While the UK government dithers and delays over the precise shape and size of its infrastructure plans – we must take it on trust that it will eventually come up with some appropriate to a modern industrialised economy – the rest of the world’s major economies are getting on with developing their own. The scale of investment planned and under way across the world is immense, and the growth is accompanied by a growth in the size of projects.
That is good news for designers, contractors and material and product suppliers; it is also looking like being good news for lawyers, if trends revealed in the latest EC Harris Global Construction Disputes Survey continue (see news).
EC Harris finds that the average value of global disputes was little changed from 2011, but there were regional variations. In the UK, for example, construction disputes more than doubled to an average value of US$27 million. The Middle East remained the source of the largest disputes at an average of US$65 million but the highest value dispute handled by EC Harris during 2012 was for US$1 billion.
The report highlights the fact that joint ventures are also throwing up disputes, with about one in five of them ending in serious disagreements.
As there are more and more mega projects being undertaken, many being so large that only joint ventures have the balance sheet strength to give clients comfort, big disputes over big projects are sure to continue.
As well as getting bigger, disputes are taking longer to resolve. This is hardly surprising as the sums involved are so large and only the more complex disputes or those where opposing camps have firmly dug in their heels fail to be resolved by negotiation. Complex issues take more time to resolve.
EC Harris points out that the increasingly multi geography, mixed cultures involved in big projects and the need to consult often remote head offices can on their own prolong the time taken to resolve disputes.
UK disputes can often be attributed to parties being less collaborative than is seen in other markets, with clients prone to imposing changes and the unaligned interests of parties forcing them to adopt conflicting positions.
On the mega projects failure of parties to understand the contractual obligations that they have signed up to is increasingly common as a source of dispute. These failures often arise because of clumsy and over legalistic drafting of bespoke contracts.
EC Harris points the way to resolving some of these issues, recommending that standard contract forms with few amendments be more widely used. A lot of dispute resolution work would be swept aside at a stroke if this single piece of advice was taken. It is advice that has been handed out practically since standard forms were invented – it is a large part of the reason why they were invented. What are the chances that it will have been taken by many by the time of the 2013 survey’s publication?
Nick Barrett
Editor