The length and dollars at stake in construction disputes vary by region, but the number involving megaprojects has ticked upward recently. For a decade, the character of industry disputes has remained steadfastly consistent, most often erupting from differences over contractual obligations and contract administration.
A common thread, according to the annual Arcadis’ Global Construction Disputes Report, “is that bad relationships doom construction projects much more often than bad soil, bad weather, bad equipment or a bad design.”
A key to successful resolutions, the report adds, includes “a willingness to compromise, set emotions aside and concentrate on what makes good business sense.”
The report is based on global construction disputes that Arcadis, the Dutch design giant and disputes consultant, worked on in 2019. It also includes input from from industry experts. Asia and South America are not included due to limited responses in the past.
Numerous other industry voices, included with report statistics, offered their own interpretation.
Survey respondents identified a willingness to compromise as the most important factor in the early resolution of disputes, wrote Sally Davies, managing partner of attorney Mayer Brown International LLP.
Parties may wish to avoid arbitration or litigation in favor of the certainty afforded by a negotiated settlement, added Joachim Knoll, a partner in dispute consultant LALIVE, with or without the help of a mediator or a dispute board.
Negotiated settlements are a mechanism being used with more success on major continental European construction projects. Among them are the CERN Dispute Board, used for construction of the CERN Large Hadron Collider near Geneva, Switzerland, and the Gotthard Tunnel Dispute Board for the Gotthard Base Tunnel in the Swiss Alps.
Connecticut Shifts Specification Types
A key official in the Connecticut Dept. of Transportation, James P. Connery, also cited the failure of contractors or subcontractors to understand or comply with contract obligations.
As a result, Connery—transportation division chief in the ConnDOT engineering bureau—wrote that the agency has been moving away from “method” specifications toward “performance-related” specifications and has revised numerous specifications to clearly shift the quality-control responsibilities to the contractor.
A possible positive development, says Roy Cooper, Arcadis’ head of North America contract solutions, is that owners require more formal dispute resolution processes that lead to successful outcomes “while extending the duration of time it takes to resolve.”