Disputes becoming increasingly common in the industry

Time taken to reach resolution on the rise - 15.1 months

Failure to properly administer the contract the main reason behind disputes

Middle East, Sunday 5 July 2015: Disputes relating to major Middle East construction projects increased significantly in value to $76.7 million in 2014 according to ARCADIS, the global natural and built asset design and consultancy firm.

This represents the highest value increase in Middle East disputes since 2011, dipping by 31.8% from $112.5million in 2011 to $76.7million in 2014. The region saw a number of high value claims being initiated for projects undertaken in 2008 and 2009 due to money made available to pursue those claims.

This year's report, Global Construction Disputes: The Higher the Stakes, the Bigger the Risk, is ARCADIS' fifth annual study into the duration, value, common causes and methods of resolution of construction disputes across the globe. The report found that construction dispute values were the highest in Asia at $85.6 million where values more than doubled, closely followed by the Middle East at $76.7 million. However, in the North America and the UK, dispute values dipped to $29.6 million and $27 million respectively.

Meanwhile, the average time taken to resolve disputes in the region rose to 15.1 months, up by 8% from just under a year in 2013. Significantly, all areas of the world saw the resolution process take longer with the exception of Asia where the average dispute length took two months less.

Edward McCluskey, Head of Alternative Dispute Resolution - Middle East at ARCADIS, said: "The Middle East construction market is back in full swing and contractors and employers are seeing more liquidity in the market.  With this though those parties that parked their losses now have the funds to pursue those claims that were parked. We forecast that this trend shall continue into 2015 as more parties have the required liquidity to pursue those claims that were put on ice."

The research found that the most common causes of construction disputes in the Middle East related to the administration of contracts. The top three causes in 2014 were:

1. Failure to properly administer the contract

2. Poorly drafted or incomplete and unsubstantiated claims

3. A biased PM or Engineer

The transportation sector saw the most disputes arise in 2014, followed by social infrastructure and real estate.

The likelihood of a joint venture (JV) ending in dispute was also reviewed in the report. ARCADIS found that where a Middle East JV was in place, almost half were driven by a JV-related difference for the second year running as the highest of any region covered in the report.

McCluskey continued: "Joint ventures are becoming more commonplace as developers opt to divest risk across major programs and blend specialist skills in the supply chain into one contract. However, this approach comes with many potential risks attached. Joint ventures can be typically described as a compromise agreement and our research shows that almost a third enters dispute proceedings."

The full report can be downloaded from here

ARCADIS' Contract Solutions team helps clients avoid, mitigate and resolve disputes. The 160 strong team is based around the globe and encompasses one of the industry's largest pool of procurement, contract, risk management and also quantum, delay, project management, engineering defects and building surveying experts. The team provides procurement, contract and dispute avoidance and management strategies, management expertise as well as dispute resolution and expert witness services. This is delivered through a blend of technical expertise, commercialism, sector insight and the use of live project data, combined with a multi-disciplined and professional focus.

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For further press information, please contact:
Julie Nguyen
PR and Communications Manager at ARCADIS
+971 (0)56 188 2465
Julie.nguyen@arcadis.com

This research was conducted by the ARCADIS Contract Solutions experts and is based on construction disputes handled by the teams during 2014.



About ARCADIS:
ARCADIS is the leading global natural and built asset design & consultancy firm working in partnership with our clients to deliver exceptional and sustainable outcomes through the application of design, consultancy, engineering, project and management services. ARCADIS differentiates through its talented and passionate people and its unique combination of capabilities covering the whole asset life cycle, its deep market sector insights and its ability to integrate health & safety and sustainability into the design and delivery of solutions across the globe. We are 28,000 people that generate more than €3 billion in revenues. We support UN-Habitat with knowledge and expertise to improve the quality of life in rapidly growing cities around the world. Please visit: www.arcadis.com  

© Press Release 2015