Understanding the causes of cost disputes and overruns can help you save time and money, according to Construction Dive.
London-based HKA’s sixth annual Crux insight report regarding global construction claims and disputes shows the top causes of conflict on U.S. construction projects are changes in scope; incorrect design; deficiencies in workmanship; unforeseen physical conditions; and incomplete design.
The effects of such conflicts are significant. The report says disputed costs on projects in the Americas reached more than a third of their value, averaging $100 million or 33.6% of capital expenditure. Because U.S. general contractors are being affected by inflation and higher borrowing costs, they are less inclined to settle and want to maximize their recovery by litigation.
Building sectors are unevenly affected by claims and conflict. Buildings and transportation infrastructure projects faced claims for longer time extensions than other sectors, while delays typically were least severe in the industrial and manufacturing sectors.
Inflation, high interest rates and tight labor markets continue to pose challenges for builders, and the report states construction is “unattractive to younger generations and female candidates.” However, accessible trades education and a greater investment in technology reportedly can help.
The report also shows the importance of not rushing projects, which can lead to workmanship deficiencies and escalating costs and timelines. Extra time taken amid the COVID-19 pandemic to review and mature designs improved constructability; design failure rates dropped from 47.6% to 35.5% globally after the pandemic hiatus. Communicating a realistic timeline to the client is key.
