Asia sees world’s most expensive construction disputes

Romesh NavaratnarajahJune 26, 2015

construction disputes

Asia recorded the world’s most expensive construction disputes in 2014 with an average value of US$85.6 million, revealed Arcadis, a global natural and built asset design and consultancy firm.

This comes as the value of disputes relating to global construction projects increased significantly to an average of US$51 million in 2014.

In its Global Construction Disputes Report 2015, Arcadis said the most common cause of construction disputes in Asia last year related to the administration of contracts.

The top three causes were: failure to properly administer the contract, failure to make interim awards on extensions of time and compensation, and poorly drafted or incomplete and unsubstantiated claims.

“This is, firstly, a reflection on the region’s continuing growth, particularly in the likes of Singapore and Hong Kong and, secondly, due to the size and complexity of some of the continent’s current programmes,” said Gary Howells, Arcadis’ Head of Contract Solutions for Asia.

He noted that these larger, more complex projects are contractually challenging. They can generate high value disputes that do not allow the parties to take a view or negotiate.

Howells added that the rise of joint venture arrangements can also lead to both internal disputes and inflexibility once it comes to negotiation.

In fact, 44 percent of joint ventures in Asia were likely to end in dispute.

Nonetheless, the report noted that the amount of time taken to resolve disputes in Asia fell by two months to twelve months, or down from the global average of 13.2 months.

 

Romesh Navaratnarajah, Singapore Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg

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