Value of Middle East construction disputes rises to $82m

The Middle East's construction industry saw its average dispute value increase by nearly 7 percent last year to $82 million, according to the Global Construction Disputes report.

The sixth annual study into the duration, value, common causes, and methods of resolution of construction disputes across the globe said that disputes in the Middle East rose to their highest value since 2011.

It added that the Middle East remains the only region with increasing dispute values compared to the previous year.

İt has been found that construction disputes were the highest in the Middle East at $82 million, followed by Asia at $67 million. However, in North America, the United Kingdom and Continental Europe, dispute values dipped to an average of $25 million. The global average was $46 million, down from $51 million in 2014, the report said.

The length of time taken to resolve disputes in the Middle East rose to 15.2 months in the Middle East last year although that was slightly shorter than the global average, the report added.

Reporter says "In an economic environment impacted by the oil price, the market continued to see a restriction in decision-making within the industry".

"This drove a lack of appropriate delegation to project management consultants and client representatives, thereby prolonging critical commercial decisions and generating cash flow issues related to instructed variations."

The report said that failure to properly administer the contract holds on to its top position regionally from last year as the main cause of construction disputes, followed by poorly drafted or incomplete and unsubstantiated claims.

In the Middle East, where a joint venture is in place, the proportion of disputes caused by a JV-related issued dropped in 2015, moving down almost 10 percent to 32.3 percent, the report added.

GPMC International General Manager commented and added to the report: "Increase on the dispute values and the percentage compared to previous years should be investigated carefully by all means not only the contractors but also the Clients and the investors. We believe professional project management consultants play vital roles to reduce the dispute rates by providing full control to the projects from concept to completion stages. GPMC international has solid 9 years of experience in GCC on PM/CM roles together with contract management, dispute resolution and claim management subjects which will help the market players in the region within the coming years".