Design and consultancy firm Arcadis releases its 2018 Global Construction Disputes Report and asked, “Does the construction industry learn from its mistakes?” The report, later summarized by Construction Dive, found that construction and contract disputes are getting longer and more complex across the globe, costing upwards of $40M annually, and taking close to 15 months to resolve.
Contract Dispute Statistics
Arcadis defined disputes as a, “situation where two parties typically differ in the assertion of a contractual right.” These disputes are getting more expensive and lengthy:
- The average value of a North American dispute dropped to $19M, from $25M and $21M in 2015 and 2016, respectively.
- However, the global average skyrocketed from $32.5M in 2016 to $43.4M in 2017.
- The average length of a North American dispute increased to 17.7 months from 15.6 months in 2016. The global average is only 14.8 months.
What’s Causing Contract Disputes?
We know that the volume of contract disputes isn’t actually increasing, but the value and length of them are – this shows the trend of larger and more complex disputes than in previous years. So, what’s causing these disputes?
- Poor contract administration, including contract errors and omissions were the top dispute cause.
- The failure to complete claims is the second dispute cause, along with poorly drafted or unsubstantiated claims.
- The failure of the owner, contractor, or subcontractor to understand or comply with contractual obligations is the third top dispute cause.
A Solution for Contract Disputes: Digitalization in Construction
Arcadis reports that, “The construction sector remains one of the least digitalized industries… but, digitalization presents an opportunity to help improve productivity levels in the industry.” They also stated that one of the ways U.S. construction disputes can be resolved or avoided is by utilizing more sophisticated claims avoidance techniques. Construction risk mitigation software like DrawAlert can help get you on the right track with construction best practices, as well as help to strengthen the relationships between all project participants to improve success.
DrawAlert was conceived with the notion that the construction industry is ready for a change within the digital sphere. With the help of DrawAlert – a cloud-based software with top-to-bottom transparency – you can boost the productivity levels in the construction industry and proactively avoid contract disputes, saving time, reducing costs, and improving the results on every one of your projects. Request a 20-minute DrawAlert Demo today to learn more about our construction administration and risk mitigation solution.