A recent study has illustrated that disputes in the construction industry are taking much longer to resolve and are also becoming more costly. The EC Harris research study looked at value, causes, duration and optimal resolution methods whilst comparing 2012 figures to those collected from 2011. In 2012 the average time to resolve a dispute was 12.9 months compared to the 2011 equivalent of 8.7 months. Dispute values also rose from Â£6.6 million to Â£17.7 million in the same time period.
The study, “Global Construction Disputes: A Longer Resolution’ is a worldwide research project and despite the increase, the UK still remains below the Â£20.4 million global average with the highest value figures being seen in the Middle East. Interestingly the lowest value was seen in the US.
The main reasons for the longer timescales in the United Kingdom were stated to be the increase in complexity of construction projects and the encouragement of the Technology and Construction Court for parties to use mediation in the first instance. Joint venture agreements were detailed as a particular area of the industry where disputes were more common.
The study helpfully detailed the 5 major causes of disputes in the construction industry:
- Failure to properly administer the contract
- Failure to understand or comply with contractual obligations
- Changes imposed by the employer
- Conflicting interests of the parties
- Incomplete or unsubstantiated claims
The increase in figures has also been attributed to the harsh economic climate. Struggling companies in the industry are said to be scrutinising payment details and contractual provisions more stringently than ever and excuses not to pay and/or dispute the agreement are on the increase. Banks, building societies and other large business arenas have begun to show signs of improvement following the financial crisis but the construction Industry is said to be still struggling. Employment and business activity in the industry are yet to improve.
To achieve resolution to a construction dispute in the best and most cost effective manner, the study recommends that disputes are dealt with at the earliest possible opportunity. Seeking advice at an early stage can avoid unnecessary delay and prevent a minor inconvenience becoming a major threat to either party. The study also places emphasis on resolving disputes before formal proceedings are utilised and makes reference to mediation and involvement of independent specialists at the early stages of a dispute.
Here at Farleys we are receiving an increasing number of enquiries from people wanting legal advice in relation to construction disputes. The study detailed above is evidence that it is important to obtain to legal advice both prior to entering into any construction project and as soon as a dispute materialises.
If you have been affected by any of these issues, contact a construction dispute solicitor at Farleys who will be available to advise you on the most appropriate course of action for you to resolve the matter whilst minimising costs and preventing further delays.
By Daniel Draper, Commercial Litigation Lawyer