Scope of Work Changes Leading Cause of Construction Disputes
Changes to a construction project’s scope of work was identified as the most frequent contributor to disagreements between owners and contractors according to a report by HKA, a leading construction claims and dispute resolution firm. The company recently released: 2019 CRUX Insight, A Global Market Sector Analysis into claims and dispute causation factors.
HKA publishes its second annual CRUX Insight Report, considered the most comprehensive and detailed analysis of its kind in the industry today.
As part of its integrated research program into claims and dispute causation on major capital projects around the world, HKA’s 2019 CRUX Insight, A Global Market Sector Analysis, identifies over 4,000 causes across 700 projects in 72 countries, with total project capital expenditure (CAPEX) in excess of US$1.2 trillion, where HKA has provided claims consulting and dispute resolution services.
HKA draws on this unprecedented bank of knowledge to provide valuable insight into the factors and pattern of causation on major engineering and construction projects across multiple sectors worldwide. Analysis, from what is believed to be the broadest and most in-depth dataset in the industry, shows that the dominant drivers of disputes are a significant lack of control over scope and design, along with poor drafting and administration of contracts. Skills gaps, cultural differences and overinflated claims are also prevalent within the web of interrelated causation factors.
This year’s CRUX Insight presents a sector-by-sector analysis of dispute causation, focusing on: Buildings; Defense, Aerospace & Military; Industrial; Infrastructure; Oil & Gas; and Power & Utilities.
Simon Moon, Partner and COO said: “We know from this year’s report that lessons are still not being learned in the industry. The consequences of delay, disruption, lost productivity, cost overrun and poor quality are not only significant for clients but for industry and economies at large.”
“All decision-makers on projects can benefit from a clearer understanding of the recurring causes of claims and disputes. We would encourage governments, policy-makers, influencers and professional bodies to engage with our CRUX research findings and its implications for the engineering and construction industry,” added Simon.
The investigation also questions the fitness for purpose of procurement strategies and operational models, with earlier and greater engagement with the market required to pre-empt unforeseen problems that emerge later in the project lifecycle.
The report highlights advancing digitalization as a way to improve the information flow, with timely access to data expected to raise the performance of project delivery teams and the design process in particular. However, it acknowledges that there is no easy technological fix for disputes that stem from human actions and omissions.
Toby Hunt, Chief Business Development Officer, said: “If the industry is to break the cycle of repetitive disruption, delay and spiraling costs, employers, contractors and the whole supply chain must better understand, prepare for and manage the complexity of their projects.”
“All stakeholders should benefit from the use of CRUX data to re-assess the risk profile of their business, including by service, sector and location,” added Toby.
To download a copy of the 2019 CRUX Insight Report, visit www.hka.com/crux-insight/.
