Ongoing liquidity issues within the Middle East construction market has resulted in a steady flow of claims being submitted as contractors take a tougher approach to entitlements, according to new research from Arcadis.
Its 2018 Global Construction Disputes Report found that while the average value of dispute rose during 2017 the regional industry continues to make progress in resolving them more swiftly.
The annual study from Arcadis examines the most common causes of dispute on construction projects, as well as the average duration and value of disputes, and the method of dispute resolution most commonly deployed.
Over the last year, the average length of time needed to resolve a dispute in the Middle East fell to 13.5 months from more than 15 months two years ago.
This trend towards swifter resolution was also observed last year, and reflects the industry’s focus on trying to improve liquidity across the wider supply chain, Arcadis said.
On a less positive note, the average value of disputes increased over the last year, rising to $91 million from $56 million in the previous year, due to a small number of high-value disputes and a flow of ‘mid value’ final account claims, the report showed.
This compared to a global average of just $46 million. The report said that failure to make interim awards on extensions of time and compensation emerged as the most common cause of disputes on construction projects in the Middle East.
Rob Nelson-Williams, regional head of contract solutions, Arcadis Middle East said: “In analysing the causes of disputes on construction projects in the Middle East, we continue to see a lot of the same issues crop up. This underlines the need to get the basics right, and the importance of seasoned technical and commercial advice when it comes to contract or claims strategy.
“Over the next 12 to 18 months, major regional construction related events loom ever closer. As pressure increases to meet fixed deadlines, the need to make smart decisions around contract and procurement strategies will be even more important.
“Embracing lessons from the past is key to reducing the risk of disputes, but also in helping the industry move towards a more harmonious and less confrontational contracting environment for all parties,” he added.
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