The UK construction market comes out comparatively well on some scores in the latest EC Harris Global Construction Disputes report (see News), which suggests that whereas the global average value of sums involved in construction disputes has fallen over the year since the last report, disputes are taking longer to resolve. In the UK the average amount disputed has risen, as has the time taken to achieve resolutions, but the UK is still the speediest jurisdiction in which to conduct negotiations.
The United States took the longest to resolve disputes at an average of 14.4 months, confirming anecdotal and other evidence that the US is a highly litigious market in which to operate. UK disputes lasted 8.7 months on average, compared to 6.75 months a year ago. As the reports states, disparities between regions come as no real surprise as the length and value of disputes depends on the size, complexity and volume of construction projects undertaken, as well as the traditional preference for, and availability of, methods of dispute resolution in each region.
The UK’s relatively speedy dispute resolution may also be down to local factors such as the success of adjudication and the generally high quality service provided by the Technology and Construction Court (TCC). The latter has apparently been under threat due to a shortage of judges but steps are being taken to reduce the number of cases heard by the London TCC so this can be expected to continue to be a factor in the speed of dispute resolution in the UK. Adjudication however shows signs of increasingly being shunned, partly due to some inconsistent decisions and some adjudications taking longer than the statutory 28 days.
As to the methods deployed to resolve disputes, party to party negotiation was the most favoured, closely followed by mediation. Arbitration has fallen in popularity but remains the third most favoured method, followed by adjudication and then litigation. The report’s authors take heart from the falling popularity of formal dispute resolution.
What sparks most disputes? The survey found that a failure to properly administer the contract was the most common cause, followed by conflicting party interests, unrealistic risk transfer from employers to contractors, changes imposed by the employer and ambiguously worded contracts.
Clients shoulder at least some of the blame for contract administration failures, as they are said to be less willing to spend money during the procurement phase of projects to the extent that the contract selected is unfamiliar to those chosen to administer it. Projects are often being shaped around the contract selected, found the report’s authors, rather than the contract being developed to suit the project. Th is partly stems from clients being advised to adopt contracts such as NEC3.
For the future, the survey authors note that there is a rising trend in the UK construction market to go to litigation and it is likely that recent changes to the Construction Act allowing disputes based on oral contracts to be referred will see a rise in the number of disputes being referred.
Nick Barrett
Editor