More than a quarter of firms have been involved in one or more disputes in the past 12 months according to a Construction Contracts & Law Report from the Royal Institute of British Architects.
Despite a fall in reported disputes since a previous survey conducted in 2018, close to half of respondents felt that disputes had increased in the sector during the last year.
‘Extension of time’ was the most common issue in dispute – having been reported by 50% of respondents – followed by ‘defective work’ (41%), ‘loss and expense’ (31%), ‘valuation of the final account’ (30%) and ‘valuation of variations’ (26%).
Survey participants, the majority of whom were consultants, were also invited to give their reasons for feeling that the number of disputes had increased.
Common issues cited included contractors using disputes to preserve or increase their margins, late payments, risks being inappropriately transferred, an adversarial approach among project partners, and the complexity of procurement and contracting processes.
New challenges were also highlighted around the effects of Covid, Brexit, supply chain and labour issues and construction product price inflation, as well as difficulties with professional indemnity insurance cost and availability. Construction work was either stopped or suspended in just over a quarter (27%) of projects in dispute.
Further findings show that the most common dispute avoidance procedure included in respondents’ contracts is adjudication (50%), followed by ‘negotiation at board/company level’ (34%), arbitration (30%) and mediation (27%).
In cases where dispute avoidance and resolution have failed, the final tribunal of choice is adjudication for 42%, court for 20%, arbitration for 17% and mediation for 10% of survey participants.