12.8 months. However, this is up approximately 28% on last year and consistent with the global trend, whereby disputes are taking longer on average to resolve.

What is the root problem for these disputes?

The number one cause of disputes for the fourth year running in the UK continues to be a failure to properly administer the contract. Unsurprisingly, almost two-thirds of respondents stated that proper contract administration would have had the single largest impact in avoiding the disputes they were involved in.

Equally, while it is encouraging that the most common period for resolution is settlement prior to proceedings, most disputes in the UK are still being resolved after they have crystallised, rather than parties seeking to avoid or mitigate potential dispute situations as they arise. While it is promising that the most popular method of resolving these disputes is through party-to-party negotiation, this is still typically occurring at a stage in the dispute cycle when the most effort, cost and time are required.

How to avoid disputes?

As the industry seeks to better understand and address the impact of human factors in disputes, the aspiration is that early dispute resolution techniques – such as dispute avoidance – will become increasingly common. The construction industry is learning the value of engaging in proactive dispute avoidance, mitigation and resolution techniques. However, success typically depends on taking a multi-dimensional approach to potential issues.

• The number one factor that could have the biggest impact in avoiding disputes was identified as “a willingness to compromise in the dispute”.
• The first step in seeking to avoid any disputes should be to embed a conscious decision-making process into any project, focusing on client objectives, project constraints and the contractual framework in a way that addresses risk from the outset. Better training for everyone involved in administering contracts can go a long way towards avoiding disputes as they arise, along with a robust set of contract terms and effective progress reporting and monitoring procedures.
• If a dispute should arise at any point, it should be addressed immediately in order to help mitigate the impact. This is where effective and proportionate investigation processes come into play, identifying key issues and – crucially – possible recovery measures.
• If a dispute results in formal proceedings, adjudication and mediation top the list of possible resolution methods in the UK, alongside negotiation, in which case expert advice should be sought at an early stage to assess the merits.

At Cavendish Professionals are always recruiting for experienced dispute resolution professionals, get in touch and speak to our team to see how we can help you with your next career step, alternatively your next recruitment placement.