ARCADIS Report: Construction Disputes Resolved in Less Time in U.S. in 2012

  ARCADIS Report: Construction Disputes Resolved in Less Time in U.S. in 2012

  *Cost reductions of recession-era contracts helps reduce value and duration
    of disputes in 2012
  *Average value of disputes is lower in U.S. compared to rest of world

Business Wire

HIGHLANDS RANCH, Colo. -- June 19, 2013

Recognizing the early signs that could lead to construction disputes and
addressing these issues promptly helped reduce the value and length of
disputes in the U.S. in 2012, according to a study from ARCADIS (EURONEXT:
ARCAD), a leading pure play global engineering and consultancy firm, and its
subsidiary EC Harris, a global built asset consultancy.

This year’s report, ‘Global Construction Disputes: A Longer Resolution,‘ is
ARCADIS’ third annual global study into the duration, value, common causes and
resolution of construction disputes. Disputes in the U.S. at $9 million had
the lowest value globally, while in the U.K. disputes more than doubled in
value from $10.2 million to $27 million. The Middle East continued to
experience the highest value disputes at $65 million, followed by Asia at
$39.7 million.

The report notes that the causes of disputes in the U.S. are significantly
different from other regions of the world. According to Joe Seibold, executive
vice president at ARCADIS U.S., “We continue to see an emphasis from both
public and private sector owners to avoid and mitigate disputes through risk
management and early field-level resolution. The average value of claims in
the U.S. continues to be lower than the global average, largely due to the
efforts of both the owner and contractor to pursue resolution and the culture
of general claims avoidance.”

“In addition, the construction contracts that were awarded in the last three
to four years during the economic downturn are now approaching completion.
Those earlier construction bids often came in lower than was budgeted by the
owner due to a hyper-competitive market at the time. Many owners realized that
the ‘savings‘ were ethereal and held onto the savings as a contingency to
address and buffer any potential disputes once the project neared completion.
This helped them stay ahead and avoid disputes altogether,” Seibold adds.

The U.S. was one of the few markets where the average dispute lengths fell,
moving from 14.4 months in 2011 to 11.9 months in 2012. With work on the rise
at real market value, it is expected that managers will have less time to
resolve disputes or stay on top of the issues that cause them. “We anticipate
the dispute rate to rise in the U.S. if the construction market continues to
improve,” Seibold concluded.

The research found that all of the top three causes of construction disputes
revolved around a mistake or failure, making them all avoidable to varying
degrees, with the top causes being:

1. Incomplete and/or unsubstantiated claims

2. Failure to understand or comply with contractual obligations

3. Failure to properly administer the contract

This research was conducted by the EC Harris Contract Solutions and ARCADIS
Construction Claims Consulting experts and is based on construction disputes
handled by the teams during 2012.

For more information, please contact Debra Havins of ARCADIS at 303 471 3485


ARCADIS is the leading pure play global engineering and consultancy firm,
providing consultancy, design, engineering and management services in
infrastructure, water, environment and buildings. We enhance mobility,
sustainability and quality of life by creating balance in the built and
natural environments. ARCADIS develops, designs, implements, maintains and
operates projects for companies and governments. With 22,000 employees and
more than $3.3 billion in revenues, the company has an extensive international
network supported by strong local market positions. ARCADIS supports
UN-HABITAT with knowledge and expertise to improve the quality of life in
rapidly growing cities around the world. Visit us at:

About EC Harris

EC Harris is a leading global built asset consultancy. As an ARCADIS company,
EC Harris has access to approximately 22,000 professionals worldwide operating
in over 70 countries, 300 offices and generating in excess of €2.5 billion in
revenue. Working across a wide range of market sectors, EC Harris helps
clients make the most from the money they spend on their built assets. For
further information, contact

Notes to editor

Global construction disputes – summary of results

Region           Dispute values (US$ millions)   Length of dispute (months)
                 2010      2011       2012     2010      2011     2012
Middle East      56.3      112.5      65       8.3       9        14.6
Asia             64.5      53.1       39.7     11.4      12.4     14.3
U.S.             64.5      10.5       9        11.4      14.4     11.9
U.K.             7.5       10.2       27       6.8       8.7      12.9
Mainland Europe  33.3      35.1       25       10        11.7     6
Global average   35.1      32.2       31.7     9.1       10.6     12.8

Source: EC Harris Global Construction Disputes 2013: A Longer Resolution


Debra Havins, 303-471-3485
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