Covid blamed for record size of construction disputes

Contract disputes encountered by consultant Arcadis rose to the highest average value ever recorded since its survey began 11 years ago.

Around three-quarters of those surveyed blamed Covid-19 impacts for the rise and uncertainty around which party was liable for the time and cost risk arising from the pandemic.

But despite a spike in the value of disputes, the UK remains the fastest at resolving issues, doing this in just less than 10 months on average.

The majority of disputes are also getting resolved before formal proceedings.

This compared with over 14 months in North America and the rest of Europe, and nearly 16 months in the Middle East, supporting the growth of adjudication in the UK.

Gary Kitt, Head of UK Contract Solutions at Arcadis, said: “The most common cause of disputes in the UK was the parties failing to understand or comply with their contractual obligations. “

He added that this was followed by errors and/or omissions in the contract document and then the failure to make interim awards on extensions of time and compensation as the second and third-leading causes, respectively.  

Kitt said that third-party or force majeure events did not feature highly as it appeared claimants had been hesitant to rely upon force majeure provisions due to the legal uncertainty surrounding the effects of the pandemic.

But the report warned that Arcadis was aware that some organisations may be waiting for the waters to be tested through the UK legal system on Covid-19-caused project delays and cost increases.

“We strongly discourage this approach and hope it does not lead to an opening of the floodgates in litigious actions,” warned the report.

Click here for the 2021 Global Construction Disputes Report.

updated: 16/06/2021