$34.3million decline in value of construction disputes

But claimants are being made to wait longer than at any point since 2010, with the average resolution taking 20 months

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Construction dispute values have fallen sharply year-on-year
Construction dispute values have fallen sharply year-on-year

The value of construction disputes in the Middle East has plummeted, but the average time it takes to reach a resolution has also shifted, with the typical claimant waiting over a year-and-a-half for a payout.

The ninth edition of Arcadis’ Global Construction Disputes Report showed a significant reduction in outstanding payments from $91million to $56.7m between 2017 and 2018.

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The global average fell from $43.4m to $33m in the same period.

But claimants are being made to wait longer than at any point since 2010, with the average wait time for a resolution now clocking the 20 month mark.

This, according to the report, is due to the ongoing low liquidity in the market that results in delays in paying out the disputed amounts.

Poorly drafted or incomplete and unsubstantiated claims, a failure to properly administer the contract, and owners, contractors, and subcontractors failing to understand or comply with contractual obligations – a mainstay on the list since 2016 - have been touted as the most common cause of disputes.

Shawkat Abbas, Head of Quantum Contract Solutions at Arcadis Middle East, said claimants “must stick to an evidence-based approach if they want to reach a satisfactory conclusion”.

He added: “Combined with the other two common dispute causes, the industry is confirming the importance of complete understanding of contract administration and claims fundamentals.”

Party-to-party negotiation and arbitration remained as the two most preferred methods of resolving disputes.

The report also showed that mediation is returning as a common method of alternative dispute resolution in the Middle East.

“With party-to-party negotiation still the most preferred resolution method, we see how important open and consistent communication among different parties is in resolving disputes, added Abbas.

“Seeing the importance of logic and facts in the causes of disputes and the emphasis on the human aspect in reaching a resolution are not contradictory at all.

“Instead, this is telling us that we must have substantial understanding of the problems, but we should always keep in mind that we are dealing with creatures of emotion and not just with numbers in our spreadsheets.”

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