US vs Canada: Which Country Is Riskier for Construction?
Though somewhat similar at first glance, U.S. and Canadian construction projects differ in how disputes stack up.
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Is there less construction risk on one side of the U.S.-Canada border than on the other?
Within the recently issued CRUX report—consultant HKA's annual analysis of risk in different parts of the world—is a section that compares what happens in the U.S. and Canada. Around the world, scope changes, design deficiencies and contractual differences are typically the leading causes of disputes, HKA reports.
HKA's analysis of all of the Americas covered 581 projects in 19 countries, most in North America, with an average cost of $693 million. The disputed costs, HKA writes, typically reached almost a third of that average value, while extra time sought by contractors prolonged schedules by more than half of their planned duration.
Canadian projects, it turns out, suffered more design problems, HKA reports. About 42% of the projects reviewed had what HKA calls a "design-centric failure," which could be incomplete, incorrect or late issuing of design information.
By comparison, only about 36% of U.S. projects in HKA's analysis had that same kind of problem.
Among transportation projects that had design problems, the divergence between the U.S. and Canada widened beyond 10%, it said.
Late or Restricted Site Access
In the case of late or restricted access to sites—a separate source of claims and disputes tracked by HKA—those were "almost twice as common north of the border," the report states. Canadian project disputes had site-access issues on 24.5% of those studied, while U.S. project troubles only had site-access issues on 12.8%.
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Disputed costs tend to be lower in Canada, and the additional time to complete projects is less than in the U.S., HKA wrote.
"Cultural differences may be in play, along with a more contractor-driven environment in the U.S., and a less litigious one in Canada," the report noted. "Adjudication has become a statutory remedy in several provinces, and there also is a greater tendency to settle promptly."
